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Honorable Carol M. Browner
Administrator
U.S. Environmental Protection Agency
Washington, D.C. 20460
Dear Administrator Browner:
On behalf of the Environmental Financial Advisory Board (EFAB), we are very
pleased to transmit to you the EFAB Report, "Financing Environmental Infrastructure
Along the U.S./Mexican Border and in Eastern Europe and the Former Soviet
Republics." This Report provides a creative strategy for financing the growing
environmental needs in these geographic regions. We believe the initiatives presented
here are particularly timely for the Administration because they will support the delivery
of essential environmental services in these regions and at the same time assist with
trade negotiations.
The Board proposes a public finance system based on user fees and innovative^
supported by a financial guaranty fund to raise the necessary capital for badly needed
environmental facilities. This system would enable newly created environmental districts
to sell public bonds in the domestic and international markets. The financial guaranty
fund would serve as a credit enhancement mechanism to guarantee the bond issues and
improve their acceptance in the credit markets. The proceeds from the bonds, along
with other capital subsidies that may be required, would build needed environmental
facilities. The facilities would, in turn, provide services to various customers — industry,
communities, and residences - that would be subject to user fees payable to the
environmental district to cover operation and maintenance costs for the facilities and
debt service. The establishment of user fees is critical to the market acceptability of the
new public finance system debt
We believe that the public finance system approach offers a sound and effective way
of paying for environmental facilities along our southern border and in Eastern Europe
and the former Soviet Republics. We and the EFAB Executive Committee are available
at your convenience to discuss this Report and to provide any further analyses you may
require.
Sincerely,
Frieda K. Wallison Herbert Bafrract
Vice Chair, Environmental Executive Director, Environmental
Financial Advisory Board Financial Advisory Board
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TABLE OF CONTENTS
I. INTRODUCTION 1
A. Background 1
B. General Findings < 2
H. THE MEXICAN BORDER ISSUE 1 3
A. Resolutions 3
B. Discussion 3
C. Conclusion 9
III. THE ISSUE OF EASTERN EUROPE AND
THE FORMER SOVIET REPUBLICS 10
A. Resolutions 10
B. Discussion 10
C. Conclusion 12
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1993 Report of the Environmental Financial Advisory Board
of the
United States Environmental Protection Agency
I. INTRODUCTION
BACKGROUND
Upon convening in January 1993, the International Committee (the "Committee11) of
the Environmental Financial Advisory Board (the "Board") of the United States
Environmental Protection Agency (the "Agency1) briefly assessed the environmental
finance issues facing the world. Although the Committee saw many problems on each
continent, faced with limited time and resources, it elected to address two issues which it
considered vital: first, the disparity in environmental quality between the United States
and Mexico, as it might affect the adoption of the North American Free Trade
Agreement (NAFTA); and, second, the almost staggering need for new environmental
infrastructure in Eastern Europe and the republics of the former Soviet Union.
As negotiations for the North American Free Trade Agreement gained momentum
throughout 1991 and 1992, concern was expressed by many environmental interests in
the United States over the disparity in environmental quality between the U.S. and
Mexico. In particular, there was a concern that badly needed water, wastewater, and
solid waste disposal projects along the 3,200 mile border with the United States would
not be built The Agency estimated the cost of these needed facilities at between $5-7
billion.
The Committee considered strategies for dealing with the problem of financing
environmental infrastructure projects in Mexico along the U.S. border. The goal of the
Committee was to pass along to the Board, and ultimately to the Administrator, a series
of recommendations to assist in the financing of such environmental infrastructure
projects in Mexico, which would, in turn, facilitate the passage and implementation of
NAFTA.
In like manner, the Committee also considered published reports describing a
tremendous need for new environmental infrastructure projects in the republics of
Eastern Europe and the former Soviet Union. Here, the Committee wished to
recommend to the Board, and to the Administrator, a course of action which not only
would assist the republics of Eastern Europe but which would also inure to the benefit
of the United States, as well, in terms of stimulating exports.
In furtherance of its goals, the Committee made a series of eight general findings. It
then adopted a series of resolutions on each issue, which it augmented with discussion
and conclusions based on its resolutions. The proceedings of the Committee are as
follows:
Pagel
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1993 Report of the Environmental Financial Advisory Board
GENERAL FINDINGS,
In considering the Mexican Border Issue and the Issue of Eastern Europe and
Former Soviet Republics, the Committee made eight findings. They are:
1) It is highly unlikely that any central government will ever be able to provide all
of the funds needed for necessary environmental infrastructure projects.
