Economic Measures for Environmental Performance Enhancement

1. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 Economic measures to support better environmental performance Dr. Piero Carlo Frigerio FinPiemonte expert

2. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 INVESTMENT Application of financial resources for the purchase of assets, equity holding, joint ventures, know-how, patents and services liable to provide direct or indirect economic benefits in subsequent periods. Investment may therefore be made in fixed assets, extraordinary expences, deferred charges, working capital. Investment activities take the form of „proposals“.

3. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 PROPOSAL A „proposal“ is the set of specific investments required to achieve a pre-established objective, clearly identificable both economically and financially.

4. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 PROJECT A „project“ includes definition of the means, resources and time required to make the investment. Each proposal may therefore comprise a number of different projects in which part of the proposal is implemented in conformity with the pre-established timetable and objectives.

5. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 The profitability of an investment proposal is assessed, calculating the following indices: internal rate of return pay-back period net present value break-even point

6. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 SOURCES OF FINANCING : Reportmust provide an overview of possible sources of financing to cover the planned investments, indicating in particular: own funds recourse to short/medium/long terms loans indicating the interest rate possible facilitations, specifying the sums that can be obtained, saved,financed and the relative rate of interest in the case of loans

7. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 • Evaluation parameters for calculation of the amount of investments cannot be defined a priori. • These parameters could for example refer to the following indicators: • Turnover Net profit • Employees Owner’s capital • etc. • although there is no direct link between these indicators and the capability to make an investment.

8. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 Every company shall be free to define the amount of investments, which it is willing to apply in the future. From the company‘s point of view the yearly fixed investments must not compromise the profit too much.Any investment for “Fixed activities”resultsin an immediate depletion of its financial position, comparable to the amount of the expense done. In particular, environmental investments, in relation to the economic asset of the farm, have only negative effects, since environmental benefits (hardly definable) are of public interest, mostly.

9. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 We argue that the investments for environment protection should not exceed on average 15-20 %of the total year investments in order to be sustainable. State Authority should favour investments dedicated to fixed assets, by providing industry with various economic benefits.

10. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 Fixed investments for the improvement of the plant management Benefits should address investments on technology, in order that industry achieves as soon as possible the efficiency degree as to compete in the global market.

11. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 Fixed investments for the improvement of the environmental quality Regardless of the procedures of public supports, we suppose that public benefit for investments should be higher for „environmental investments“ than for “technology investments”.

12. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 Industries are currently eligible for EU financing of investments. As a EU Member State Slovakia has become the recipient of all the EU policies and programmes. Among others, this means the possibility to apply for a support from the StructuralFunds in the framework of the European RegionalPolicy. In particular, measures aimed at the introduction of technologies that enhance environmental performance are encouraged.

13. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 It is therefore possible that the investments sustained by a company for the purpose of protection of the environment will be considerably reduced against the total necessary amount. Requirements and procedures are reported in Reference Document on Economics and Cross-Media Effects DRAFT September 2003 European IPPC Bureau (final version expected by December 2004)

14. Italian Committee of United Cities (CICU) Slovak Hydrometeorological Institute PHARE - twinning Project SK02/IB/EN01 To realize the actions suggested by BATs, three main aspects, at least, are fundamental to be carefully analysed: capability to carry out big investments, as regards the amount of money and the technical difficulties capability to run new settlements (recent BATs could require specific skills which are not available in the company) economic capability to support the investments and to get cash.