The Jerusalem Institute for Israel Studies

The Center for Environmental Policy

Established by the Charles H. Revson Foundation

The National Budget

and
the Environment

Noga Levtzion-Nadan

2006
 The Center for Environmental Policy Studies Series no. 22

The National Budget and the Environment

Noga Levtzion-Nadan

The opinions expressed in this document are solely those of the author.

This publication was made possible by funds granted

by the Charles H. Revson Foundation.

© 2006, The Jerusalem Institute for Israel Studies

The Hay Elyachar House
20 Radak St. 92186 Jerusalem, Israel

http://www.jiis.org.il
E-mail: machon@jiis.org.il
 Abstract, Findings, and Conclusions

This research project analyzes the national budget in terms of environmental issues
and presents some conclusions regarding the way in which different government
ministries are budgeted and the ways in which their budgets are utilized.
The research shows that the vote on the budget at the beginning of the year does
not reflect the activities of the government in the environmental arena, and that
discussion and change of the budget continue even after the voting ends. There is a
wide gap between the proposed budget and its execution, and if the budget is not fully
utilized, its goals are not met. The way in which the budget is constructed and presented
make both debate about it and follow-up on its implementation difficult (the budget is
the primary document detailing government plans). While the budget appears highly
detailed and transparent, technical problems and redundancies make it and its
significance difficult to comprehend. The Knesset (which approves the budget), the
general public, and bodies appointed by the government cannot understand the national
budget in a comprehensive or thorough way. The quantitative expression of the
government’s activities is thus essentially hidden from the public eye.

A. Findings
1. The budget and its clauses are the technical, numerical expression of the
substantive problems in the areas of government authority and responsibility.
2. A rise in the level of the budget does not necessarily guarantee a rise in the level
of actual expenditure. The amount budgeted in 2001to environmental matters
was 18% higher than in 1996, but the real expenditure was actually 5% lower
(see graph no.1).
3. Statistics show the following trends (see table 2):
a. Both the budget and actual expenditure regarding water grew in real terms
since 1999.
b. Both the budget and the actual expenditures grew for the prevention of air
pollution, environmental education, international relations, and other areas
of expenditure of the Ministry of Environmental Protection.
c. The budgets for drainage, disposal of solid waste, the preservation of
biological diversity, and the support of environmental organizations all grew,
but actual expenditure shrank.

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 d. The budget for subsistence agriculture shrank, but the actual expenditure
grew.
e. Budgets were cut for the treatment of sewage, dangerous chemicals, support
for industry, the reduction of noise and radiation, and landscape protection —
and their real expenditure also shrank
4. The splitting of budgets and the division of authority among different ministries
do not allow for a broad view of a given field and confound attempts to formulate
coordinated policy. The fragmentation of administration increases costs and may
damage communal interests. The result: solutions that would have been less
expensive if there were a unified authority seem more expensive because of the
duplication of costs to the different bodies involved. In the case of water
management, for example, the distribution of authority among different regional
councils prevented the implementation of a unified policy and affected the
willingness of different sources to invest in solutions that would have been
unquestionably cheaper — such as improving sewage treatment — had there
been a single governing authority. Instead of clearly less expensive options, more
expensive ones have been chosen, such as desalination of sea water.

Graph 1: Environmental Budgets 1996-2001 — Budgets vs. Actual Expenditure

Budgeted Amounts Rose in Absolute Terms, Whereas Actual Expenditures Fell

1,800
Sum in Millions of Israeli Shekels

1,600

1,400

1,200

1,000

800

600
1996 1997 1998 1999 2000 2001

Actual Expenditure Budget

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 Table 2: Total Environmental Budgeting Over the Years — According to Subject
(In thousands of Israel Shekels)

Year Type of Water & Land Treatment Protection Protection Advancing Additional
Budget Sewage Preservation: of Sewage of the Air, of Biological Environment Expenditures
Management Drainage, & Dangerous Energy Diversity & Awareness of the Ministry
Agriculture, Materials, Treatment, the Landscape of the Environment
& Quarries & Industrial Radiation,
Support Noise, &
Environmental
Health

2001 Actual 352,906 90,303 56,962 28,717 204,917 163,048 82,270.2

Budget 795,579 112,225 106,368 53,189 275,325 176,350 102,347.9

2000 Actual 426,756 53,821 95,123 23,908 228,938 148,496 67,474.9

Budget 672,850 75,680 143,927 41,173 271,604 166,851 82,341.0

1999 Actual 383,722 68,512 75,341 15,799 229,312 157,177 59,205.1

Budget 626,527 77,964 121,263 34,430 281,892 167,051 70,083.5

1998 Actual 461,567 58,373 68,930 26,846 210,419 86,287 61,311.6

Budget 610,603 78,681 114,255 42,480 271,181 93,374 72,644.9

1997 Actual 405,483 66,633 50,210 36,996 207,653 75,892 57,608.3

Budget 550,644 100,016 96,694 53,265 238,849 82,089 66,669.7

1996 Actual 459,150 70,381 80,807 26,718 243,103 86,955 52,157.0

Budget 635,467 118,109 123,767 45,735 257,486 96,337 64,876.0

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Source: Reports on Budgets and Spending of Government Ministries 1996-2001
 Graph 3: Total Expenditures of Government Ministries Versus Rate of Budget
Utilization

2,000 100

1,800 90

1,600 80

Rate of Budget Utilization

1,400 70

1,200 60
Expenditure

1,000 50

800 40

600 30

400 20

200 10

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5. There is double-budgeting: several ministries budget the same activity (not as

partners in the same project), or similar functions are performed by the same
ministry. This wastefulness inhibits the maximizing of the budget.
6. New budget initiatives, changes in the conditions for support, and alterations in
the budget also adversely affect the use of the budgeted amounts.
7. The research shows that aid is better utilized (up to 80%) when directed at a wide
group of sectors (the Jewish sector, the Arab sector, etc.) than when directed to
projects of special authorities, even under positive conditions. The articulation
of clear and consistent criteria kept over a long period of time and open to a wide
range of sectors which promote the formation of a “critical mass” will improve
the use of the budget.