2) Environmental infrastructure projects will face ever-more fierce competition for
funding as nutrition, health, housing, education, and other vital societal needs lay claims
to scarce central government financial resources.
3) The only alternative to central government funding is funding through domestic
and international capital markets.
4) The principal funding mechanism for environmental infrastructure projects
should be fair and reasonable user fees, which can serve as a means of access to the
international capital market
5) Certain environmental infrastructure projects could be funded if subsovereign
finance mechanisms, based on user fees and similar to the American municipal bond
market in the United States, were created in other countries.
6) In order to gain broad market acceptance within a relatively short period of
time, this subsovereign finance system should be augmented with a financial guaranty
mechanism to enhance the credit of such projects to the investment grade level.
7) The financial guaranty mechanism required to launch a new subsovereign
financing system should be privately funded in whole or in part
8) It is in the best interest of the United States to encourage the creation of public
finance systems abroad, since the U.S. has the greatest repository of legal, financial,
organizational, administrative and managerial expertise in the field of public finance, all
of which services can be exported.
Based on these eight findings, the Committee adopted the following resolutions and
conducted the following discussions on each issue:
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1993 Report of the Environmental Financial Advisory Board
II. THE MEXICAN BORDER ISSUE
RESOLUTIONS
1) RESOLVED, that the Administrator is advised to suggest, pursuant to the
North American Free Trade Agreement, to the appropriate authorities in Mexico, the
creation of a financial system, based on user fees, which provides for the issuance of
public debt by subsovereign governmental entities.
2) RESOLVED, that the Administrator is advised to suggest, pursuant to the
North American Free Trade Agreement, to the appropriate authorities in Mexico, the
creation of a privately funded financial guaranty mechanism to enhance the new public
securities system.
3) RESOLVED, that the Administrator is advised to offer, within the limits of
appropriations to the Agency, technical assistance to support efforts of the government
of Mexico to create a public securities system, based on user fees, and to support the
creation of a privately funded financial guaranty mechanism to enhance such new public
securities system.
DISCUSSION
In the United States, 75-80% of all environmental infrastructure funding comes from
the public finance system. The same could be true in Mexico. The environmental
infrastructure funding problem in Mexico will not be solved without a public finance
system. Creating a public finance system in Mexico, however, will not be easy. Nor will
it be quick.
Mexico is poor. The average wage-earner in Mexico takes home $2,000 per year. In
the more prosperous 65-mile wide Mexican zone that borders the U.S. along the states
of California, Arizona, New Mexico, and Texas, known as the maquiladora corridor, the
median wage is $3,000. In rural America, where median incomes are five to six times
higher than in Mexico, user fees cannot support many environmental infrastructure
projects, even at interest rates of 0%. The same will be true in Mexico, even more so.
In Mexico, less of the burden of paying for a project can be laid upon the users.
Whatever user fees can be imposed in Mexico, it imperative that they first be
dedicated to the payment of the operation and maintenance of the system. No capital
market will accept the debt of a system which relies on subsidies to pay for its operation
and maintenance. Users will not pay for shoddy or intermittent service. If inadequate
service is provided, there will be no assured stream of income from user fees. Having a
constant and assured stream of income from user fees is absolutely essential in obtaining .
access to domestic and international capital markets. Therefore, whatever pesos are
raised from fees must first be used to guarantee the integrity of the ongoing operation of
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1993 Report of the Environmental Financial Advisory Board
the system. Only user fees in excess of real operation and maintenance expenses can be
dedicated to the payment of principal and interest on debt instruments issued to build or
improve systems.
The point, however, is that every peso raised through a user fee based system is one
peso less that has to depend on the central government If 10% of a capital project can
be paid for with user fees, then it should be. That is 10% less the central government
will be asked to pay. If 50% can be paid with user fees, even better. It is intuitive that
the probability of a project's receiving central government funding is in inverse
proportion to the percentage of funds requested.
Studies of reasonable user charges in developing countries range from 1% to 20% of
median income depending on a multiplicity of factors. For Mexico, this would mean a
range of annual fees of between $20 and $600. Assuming a $100 annual user fee
pledged to a property structured public security, about $1,000 per user could be raised in
the capital markets to pay for environmental infrastructure projects. This would go a
long way to alleviate the environmental problems facing the region.
