Section ECOLOGY AND ENVIRONMENTAL STUDIES

ENVIRONMENTAL EXPENSES IN MUNICIPAL BUDGETS

IN POLAND IN THE CONTEXT OF ASPIRING TO
BECOMING A SMART, SUSTAINABLE CITY

Assoc. Prof. Dr. Izabela Jonek-Kowalska 1

2
1, 2
Silesian University of Technology, Poland

ABSTRACT
Environmental protection is one of the key priorities of sustainable
development. Nowadays, in contemporary economies and organizations it is also
the basic component of development strategies. Unfortunately, its real
implementation is associated with significant financial expenses and long-term
payback period and as a result - in fact - it often becomes only the basic component
of media and marketing strategies. Therefore, the main aim of this article is to
analyse the scope and changes of environmental expenses in the municipal budgets
in Poland as one of the conditions for becoming a smart community or smart city.
The research includes financial statistics of 2,477 municipal communities in Poland
from the period of 2003-2018 and the research questions are: 1) What were the
tendencies in the environmental expenses, their level and their share in the
municipal budgets for the analysed period, and (2) how could these tendencies be
identified in the context of creating a smart community or smart city? The used
methodology is based on budget statistical data from 2003-2018 and includes
structure and dynamics indices as well as trend functions.
Keywords: environmental municipal economics, smart city, sustainable
development, municipal budgets in Poland, environmental expenses

INTRODUCTION
Along with the development and dissemination of modern information and
telecommunications technologies and systems in the planning and development of
urban infrastructure, the concept of a smart city has appeared [1], [2]. In this

equivalent of the senses and means a network of tele-information connections

closely integrated and interdependent with other traditional technical systems
(water, sewage, transport, security and others). It is a specific equivalent of "nerve
connections" and data collection and processing centres representing a mapping of
the "central nervous system") [3]. The components of such an intelligent system
communicate with each other to increase the performance, effectiveness and
efficiency of urban infrastructure. In principle, it should contribute to improving the
quality of life of the city's residents [4], [5].
The above definition of a smart city, however, only exposes its two key
attributes: use of modern technologies and the well-being of residents. This
understanding is very limited, idealised, and omits some important, but sometimes

35
problematic, social [6], environmental [7], [8] and economic issues [9], [10]. These
issues can be summarised in the following specific questions:
Do only young, fully healthy and happy residents live in smart cities?
Meaning how to solve the issues of presence among residents the
elderly, disabled and less prosperous people?
How to cover all effects of urban agglomerations with an "intelligent"
model? For example, how to deal with air, soil and water pollution or
how to solve the problem of municipal and industrial waste
accumulation?
How to finance the creation, development and functioning of
potentially capital-intensive enterprises such as smart cities? Who
should finance creating urban areas and what economic and social rate
of return can be expected?
Therefore, a number of difficult and complicated issues remain to be solved
related particularly to the sustainable development of smart cities [11], [12]. Given
the above circumstances, the authors of this article decided to focuses on the
ecological and economic aspects of the development of smart cities. The main
purpose of these considerations is the analysis and assessment of environmental
expenses in urban budgets in Poland in the long-term perspective covering the years
2003-2018 conducted in the context of the aspirations of Polish municipalities for

METHODOLOGY
There are currently 2,477 municipalities in Poland, 302 of which are urban
municipalities, 638 urban-rural municipalities and 1,537 rural municipalities. All of
these entities have their own budgets from which they finance public and social
tasks specified in the relevant legal acts. The most important tasks of municipalities
in Poland include, among others:
spatial order [13], property management,
municipal roads, streets, bridges, squares and traffic organisation,
waterworks, sewerage, municipal wastewater disposal and treatment,
maintaining cleanliness within the commune, organization and
maintenance of landfills and disposal of municipal waste (in primary
health care) [14],
local public transport,
health care,
social assistance, including running the care centres and facilities,
municipal housing construction,
public education ((in pre-school and primary education),
culture, including municipal libraries and other cultural institutions as
well as the protection and care for monuments,
physical culture and tourism, including recreational areas and sports
facilities,

