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World Resources 1996-97 (A joint publication by The World Resource Institute, The United Nations Environment Programme, The United Nations Development Programme, and the World Bank) (Data edited by Dr. Róbinson Rojas)
6. City and Community: Toward Environmental Sustainability STRENGTHENING LOCAL GOVERNMENTS IN DEVELOPING COUNTRIES
Local governments play a central role in managing the urban environment. They usually bear primary responsibility for urban infrastructure and land use planning and are often directly involved in the provision of basic water, sanitation, and garbage disposal services.
Given the difficulty and variety of these many functions, strong institutional capacity--including adequate funding, efficient organization, clear lines of authority, and qualified personnel--is necessary if local governments are to be effective environmental managers. Unfortunately, such capacity is too often lacking. In many developing countries, local governments cannot provide basic urban services, let alone regulate and enforce environmental legislation (3). In Europe and North America, when air pollution became severe, the legal, regulatory, and financial structures to implement environmental management already existed. The basic infrastructure was already in place. In contrast, many cities in developing countries are facing new pollution threats with weak institutional structures, inadequate capital budgets, backlogs in providing basic infrastructure, and economies far less able to generate the needed capital (4).
Part of the problem is that, until recently, most governments in developing countries were centralized, often authoritarian, regimes (5). In the late 1960s and 1970s, many central governments established national housing authorities, urban development corporations, and national land use planning authorities to control urban development as newly independent regimes sought to consolidate their power (6). These institutions were believed to be better equipped to handle urban development and infrastructure investment because of their much wider powers and greater financial resources compared with those of existing local authorities.
However, as the numbers of these institutions grew, confusion over levels of authority, overlapping responsibilities, and vested political interests grew in parallel. Metropolitan authorities would construct large, expensive infrastructure and then transfer the management responsibilities to local authorities, who had neither the financial nor the technical resources to operate or maintain it. In addition, metropolitan institutions, accountable to the central government, lacked adequate avenues for public participation (7).
As a result of these and other factors, by the late 1980s, a distinct trend toward decentralization emerged, with a majority of central governments transferring some degree of political power back to local units of government (8). Yet, the scale and extent of this decentralization have varied enormously. In many Latin American countries, for instance, decentralization has meant a shift from a centrally appointed mayor to one directly elected by the public (9). In some countries in Africa, by contrast, decentralization appears to have occurred only in name. The central government continues to appoint municipal officials and control local spending decisions (10) (11). In short, decentralization has not always resulted in a real devolution of power to local municipalities, nor has it necessarily increased the electoral accountability or fiscal autonomy of local authorities (12). (See Table 6.1.)
The reluctance of central governments to delegate full financial resource s and functional responsibilities to municipalities is understandable in political terms (13). Furthermore, there is no guarantee that local governments will perform any better than central governments. Good local leadership goes far beyond financial resources and technical skills (14). For example, strong political will is needed to impose a new property tax, and all too often, municipal leaders find it easier to ignore the needs of the city's poor than to raise the taxes of the city's wealthier constituents (15). Despite these difficulties, a number of local authorities have already begun to address urban environmental problems. (See Box 6.1.)
In other cities, however, there remains a distinct need to build a foundation for urban planning and governance at the local level (16). Doing so will require enhancing local revenue resources for planning and management and rapidly building the technical and professional competences of local government personnel (17). In this era of increasing responsibilities, it will also require forming partnerships with other actors, including other cities and the private sector.
Although local governments in developing countries often have levels of responsibility for services and infrastructure comparable to those of local governments in developed countries, their revenue bases are generally much smaller--about one hundredth or less, according to one estimate (18). Indeed, in some of the poorer developing nations, local governments must function on annual budgets equivalent to only a few U.S. dollars per capita, which severely restricts their ability to fund services or expand infrastructure (19).
Low revenue bases result from many factors, not the least of which is the failure of central governments to transfer to local governments financial resources along with management responsibilities. In most developing countries, local capacities for revenue generation are rudimentary and dependence on central governments for financial assistance is high (20). (See Figure 6.1.)Studies show that an average of 90 percent of public revenues is collected and spent by national governments in developing countries, compared with about 65 percent in high-income countries (21).
Attention to urban finance is crucial if cities are to adequately discharge their duties as urban environmental managers. Strategies to increase urban financial resources begin with basic reform, allowing municipalities to initiate, determine the rate of, and better administer taxes--be they property taxes, special taxes such as business taxes or motor vehicle registration taxes, local surcharges on national taxes, or user fees and service charges for government-funded programs (22).
One critical area of reform is improving property tax collection. Although property taxes are a common form of local taxation, in many cities they generate little revenue compared with other local taxes such as automobile or income taxes (23). Difficulties in assessing property values, keeping assessments current, and enforcing compliance have made tax administration a burden on municipalities. Also, exemptions to such taxes made for political reasons or to attract development can erode the tax base or distribute the tax burden inequitably. Moreover, tax rates and exemption policies are often set by the central government, so changes in these rates and policies--even to compensate for inflation or to correct inequities--can be difficult to achieve (24).
Maximizing the potential of property taxes for local revenue generation will require both changes in local tax structures and improved assessment and collection procedures. This will not be easy. The basic data on which property taxes are based are lacking in most cities. Disputes over land ownership, outdated city maps, and land transactions that occur outside formal market structures all complicate tax collection. Rapid urban growth on the peripheries of these cities exacerbates the difficulties because new settlements must be constantly incorporated into city records if the tax base is to reflect the physical growth of the city (25).