It must be noted that user fees alone will sometimes be insufficient to pay the full
cost of a capital project This is true in the United States for both large and small
communities. It will also be true for Mexico. In such cases, traditional subsidies must
be used in Mexico to make up cash shortfalls, as they are in the United States.
However, the principle must obtain that subsidies should be minimized. The greatest
possible amount of financial support must come from user fees.
So, although user fees alone cannot bear the entire burden of paying for
environmental infrastructure (much less annual operation and maintenance costs), they
are not insignificant; and a structure should be devised to harness these potential
funding streams.
.Mexico also has a tradition of strong central government Little real power has
devolved to the states and cities. One of the most jealously guarded powers is the power
to raise funds or levy taxes. Local governments in Mexico do not have these powers.
Recently, however, Mexican treasury officials have begun to reverse long-standing
opposition to local financial autonomy. In the last year, they have approved a privately
owned toll road which was privately financed in the international capital market This
example is structurally analogous to a financially autonomous public water or wastewater
district Both involve single function entities. Both involve entities whose financial
"autonomy" is restricted to the use of a highly limited set of fees. Both involve
circumstances where the penalty for non-payment is non-use. In short, no general
powers to tax; no police powers to sanction non-payors. Mexico seems to be leaning
strongly in favor of creating a broader array of such entities which are ideal to finance
environmental infrastructure. The key here is autonomy. Capital markets will not
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1993 Report of the Environmental Financial Advisory Board
accept the debt of entities whose legal basis or fundamental organization can be changed
by any legislature or any government at will.
There seems to be, therefore, both a reasonable user fee base in Mexico as well as a
growing desire to create limited-purpose, financially autonomous public entities. But
more will be needed. Mexico needs good engineers to run the works and good
managers to collect the fees.
If users are to be required to pay fees, then they must be furnished with reliable and
quality service. To do so requires engineers to run the works. Mexico does not have a
well developed community of sanitary engineers. It is reputed that fewer than 50% of
the sewage treatment plants in Mexico are fully operational, and that the principal
reason therefore is a lack of qualified personnel In the long term, Mexico must look to
the establishment of university-level training programs for engineers in the water,
wastewater and solid waste fields. In the short term, it could look to the Agency for
technical assistance. It could also look at the establishment of reciprocal programs with
public water and sewer districts in the U.S. Mexico could also, as in tile case of the
private toll road, look to private contractors to run their water and wastewater systems.
Administration is also a problem. For an entity to be creditworthy, it must have
sound management In Mexico, there are no university-level courses of study in public
administration. These will have to be developed to assure that the new autonomous
units of government can look to cadres of qualified candidates for management In the
interim and on a short-term basis, however, Mexico can look for technical assistance
from the Agency. The pilot Environmental Finance Center at the University of New
Mexico could serve as a resource. In addition, reciprocal arrangements with American
public utility districts could also be organized, as could contracts for management
services with private companies.
Good management is essential to good credit, but is not the only criterion. In a
market-based financing system, a legal nexus must exist between the fees paid by a
system's users and the payments made to the system's creditors. Pledges of system funds
must be constitutionally enforceable. Lenders must have an absolute legal right to any
fees pledged to them. Furthermore, there must be legal mechanisms in place to assure
that such funds, once collected by a system, duly make their way to the system's
bondholders. Studies must be done to identify what statues, similar to the Trust
Indenture Act of 1940, must be enacted or amended, to assure that pledged funds will
be properly handled and that there are strong legal sanctions against the careless and the
criminal. Finally, Mexican banks must be able to offer services as traditional bond
registrars, trustees, and payment agents.
The creation of a public securities market in Mexico involves three areas of effort
In addition to the training of the technical and administrative personnel and the
enactment of appropriate statutory and constitutional safeguards, there remains the
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1993 Report of the Environmental Financial Advisory Board
overwhelming logistical problem of drawing demographic lines, constructing facilities,
installing meters, establishing user accounts, and educating a populace unaccustomed to
receiving high levels of service and unaccustomed to paying for any level of service to
react and behave in the predictable and reliable financial patterns, day-to-day and year-
to-year, that are necessary to create the history of solvency and stability required for a
system to receive an investment grade credit rating.
There are no shortcuts in this process. It takes time to create a credit history. But
it takes longer to create a credit history of investment grade quality. Furthermore,
under certain circumstances a system may wish to take on more debt (to improve the
quality of its services), than would be expected of an investment grade system.