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 Section ECOLOGY AND ENVIRONMENTAL STUDIES

some of public order and the security of citizens as well as fire and
flood protection, including equipment and maintenance of the
municipal flood control warehouse [15].
Own tasks of municipalities also include environmental and nature protection
as well as the organisation of municipality greenery and trees. Usually, due to the
multitude and complexity of tasks entrusted to municipalities by specific legal acts,
ecological activities are not a budget priority. However, it should be emphasised
that in the long-term perspective their undertaking has a positive effect on housing,
landscape, environmental and aesthetic conditions, which certainly contributes to
improving the quality of life of residents and their final choice of place of residence.
That is why it is worth looking at the policy of pro-environmental expenses
practiced in Polish municipalities in the years 2003-2018, and answering the
following research questions:
(1) What were the tendencies in the environmental expenses, their level and
their share in the municipal budgets for the analysed period, and
(2) how could these tendencies be identified in the context of creating a smart
community or smart city?
In the research oriented to functioning of the communes, they are usually
divided into two groups:
1. urban and urban-rural municipalities, i.e. those which have at least one
city with the status of city in their territory,
2. and rural municipalities in which only villages operate.
In this research aspect, an answer to the question about possible differences in
the share and dynamics of environmental expenses occurring between the indicated
groups of municipalities is frequently sought.
Research methods use structure and dynamics indicators as well as trend
functions to identify observed development trends. Statistical analyses also use the
average rate of change of the studied parameters, and a correlation coefficient
describing the strength of relationships between selected groups of expenses.
Primary data used in this study on the level of expenses in municipalities comes
from reports of the Ministry of Finance on the finances of local government units
in Poland and cover the years 2003-2018. In order to ensure their comparability
over time all expenses were given in fixed prices, adjusted for inflation according
to statistical data provided by the National Bank of Poland for the analysed period.

RESULTS
Pro-environmental expenses are included in budget classifications and statistics
under two categories:
municipal management and environmental protection being a key
expenses group on environmental care, which includes, among others:

37
 sewage management and water protection; waste management;
cleaning; maintenance of greenery and animal shelters,
botanical and zoological gardens as well as natural areas and protected
objects of nature a complementary group of environmental expenses
of a very small scope and importance.
In the first stage of the analysis, reference was made to expenses on municipal
management and environmental protection. Their absolute value and share in the
budget of municipalities is presented in Figures 1 and 2.

15

y = 5E+08x + 2E+09
R² = 0.8839
10

y = 2E+08x + 2E+09
R² = 0.9358
5

y = 2E+08x + 5E+08
R² = 0.7819
0

all municipalities
urban and urban-rural municipalities
rural municipalities

Figure 1. Municipality expenses on municipal management and environmental

protection in Poland in the years 2003-2018 [in PLN billion]
Source: own compilation on the basis of data from the Ministry of Finance.

38
 Section ECOLOGY AND ENVIRONMENTAL STUDIES

12%
y = -0.0004x + 0.0958
R² = 0.0738
10%

8%
y = 0.0013x + 0.0591
R² = 0.2708
6%
y = 0.0003x + 0.0799
R² = 0.0373
4%

2%

0%

all municipalities
urban and rural-urban minicipalities
rural municipalities
Linear (all municipalities)
Linear (urban and rural-urban minicipalities)

Figure 2. The share of expenses on municipal management and environmental

protection in the budgets of Polish municipalities in Poland in the years 2003-
2018 [in %]
Source: own compilation on the basis of data from the Ministry of Finance.
In light of the presented data and the accompanying description of development
trends, it can be stated that until 2014, both the value of pro-environmental expenses
and their share in municipal budgets in Poland systematically increased over time,
which can be considered a favourable and desirable phenomenon for sustainable
development of municipalities in Poland and strengthening their aspirations to be
smarter. However, rural municipalities, despite their larger number, spent less on
municipal management and environmental protection than urban and urban-rural
municipalities, which was probably the result of both industrial and geographical
conditions which are often more favourable in rural municipalities, and from much
less affluent budgets of rural municipalities.
In the years 2015-2016, both the value of pro-environmental expenses and their
share in municipal budgets clearly decreased. This was due to the very low real
growth rate of total municipal expenses, and additionally in 2016, to a significant
reduction in expenses on municipal management and environmental protection in
both analysed groups of municipalities. The decrease in pro-environmental
39
expenses in response to smaller expenses possibilities clearly indicates the low rank
of this type of expenses in the budgets of the researched municipalities.
In the years 2017-2018, the value of expenses and their share in the budgets of
Polish municipalities increased again, particularly intensively in rural
municipalities. This is a positive tendency conducive to the sustainable
development of municipalities in Poland.
Pro-environmental expenses increase with time and with the budgets of Polish
municipalities, which is why it is worth looking at the growth rate of these expenses
and their correlation with the level of total expenses, as presented in Tables 1 and
2 respectively.
Table 1. The average rate of change of the researched parameters (category 1) in
Polish municipalities in the years 2003-2018 [in %]
Specification Average rate
of change
average rate of change in total expenses in all municipalities 8.66%
average rate of change in expenses on municipal management and
8.93%
environmental protection in all municipalities
average rate of change in expenses on municipal management and
7.53%
environmental protection in urban and urban-rural municipalities
average rate of change in expenses on municipal management and
10.89%
environmental protection in total in rural municipalities
Source: own compilation on the basis of data from the Ministry of Finance.
Table 2. Pearson correlation coefficients for the researched parameters
(category 1) in Polish municipalities in the years 2003-2018
Correlation coefficient between: Average rate of
change
total expenses and expenses on municipal management and
0,9546**
environmental protection of all municipalities
total expenses and expenses on municipal management and
0,9575**
environmental protection of urban and urban-rural municipalities
total expenses and expenses on municipal management and
0,9230**
environmental protection of rural municipalities
** - significance level p<0.001
Source: own compilation on the basis of data from the Ministry of Finance.
And so, the average annual growth rate of expenses on municipal management
and environmental protection in all municipalities and in rural municipalities was
higher than the growth rate of total expenses in all Polish local government units.
This is a promising sign of the growing awareness of the importance of this type of
expenses for the development of municipalities. In the case of urban and urban-rural
municipalities, the average annual expenses growth rate was over 1 percentage point
lower than the total expenses growth rate, which may signal a certain
marginalisation of this type of expenses, caused by both the multitude of financial
needs and a higher level of municipal management development in urban and urban-
rural municipalities (lower investments in this area). Nevertheless, it should be