In the area of improving compliance, some relatively simple measures can result in significant tax revenue increases. Delhi, India, for example, increased its property tax collections by 96 percent in 1 year through a combination of measures, including providing discounts for early payments, centralizing collection points for tax payments, freezing bank accounts for defaulters, and requiring taxpayers to pay taxes before appeals against their assessments can be considered (26).
Another valuable source of revenue for city governments is the introduction of user fees for environmental services such as water and sewerage (27). Few local governments have either the institutional capability or the legal authorization to set and collect user fees (28)(29). In Bangkok, for example, the allowable charge for garbage collection is set by Thailand's central government, although it is the city that must provide these services. As a result, city officials can charge only US$5.95 per household for garbage collection, even though it costs them US$9.83 (30)(31). Even when local governments do have the authority to set user fees, these fees still typically fall far below the actual costs of providing services.
Attempts to increase the financial base of local governments must also include reforming the direct transfer of funds from central to local governments. These transfers, which occur through such mechanisms as grants, subsidies, and other payments, are currently one of the largest sources of local funds in the developing world. In many cases, however, they are subject to political manipulation, are not targeted well, are irregular in their timing, or do not take into account local circumstances or priorities (32)(33).
Building Professional Capacity
More revenue does not in itself guarantee a more effective local government (34). In addition to adequate funding, effective urban environmental management requires personnel with appropriate managerial, technical, and financial skills. Key skills span a wide range: the drafting of legislation and regulations, environmental monitoring and enforcement, and cost accounting, to name just a few (35).
In many developing countries, there is a severe shortage of trained personnel. Lack of training, low wages, and limited career opportunities present serious obstacles to attracting and keeping effective urban managers (36). In Indonesia, a recent study found that the average length of training related to urban management and finance among more than 700,000 local officials averaged only about 2 hours per year. Accordingly, the Indonesian government plans to establish regional centers for local personnel training (37).
Building the capacities of environmental professionals in local government will require a greater commitment to training and technical assistance programs at a variety of levels (38). National governments can play a part in enhancing local professional capacity both by providing grant money to support local training efforts and by establishing national technical assistance programs specifically directed at municipal employees. In Brazil, a team of trained officials from the central government was sent on a temporary basis to local government offices to advise municipal urban managers and help them upgrade the analytic and technical capabilities of their staffs. Eventually, it evolved into a permanent extension service known as the Brazilian Institute of Municipal Administration (39). In Malaysia, regional centers that offer course work in local planning, budgeting, and other skills have been established for local government professionals (40).
Partnerships with Other Actors
Whereas governments have historically provided the bulk of urban services themselves, the scope of problems facing today's cities are too large and city coffers are too small for local governments to handle them alone. Instead, local governments will need to capitalize on the resources available to them, be they private companies providing capital and jobs, NGOs providing information and grassroots mobilization, or communities themselves.
In recent years, there has been a trend toward the privatization of public services (41). Awarding contracts for environmental services to private companies offers potential cost savings. Where competition and adequate accountability to municipal managers exist, privatization may net substantial savings without degrading the quality of service. This has been the case with garbage disposal service in Buenos Aires, Argentina, where private firms under municipal contract are able to offer high-quality collection services more efficiently than the city itself can (42). For such partnerships to be effective, however, cities must execute appropriate oversight (43).
Partnerships between industry and government can also be productive. Such partnerships can stimulate development of cleaner manufacturing processes and energy technologies for local use or can encourage the adaptation of off-the-shelf technologies to local circumstances (44).
Some of the most valuable relationships that governments can cultivate are with NGOs and community groups. These organizations can determine the special circumstances and needs of neighborhoods, plan appropriate projects to address those needs, mobilize funding, and generally bridge the gap between government and the affected community. Partnerships do not just happen, however. To foster them, city governments must actively promote the involvement of outside groups in environmental planning and decisionmaking.
In many cities and towns in the developing world, municipal governments are already involved in urban improvements, establishing participatory planning processes and marshaling their political and economic clout to strengthen local authority over environmental management. In 1992, citizen protests about the basin's deteriorating air quality prompted Mexico City officials to create the Metropolitan Commission for the Protection of Air Quality (45). The local government has played an active role in urban air quality control, removing polluting industrial facilities from the city, restricting private automobile use, developing and bringing cleaner vehicle fuels to the market, planting trees, and investing heavily in public transit infrastructure (46). To pay for these initiatives, the municipality has established its own direct and flexible financing arrangements with foreign banks and governments.
In 1994, the city of Quito, Ecuador, took a similar course and achieved the passage of national legislation to establish the Metropolitan District of Quito. This legislation provided the municipality with control over all aspects of environmental policy, land use regulation, transportation planning, and organizational design of the municipal government. Having established a local government with sufficient power to plan its own future, the mayor then proceeded to decentralize the municipal administration into three geographic zones. Each zone has its own local office responsible for formulating new service delivery strategies for its area. One of the primary objectives of decentralization was to put the municipal government in closer touch with the community and to facilitate a higher level of citizen participation in planning urban services, especially with the barrio associations in the city's long-underserved south zone (47).
Other municipalities such as Porto Alegre and Santos, Brazil, have established democratic planning and budgeting procedures using the input of citizen councils, each representing a specific population group or urban service issue (48).