Investment grade credit ratings require the setting of user fees far in excess of
operational and debt service requirements (to provide a cushion against unplanned
expenses or drop-offs in user charges). A system may not want to tax its users beyond
the necessary.
In short, although long credit histories of great solvency and firm stability are
desirable, they may not be realistically attainable for new, autonomous Mexican utility
districts charged with the Augean task of cleaning up the environmental problems along
the border. For these reasons, a financial guaranty mechanism will be necessary to bring
a large number of relatively small (under $10 million) bond issues of newly created,
Mexican utility districts to the domestic or international capital market In this regard, it
must be noted that the creation of a broad domestic capital market for subsovereign
government debt should be a highly desirable goal for the Mexican economy. The
creation of an international market for such debt should also be desirable but will also
involve additional questions of sovereign risk.
A financial guaranty for environmental infrastructure projects in Mexico cannot
depend on the central government for the same reason-that the funding of
environmental infrastructure projects in Mexico cannot depend on the central
government Both the cash and the credit are exhaustible. Both central government
funds and central government guaranties are finite. Central governments cannot afford
to fund every environmental project, and they cannot afford to guaranty every
environmental project, either.
An appropriate financial guaranty mechanism for Mexican environmental
infrastructure projects would involve a substantial fund. As will be shown below, a
financial guaranty fund would undoubtedly have to be in the range of $100 - $250
million. Such a fund would be able to serve as an effective financial guaranty for about
$1 - 2.5 billion of bonds issued by new, Mexican utility districts. Moreover, if properly
structured and supported by annual guaranty fees, such a fund could be self-sustaining
and, therefore, facilitate the funding of virtually all of the $5 - 7 billion of identified
environmental infrastructure projects in Mexico along the U.S. border.
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1993 Report of the Environmental Financial Advisory Board
The Standard & Poor's Corporation (S&F) has done seminal work in developing the
methodology to rate structured funds which act as financial guaranties for much larger
amounts of issued debt in the U.S. municipal market This work was published in
conjunction with the rating of state programs involved in the Agency's State Revolving
Fund (SRF) Program. Using this methodology, S&P estimates that, under the worst
case scenario (which they specifically hypothesize in each instance), a certain percentage
of a given class of bonds (such as water and sewer bonds), issued with a specific credit
rating, will be delinquent for a certain period of years at some point during their term..
For the sake of conservatism, S&P methodology postulates that the delinquency will
occur one year after issuance; and, for the sake of reality, it postulates that an of the
delinquencies will phase in over three years.
Let us assume $100 of sewer bonds of Non-Investment Grade (NIG) quality, the
annual debt service payments on which are $10. Let us assume, using published S&P
methodology, that sewer bonds with the lowest investment grade rating (BBB) have a
default frequency of 10%. This means that in each year of presumed delinquency, 10%
of the annual debt service payment, or $1, will be missing. Let us also assume, using
S&P methodology for U.S. municipals, that such delinquent sewer bonds have a five year
delay period. This means that the $1 will be missing each year for five years. Bearing in
mind that the delinquency process begins in the second year and phases in over three
years, the total delinquencies on all of the $100 of bonds issued would be as follows:
Year 1 - $0.00 Year 6 - $1.00
Year2 - $0.33 Year? - $0.67
Year3 - $0.67 Year 8 - $033
Year 4 - $1.00
YearS - $1.00 Total - $5.00
Thus, according to S&P, the $100 of BBB sewer bonds in the above example, will
experience total losses of $5. (We ignore the effect of discounting which would further
reduce these results. It should also be noted that these results are based solely on U.S.
experience and that there are no assurances that Mexican credit will provide comparable
default or loss experience.) Using this methodology, generally, we can develop an
amount of cash appropriate for guaranteeing bonds at the BBB or higher rating levels.
This approach can be extended to NIG bonds, but collateral levels will be much greater.
For example, for a NIG portfolio to attain a AAA rating, considerable cash collateral
would have to be put up, perhaps as much as 20 - 40% of par, or more.
The principle, however, is established that NIG bonds may attain investment grade
status if additional funds are pledged, as a financial guaranty, to their bondholders. This
is precisely the type of financial guaranty mechanism which can be brought to bear on
the NIG bonds of new, Mexican utility district bonds. A guaranty ratio of 10% is
postulated for a proposed Mexican environmental infrastructure guaranty fund.
