The World Bank/WBI’s CBNRM Initiative

Case Received: January 27, 1998

Author: Sergiy Gerasymenko

Tel: +38 044 2690527

Fax: +38 044 2458820

Project Manager - GERASYMENKO Olena, Kiev Economic Institute of Management

GORLIKY Boris, D.Sc. in Geolocical and Mineralogical Sciences, Ministry of Emergency Situation, Ukrane.

SOVA Roman, D.Sc. in Medicine, Institute of Ecohygiene and Toxicology of the Ministry of Public Health, Ukraine.

GERASYMENKO Sergiy, D.Sc. in Economy, Kiev National University of Economics.

KUZMINA Irina, Research Institute of Statistics of the State Committee for Statistics, Ukraine.

More than 400 events identified as emergency situations take place every year in Ukraine. Notwithstanding the production rate decrease, one can see growth of emergency situations number lately. They take away thousands of human lives, prejudice not only social life and economy, but ecology as well.

Due to the crisis in economic and social life of Ukraine, the State and local budgets can apportion at best 15-20 % of the amount needed for compensation of losses caused by ecological accidents and catastrophes. Moreover, there is no legislative machinery in the country for evaluation of ecological risks associated with functioning and construction of new economic and social projects. It means that there is no law determining persons' liability for ecological harm and regulations for formation of funds necessary for primary financing urgent measures in cases of ecological accidents and catastrophes.

We believe that in order to solve these problems in specific socio-economic conditions of the transition ecological, it would be advisable to establish insurance in Ukraine.

The Ukrainian Ministry of Ecological Security and the Ministry of Emergency Situations, the State Scientific Centre for Radiogeochemistry and Environment of the Ukrainian National Academy of Sciences took the lead in creation of a scientific group for elaboration of ecological insurance methods.

Such an activity requires an exhaustive and reliable information on insurance cases. That's why the scientific group includes along with workers of the above organizations also workers of the Research Institute of Statistics of the Ukrainian State Committee for Statistics and Kiev National Economic University.

Realization of the ecological insurance methodology (later on - the Project) provides for:

• coefficients system creation for evaluation at the state of natural resources and their utilization, and changes due to human activity, effectivity of protection and restitution of renewable natural resources;

• economic and ecological harm caused by changes in natural resources;
• informational system elaboration for collection, processing and analysis of information necessary for the above coefficients calculation and losses evaluation;
• insurance cases classification in order to select those related to ecological of insurance and exclude them from the "traditional" insurance;
• tariff rates and insured amounts determination;
• recommendations elaboration for the structure of insurance payments by persons proceeding from liability and competence of the same in possible insurance cases generation;
• necessary ecological insurance fund evaluation for Ukraine.

The following stages of the Project are fulfilled for the moment:

• an Ecological Macro-coefficients System for environmental protection state management efficiency improvement is established;

• a system ECOSTAT is established with indices divided into 3 subdivisions "Condition", "Effect", "Measures" describing ecological situation and natural resources utilization, anthropogenic effects and society's reaction on ecological situation;

• recommendations on changes in the State Accounting System for the environment condition and protection were elaborated and proposed to the Ukrainian State Committee for Statistics;

• environment pollution natural harm and monetary equivalent of the same evaluation methods were elaborated.

Completion of the Project's realization shall result in creation of methodological base for development of the Law on Ecological Insurance, creation of sufficient financial and material resources for ecological accidents and catastrophes harm compensation as well as funds for financing measures of environment protection from human activity.

Aftereffects of the Chernobil catastrophe and irresponsive exploitation of the unique Ukrainian nature during the Soviet epoch resulted in such a situation with natural resources that an urgent introduction of their management civilized methods is indispensable otherwise the state of environment in Ukraine may became dangerous not only for health but also for life.

The Project may be of interest not only for Ukraine but also for any other country (first of all - for the countries of the former Soviet Union) where ecological insurance is not introduced till present. Methods and calculation results performed in the time of the Project realization may serve as an initial element for an analogous Project elaboration in other countries. And interchange of similar information between countries would favour its improvement when the Ecological Insurance System already functions.

Financial problems create certain difficulties for the timely completion of the Project. It concerns, in particular, tariff rates determination that requires a special statistic investigation, a data base creation and a computer analysis of the last, and later - ecological insurance accidents computer monitoring.

There is also a problem connected with the publishing of the results of realized stages. Despite the fact, that certain provisions of the Project have already appeared in Thesis of scientific conferences and in collections of scientific works.