Bhutan

2nd Public Environmental Expenditure Review (PEER) Report Launched in Bhutan

14 November 2011, Thimphu: Bhutan launched its 2nd PEER report during the side event of the Regional Climate Summit. The report was launched by HRH Princess Euphelma Choden Wangchhuck at the high level forum with government officials, youth participants from the 4 countries (of Bangladesh, Bhutan, India & Nepal) and international delegates.

The report includes a review of public expenditure on environment and natural resources sector, encompassing expenditure incurred by the Ministries and its Departments, Autonomous agencies, local government (districts & blocks).  The findings of the report revealed that about 6% of public expenditure is met towards achieving environment related policy objectives of the Royal Government of Bhutan (RGoB) within the context of GNH.

In the first two years of the 10th Plan, Bhutan's total Public Environmental Expenditure (PEE) and Public Expenditure (PE) percentage of GDP was 2.1% and 2.9% respectively. The analysis of core PEE revealed 2.1-2.5% of PE and 0.8-1.1% of GDP. This indicates that Bhutan's PEE share as percentage of PE is in similar range with other countries, but PEE as percentage of GDP is higher than other countries. Other interesting observations include - a decrease in expenditure on soil conservation and land management by 4.7%; a modest increase of 2.5% on climate change initiatives; and a substantial increase of 8.8% on environment mainstreaming initiatives within the two fiscal years.

According to the report, RGoB's contribution to the total PEE accounted for about 53% & 51% respectively for the two FY, and external assistance accounted for about 25% in 2008/09 and 48% in 2009/10. This increase in funding from internal resources is a clear reflection of the government's commitment to environmental conservation as enshrined in the constitution and GNH philosophy.

The development partners contributing to PEE include: the Government of India, Denmark, UN Agencies, GEF, and World Bank, ADB and few bilateral donors and INGOs. In terms of PEE budget efficiency, the local government demonstrated efficient utilization with 81% and 85% in both the years as compared to central ministries with 69% & 66% respectively.

As a way forward, the report recommends undertaking an environmental expenditure review of the private sector, NGOs and foundations in parallel with the next PEER in 2013. The report further recommends integrating 'green' budget codes into public accounting system and linking the environmental classification to sector's 11th FYP programmes, as well as conducting a detail assessment of the efficiency and effectiveness of environmental expenditures for cross-cutting topics of policy relevance such as climate change, EFRC etc.