Environmental protection expenditures

Several national environmental policy instruments are implemented for reducing and regulating the environmental pressure resulting from business activity: economic instruments (environmental taxes, packaging deposit system) and regulative mechanisms (e.g. environmental norms, environmental restrictions and prohibitions). These instruments motivate producers to engage less polluting technologies and force enterprises, establishments and households to reduce and treat generated waste and emissions.

Environmental protection expenditures indicate how much has been invested in the reconstruction and acquisition of environmental protection technologies and equipment, and how much has been spent on keeping these technologies and equipment functioning. Environmental protection expenditures also contain pollution charges and payments for environmental protection services (e.g. waste collection, wastewater management, environmental consultations).

Production enterprises (i.e. enterprises not specialised in environmental protection) make expenditure to reduce and treat pollution resulting from their activities. The other kind of enterprises are establishments specialised in the provision of environmental protection services (enterprises specialised in environmental protection, e.g. enterprises dealing with wastewater or waste management), which treat pollution generated by other enterprises, establishments and households. Also nature protection establishments and enterprises dealing with environmental impact and risk assessments or environmental research are included in this group of enterprises. 

Production enterprises mostly spend on the protection of ambient air and on the wastewater and waste management

The environmental protection expenditures of production enterprises have in general increased. Environmental protection expenditures are costs, where the purpose is to protect the environment, or in other words, to prevent, reduce or eliminate pollution or any other degradation of the environment. In general production enterprises invest more in end-of-pipe installations (for the reduction of pollution already generated) and less in integrated technologies (for the prevention or reduction of the amount of pollution created at the source). Production enterprises usually spend money on the protection of ambient air as well as on the waste and wastewater management. The environmental protection expenditure time series may largely vary, because yearly volumes of investments may differ to a great extent. In some years, investments have comprised even a half of the total sum of production enterprises’ environmental protection expenditures.

Figure. Environmental protection expenditures of enterprises and local governments by type of expenditure, 2009

Source: 2011 Statistical Yearbook.

Figure. Environmental protection expenditures of enterprises and local governments by environmental protection activity, 2009

Source: 2011 Statistical Yearbook.

All expenditures made by enterprises providing environmental services are considered environmental protection expenditures

The above discussion focused on production enterprises which have to make expenditures to handle the emissions and waste resulting from their activities. The other group embraces enterprises which have specialized in the pollution treatment and waste management or in the protection of biological diversity. Included here are the waste and wastewater handlers, waste collectors and treaters, street cleaning enterprises, nature protection establishments, as well as enterprises dealing with the environmental impact and risk assessments and environmental research. All such enterprises provide environmental services and all expenditures made by them are considered environmental protection expenditures. Enterprises in this group have especially large in-house spendings i.e. expenditures on materials, energy and labour. Investments make up approximately a fifth of their total environmental protection expenditures.

Hereby it should be mentioned that the environmental protection expenditures made by production enterprises and providers of environmental services cannot be summed up for the purpose of calculating the total sum of environmental protection expenditure of Estonian business sector. Summing up cannot be done, because one cost can occur in the totals for several times — production enterprises pay for purchasing environmental protection services, these payments, however, are revenues for providers of environmental services. Providers of environmental services, in turn, use these revenues for financing their in-house spendings and investments.

Public sector’s environmental protection expenditures are handled differently by Statistics Estonia and by the Ministry of Finance.

In the public sector, the central government as well as local governments spend money on environmental protection. Statistics Estonia collects data on environmental protection expenditures from rural municipality governments and city governments on an annual basis. Local governments mostly spend money on the wastewater and waste management. Investments have a relevant role in local governments’ environmental protection expenditures — in some years, investments may comprise even two thirds of local governments’ environmental protection expenditures. Statistics Estonia has not yet estimated the size of environmental protection expenditures made by the central government.

Statistics Estonia collects data on the environmental protection expenditures in compliance with the definition of environmental protection expenditures elaborated by the Statistical Office of the European Communities (Eurostat) and Organisation for Economic Co-operation and Development (OECD). Pursuant to the definition, environmental protection expenditures are costs, where the main purpose is to prevent, reduce or eliminate pollution of the environment.

However, the Estonian Ministry of Finance also collects data on the public sector’s environmental protection expenditures. The database of Statistics Estonia and that of the Ministry of Finance differ from each other and the dissimilarity is caused by different approaches to the definition of ’environmental protection’. The Ministry of Finance handles the environmental protection expenditures in a wider sense than Statistics Estonia.

Description of the methodology and the definitions are attached to the tables of the statistical database (see the link ”Definitions and Methodology”).