KUALA LUMPUR, Feb 11 (IPS) - Developing countries can tap alternative local sources to finance sustainable development in the South, according to a noted development expert.

There is great potential for mobilising local funds if governments were to charge more for services they provide, recover rent from natural resources and impose environmental taxes, said A. Markandya of the Harvard Institute for International Development.

Privatising industries, defining property rights and marketing natural resources in a sustainable way can generate additional finances, he said.

''In developing countries that are short of resources to finance sustainable development, there is a strong argument for the use of environmental taxes,'' Markandya said at a meeting here last week on financing for Agenda 21, a global plan to halt environmental damage by the 21st century.

He said 'green' taxes can be levied on fuels, packaging, water effluent and ecologically damaging inputs such as pesticides and toxic chemicals. Such measures not only give the right signals for pollution abatement but are also income-generating and cost-efficient, he added.

Recent attempts to use these market-based instruments include noise charges in Hong Kong, effluent charges in Malaysia, road user charges in Singapore and waste-water charges in Thailand.

''Where enterprises and consumers are imposing costs on society and these costs are not in the prices paid by the polluters, there is an inefficiency in the allocation of resources in society,'' said Markandya.

This can be corrected through 'command-and-control' measures or through market-based instruments such as environmental taxes, pollution permits and subsidies for the reduction of pollution, he said. Revenues from such taxes can be used for environmental improvements.

A strong argument for environmental taxes and charges is that most governments do not recover the full costs of the services they provide, said Markandya.

The most prominent examples are water and energy but less frequently discussed are the prospects of user charges for roads, recovery of infrastructure development through a land betterment tax, solid waste disposal and waste treatment, he said.

''The main argument made against charging the full cost of such services are that users cannot afford to pay but this can be addressed by designing tariff structures that build in lifeline rates for essential consumption but impose an average tariff that recovers the full cost,'' said Markandya.

Governments miss the point that with low prices for such services, the main beneficiaries are the well-off while those who have no access to piped water, sewerage or electricity have to pay a much higher price for substitute services, he said.

Markandya said governments could also impose charges on companies and individuals that exploit natural resources such as forests, minerals, fisheries and agricultural land.

For example, only 10 to 50 percent of the value of timber goes to governments and even this is partially returned to loggers in the form of logging roads and subsidies for log processing.

If loggers were charged for the full cost of their activities, including the loss of non-timber products and other environmental services provided by forests, less would be logged, but government revenues would probably increase, said Markandya.

A higher tax on farm land or agricultural incomes could generate additional funds. ''As property rights are more fully allocated, the value of land increases and the government's tax base expands. The same applies to the impacts of infrastructure investments that result in increased land values,'' he said.

The local private sector can also help finance sustainable development in such areas as transport, roads, power generation and distribution, water supply and common effluent treatment.

Markandya said governments could offer limited leases or franchises to private firms to run the facilities under price-regulated conditions and on terms that dictate the quality of service to be offered.

In partnership with foreign sources, the local private sector can also undertake sustainable commercial exploitation of natural resources such as eco-tourism, development of non-timber forest products, national parks and areas of scientific interest.

Recent examples of such schemes include the Imbio/Merkx deal for biodiversity conservation and development in Costa Rica and the development of eco-tourism in Central and Southern Africa and the island of Madagascar.

Markandya said the key to success is for governments to provide the right legal and institutional framework to ensure that natural resources are exploited in a sustainable way and the benefits remain in the country. (END/IPS/LM/LN/94)

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