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1993 Report of the Environmental Financial Advisory Board
A financial guaranty fund for Mexican environmental infrastructure projects would
have to be substantial. In the first instance, the guaranty ratio declines with the number
of bond issues guarantied. Thus a guaranty ratio for the first bond might be 100%. For
twenty bonds it might be 30%. It is only after several hundred bonds have been
included in a guaranty portfolio that the guaranty ratios will decline to reasonable levels.
What the size of the proposed bond issues will be and what the level of a proposed
guaranty ratio might be can only be determined through further study. Suffice it to say
that any meaningful guaranty fund must be substantial enough to sustain itself until the
number of included issues is great enough for the guaranty fees to decline to reasonable
levels. For this reason, a fund in the $100 - 250 million range, as a minimum, has been
suggested.
The guaranty fund should be structured as a private enterprise. The first reason for
this is that the guaranty funds will be pledged to support bond issues whose default rates
are based on worst case scenarios. Worst cases seldom happen. This means that there
is a good probability that the original guaranty funds will not be invaded to pay debt ••
service on delinquent bonds. This probability increases when the effect of compounding
is factored in. As the guaranty funds earn interest, and the interest is added to the
funds's principal, the guaranty fund itself win grow well beyond the amount of the
original funds contributed.
In addition, the guaranty fund should charge a modest annual fee for its guaranty to
the bond-issuing district This policy is in accord with the Committee's sense that
environmental infrastructure should be paid for according to use; so too, therefore,
should services, such as guaranties, through which environmental infrastructure funding
is obtained.
The annual guaranty fee should be sufficient to keep the guaranty fund self-
sustaining. This will mean that no further infusion of capital from external sources will
be needed. More importantly, this will mean that the guaranty fund will eventually be
able to facilitate the issuance of bonds to provide for all $5 - 7 billion of identified
environmental infrastructure projects in Mexico along the U.S. border.
The effect of the annual guaranty fee on the fund constitutes the second reason why
the fund should be structured as a private enterprise. Under current market conditions,
the shareholders who contributed capital to the fund would earn about a 6% return,
absent losses. As the guaranty fees and retained earnings build up the fund, the
investor's returns will increase apace. In short, from a balance sheet point of view, the
guaranty fund resembles an insurance company — one that is engaged in a low-risk
business. As such, the guaranty fund should be an attractive investment for the long-
term institutional market
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1993 Report of the Environmental Financial Advisory Board
CONCLUSION
A public securities system can be created in Mexico so that new, autonomous
environmental infrastructure districts can gain access to domestic and international
capital markets to fund needed projects. To facilitate this process, a privately funded
financial guaranty mechanism can be created which will initially facilitate the issuance of
$1 - 2.5 billion of environmental infrastructure bonds and will eventually, because of its
self-sustaining structure, be able to facilitate the funding of virtually all of the $5 • 7
billion of identified environmental infrastructure projects in Mexico along the U.S.
border. If properly structured, the financial guaranty mechanism should be an attractive
investment for the long-term institutional market
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1993 Report of the Environmental Financial Advisory Board
III. THE ISSUE OF EASTERN EUROPE AND THE FORMER SOVIET REPUBLICS
RESOLUTIONS
1) RESOLVED, that the Administrator is advised to suggest to the appropriate
authorities in the new republics of Eastern Europe and the former Soviet Union the
creation of a financial system, based on user fees, which provides for the issuance of
public debt by subsovereign governmental entities.
2) RESOLVED, that the Administrator is advised to facilitate the creation of an
International Center for Environmental Finance, at a major university within the United
States, to promote the development of public finance systems, similar to the American
municipal bond market, in other countries as a means of financing their environmental
infrastructure projects.
3) RESOLVED, that the Administrator is advised that one of the principal
purposes of the Internationa] Center for Environmental Finance should be to conduct
conferences and informational meetings for the appropriate government officials in
Eastern Europe and the former Soviet republics on the organization, administration and
management of local government entities, cooperatives and private utilities which finance
environmental infrastructure projects through the American capital market
DISCUSSION
In Eastern Europe and the republics of the former Soviet Union, environmental
infrastructure, where it exists, is reported to be inoperable, malfunctioning or
inadequate. Dr. John J. Boland of the Johns Hopkins University reports that "Fifty or
more years of neglect, disinterest, and exploitation have resulted in a physical
environment so poisoned that it is a daily threat to the lives and health of the citizens.
