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Policy Development

For many years, environmental development assistance focused on projects. Over the last decade environmental policy development and implementation, alone or in concert with these projects has achieved greater, more enduring gains in sustainable use, effective management, conservation of natural resources, and environmental quality.

Like other types of sector policies, environmental policies establish the rules that guide environmental decisions of firms and households in rural, agricultural, and urban areas. They employ a variety of incentives and disincentives to encourage firms, farms, and households to make decisions that promote environmental goals. Environmental polices are designed and implemented for the express purpose of making an impact on environmental quality or natural resource use, or reducing pollution put into the environment. Environmental policy reforms set or change the “rules of the game” that guide the behavior of firms, farms, and households related to pollution and natural resource use.

Well-designed environmental policy reforms can cost-effectively achieve environmental objectives if they are based on sound economic principles, establish local ownership through participation, and create institutional roles and responsibilities which are consensual during the implementation process. However, participatory policymaking does not make unnecessary the need for and resources to monitor and enforce policy reforms. For donors, environmental policy reform can both increase and sustain the benefits of donors’ assistance resources. For example, policies that are more able to ensure full-cost pricing of environmental services will increase the likelihood that investments in environmental infrastructure will be properly operated and maintained.

Environmental policy reform is not without its challenges. Often it involves fundamental reconsideration of deep-seated traditions. While the benefits of well conceived environmental policy reforms are substantial and easily recognized, policy changes often require institutional reforms and affect established, politically well-connected economic interests. As a consequence, donors and their partners require a good understanding of development diplomacy, the complications and difficulties of the policy reform process and policy dialogue, and an appreciation for the local context for policy and institutional capabilities.

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