Trends and Practices of Public Environmental Expenditure in Ethiopia
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Date
2014-06
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Addis Ababa University
Abstract
One of the pillars of greening the economy is the increase of public expenditures in activities that
are associated to sustainable development. Even though environmental protection is not the only
concern for a "green " economy, it can only make sense if there is an improvement of the efforts
in the public sector associated with environmental protection. It is unquestionable that public
ftll1ding remains crucial for addressing environmental problems and, more broadly, promoting a
greener model of development in Ethiopia. The main objective of the study was to understand the
trends of public expenditure in en vironment and to obtain critical information for streamlining and
strengtheningfllture investments in environmental programs, project and activities. Public environment
expenditures covered in this report are those related to the prevention, control, abatement, or
elimination of environmental pollution by general government; both federal and state
government. The techniques used for primary data collection are key informant interview and
focus group discussion.
As many literatures indicate public spending on environmental protection is often a small
ji-action of total government budget in many developing countries. Accordingly this thesis
analyses Ethiupian spending on environmental protect ian including both federal and state levels,
in the 2002103-20121/3 period. The descriptive part of the analysis showed in aggregate terms,
public environmental expenditures have increased Fom about ETE 1136.47 million in 2002103
to about ETE 15,230.54 million in 2012113. The times series data analysis results confirmed
previous studies that suggested an increasing trend of public environmental expenditures in
absolute value, whereas in percentage terms it is highly fluctuated on environmental
expenditures at both the federal level and the state level. The environmental sector in the country
has been very effective in atlracting domestic public financing, especially afier Rio convention in
1992. Finally, through fixed effect model the elasticity of expenditure with respect to income
(GDP) is found to be 0.6, and is significant in explaining the downward slope of the
environmental Kuznets curve. The findings of the study can playing a major role in providing
information to governments, researchers and other stakeholders on the status of environment
and natural resources related spend and initiatives undertaken in a counlly.
KEY WORDS: Green economy, Public environment expenditure, fixed effect model.
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Keywords
Green economy