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8. Special budget clauses in different government ministries, which are out of
appropriate context, are not taken advantage of at all. There are also directives
for which the budgeting is far too low, and are therefore never implemented .
9. There are also a number of ministries which receive environmental budgeting
that have not been utilized for years.
10. Budgets allocated to regional councils and environmental groups are made use of
less than those allocated for activities.
11. There is a problem with the transfer of funds among different ministries for the
funding of joint environmental projects. The problem may be the result of the
lack of interest of the contributing ministry or the lack of follow-up by the ministry
that funded the project.
12. “Directed funds” that receive income from fines or duties on the basis of the
principle that “the polluter pays”, succeeded in increasing their income and
invested it in a useful way (for example, the Cleanliness Fund and the Fund for
the Prevention of Marine Pollution).
13. The pooling of resources and cooperation among ministries creates incentives
for organizations to act in these areas, to take advantage of available budgets, and
to overcome existing barriers.
14. Joint efforts by several ministries in different fields of specialty (training, support,
and research) allow for a given issue to be dealt with in a thorough and positive
way.
15. There are a number of “technical” difficulties that infringe on the transparency of
the budget, both in the field of environment and in general:
a. there are budgeted “plans” that are not explained even in the detailed budget
proposals
b. due to “technical” failures, the names of particular programs and the standards
or regulations associated with them are not complete or clear. For example,
one program is given the headline “support for organizations for progress”,
but it is not possible to identify to what organizations or what kind of progress
is being referred.
c. There are a great number of slots, or clauses, for “activities”, the meanings
of which are not clear.
d. Wage costs sometimes appear in the department budgets themselves, but
usually they appear as part of the general management expenditures of the
ministry. It is therefore difficult to assess the cost of wages for these fields.

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16. Together with the investments in environmental budgets, the dominant approach
to budgeting is the traditional approach, which views development as a principal
goal, and therefore the largest budgets go to development.

B. Recommendations and Conclusions for Future Action

1. A single body should be designated as responsible for directing environmental
policy in the management of environmental budgets in each government ministry,
in order to expand and improve activity and to maximize the utilization of the
budgets.

2. In the fields of water and drainage, a wide and holistic view should be adopted, in
the framework of which the legal authority will coincide with budgetary authority
and improve decision making. Thus the unnecessary added costs of overlapping
responsibilities and divided authority will be eliminated, allowing for better and
more rational policies.

3. The directive of regional councils, environmental organizations, and entrepreneurs

is important, as is the education and provision of information to them about
environmental issues. Assistance is also needed in solving organizational
problems, in finding sources of funding, and in the development of plans. These
services are particularly important in the sectors that have not taken advantage of
projects offered them in the past — such as the Bedouin of the Negev.

4. The Department of Finance should be encouraged to expand the range of issues

covered by the “directed funds”, for which income is dependent on expenditure
(such as the Cleanliness Fund and the Fund for the Prevention of Marine Pollution)
in order to guarantee enforcement of “the polluter pays” principle and the
improvement of the state of the environment — without depending on the national
budget or minimal government contributions.

5. Methods should be adopted which optimize the use of the budget:

a. a multi-annual plan should be prepared to deal with complicated issues,
together with a multi-annual budget, appropriate preparations and guidance,
in order to ensure efficient use of financial resources and existing government
legislation.
b. persistent efforts should be made to define budgetary plans. If the need
arises to make alterations in the budget or to initiate new programs, change
should be made gradually and in keeping with the funding and assistance

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 provided by the relevant bodies — preferably, as early in the process as
possible.
c. the attainment of concentrated budgets, with clear, stable criteria over a
period of time, should be a goal. Such budgets facilitate the formation of a
“critical mass” which in turn are more likely to result in better and fuller
utilization of funds.
d. special functions for particular sectors should be concentrated in order to
prevent the waste resulting from double-budgeting.
e. efforts should be made to eliminate and prevent overlapping and duplication
of similar or identical posts within different departments of one ministry or
in different ministries.
f. small budgets in a given ministry should be consolidated into larger budgets
to increase their effectiveness.
6. It is important to improve the transparency of the budget and to avoid “technical”
vagueness:
a. it is important that budget proposals include detailed explanations of the
plans budgeted, including definitions of proposed posts.
b. plans and posts should be given clear names so that their purpose and role be
easily understood.
c. the number of posts associated with the general title of “activities” should be
limited and greater clarification should be given as to the intentions and
execution of the given role
d. distinction should be made between wages and activities.

Discussion of environmental budgeting can not only raise awareness but bring about
wiser and more effective spending. This research is designed to be a tool in promoting
these goals, to be employed both by the government and governmental bodies and by
environmental organizations. Appropriate use of its findings can improve the state of
the environment in Israel.

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