In the industrial belt running from Germany to the Russian Republic, morbidity has
climbed, life expectancy has fallen, and large areas of land are blighted by soil, air, and
water pollution." The water of the Vistula River in parts of Poland is so corrosive that it
cannot even be used to cool machinery. According to the Agency, the discharges of the
past 50 years have rendered the Vistula so corrosive that untreated river water will
actually eat through machinery. The financing of environmental infrastructure in
Eastern Europe and the republics of the former Soviet Union is, therefore, an issue of
the highest priority.
Although the environmental infrastructure problems of Eastern Europe and the
republics of the former Soviet Union are truly staggering, members of the Agency's staff
have reported that their colleagues in these countries have a thorough acquaintance with
the latest pollution control technologies, but also a despairing inability to use them
because of their central governments' lack of funding. In addition, and more
importantly, there are no other public or private entities or instrumentalities within such
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1993 Report of the Environmental Financial Advisory Board
countries which can legally undertake environmental infrastructure projects. Moreover,
environmental specialists from Eastern Europe and the republics of the former Soviet
Union speak of a need to learn how the public finance system in the United States can
be modified and replicated to work in their countries to finance needed environmental
infrastructure projects. In short, these indigenous experts know that the answers to their
environmental infrastructure problems lie in new financing techniques, but they have no
traditional means to effect them.
To create a public finance system within Eastern Europe and the republics of the
former Soviet Union will require a significant and systematic effort Although these
countries have highly skilled engineers and other technicians aware of the problems and
acquainted with the latest pollution control methodologies, they have no subsovereign
instrumentalities of the state capable of financing environmental infrastructure projects
without the direct financial support of the central government Furthermore, the new
regimes of Eastern Europe and the republics of the former Soviet Union have neither
the financial institutions nor the financial traditions necessary to assure international
bondholders of the integrity of any financial instruments issued by any subsovereign
entities.
In this regard, the building of appropriate legal and administrative structures for
subsovereign financing of environmental infrastructure projects is the most important
first step in the solution of this problem. To this end, the Agency can assist by
facilitating the creation of an International Center of Environmental Finance, one of the
principal purposes of which would be the dissemination of information on the efficacy of
the public finance system within the U.S. in funding environmental infrastructure
projects.
This solution will not be quick. Institution building is a long and arduous process.
But it is best begun by inviting decision makers and other environmental officials in
Eastern Europe and the republics of the former Soviet Union to the U.S. for an
extended stay to learn how the domestic system of public finance is able to fund almost
$20 billion of infrastructure projects each year in the United States without significant
aid from the United States government This should be the work of the International
Center.
Another important element is the deployment of U.S. personnel skilled in the
management of environmental infrastructure systems to work in Eastern Europe and the
republics of the former Soviet Union for periods of months or years to train their
counterparts on the administration and management of environmental infrastructure
districts or companies. This should also be a classic task for the International Center.
To begin these tasks, such an International Center should conduct, on a periodic
basis, conferences and other informational meetings for officials from Eastern Europe
and the republics of the former Soviet Union on the workings of legal entities in the
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1993 Report of the Environmental Financial Advisory Board
United States, including public authorities, autonomous environmental infrastructure
districts, cooperatives and privately owned utilities.
In this regard, it is in the best interest of the United States to support such efforts.
Among all the nations of the world, the United States has developed one of the most
highly advanced financial systems for the funding of environmental infrastructure
projects in terms of its public finance system. The expertise necessary to create and
sustain such systems is an extremely valuable commodity which should be exported. It ,
takes legal, organizational, financial, administrative and management skills ~ all of which
are present in the United States in great abundance - to create new, user based systems
for financing environmental infrastructure. These ultimately renewable natural resources
must be developed and exported to Eastern Europe and the republics of the former
Soviet Union to assist in the financing of their badly needed environmental infrastructure
projects.
CONCLUSION
The United States must demonstrate to the people of Eastern Europe and the
republics of the former Soviet Union the effectiveness of the domestic public finance
system in the U.S. in financing environmental infrastructure projects. The U.S. must
also demonstrate how the domestic market can be transposed to the international capital
market so that environmental infrastructure projects in other countries can be financed
through similar finance systems which ultimately have access to new foreign domestic
capital markets and to the international capital market The optimum, means to
accomplish this end is to create and International Center for Environmental Finance at a
major university within the United States which is charged with the responsibility of
developing programs to train appropriate officials from Eastern Europe and the
republics of the former Soviet Union in the organization and administration of
subsovereign entities to operate and manage environmental infrastructure systems.
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