40
 Section ECOLOGY AND ENVIRONMENTAL STUDIES

clearly emphasised that alarming information about: low air quality in Polish cities
and villages, decreasing drinking water resources, problems with segregation and

clearly demonstrate the urgent need to intensify activities and expenses in the scope
of environmental protection and pro-ecological investments. Therefore, the
decreasing rank of pro-environmental expenses in urban and urban-rural
municipalities should be considered a worrying and incorrect trend.
Positive and very strong correlation between expenses on municipal
management and environmental protection with total expenses in all researched
units should be assessed positively. This allows us to presume that along with the
increase in financial resources owned by local government units, expenses on
current and strategic ecological activities will also increase.
As already mentioned, apart from expenses on municipal management and
environmental protection, expenses for botanical and zoological gardens as well as
natural areas and protected objects of nature are separately included in the budget
classification. These expenses are later analysed in this discussion. Charts 3 and 4
present the level of these expenses and their share in the expenses of municipalities
in Poland in the years 2003-2018.

15
y = 581555x - 1E+06
y = 431176x + 3E+06 R² = 0.6794
R² = 0.247
10

5
y = -150379x + 4E+06
R² = 0.0586

all municipalities
urban and rural-urban municipalities
rural municipalities

Figure 3. Expenses of municipalities on botanical and zoological gardens as well

as natural areas and protected objects of nature in Poland in the years 2003-2018
[in PLN million]
Source: own compilation on the basis of data from the Ministry of Finance.

41
 0.06%

0.05%

0.04% y = -1E-05x + 0.0002

R² = 0.1634
0.03%

0.02% y = -4E-07x + 9E-05 y = 9E-06x + 6E-06

R² = 0.0011 R² = 0.4923
0.01%

0.00%

all municipalities
urban and rural-urban municipalities
rural municipalities

Figure 4. The share of expenses on botanical and zoological gardens and natural
areas and protected objects of nature in the budgets of Polish municipalities in
Poland in the years 2003-2018 [in %]
Source: own compilation on the basis of data from the Ministry of Finance.
Expenses on botanical and zoological gardens as well as natural areas and
protected objects of nature are quite a specific expenses group, strongly dependent
on the geographical and landscape location of the municipalities. Its share in
municipal expenses was and remains very low - it does not exceed 0.03%. It was
also variable in time, which was primarily associated with a certain periodicity of
investments in this area. In the period 2004 2007 both the share of expenses
analysed and their value were definitely higher than in other years of the analysis.
It resulted from Poland's accession to the EU Natura 2000 programme in 2004 and
the start of spending funds related to its implementation. The goal of the programme
was and is to preserve certain types of natural habitats and species that are
considered valuable and endangered across Europe. As part of the programme, the
so-called Special Protection Areas for birds (SPAs), and Special Areas of
Conservation (SACs), which are subject to protective legal regulations are
established. Currently, the Natura 2000 network in Poland covers almost 20% of
the country's land area. It consists of: 849 habitat areas and 145 special bird
protection areas.
In general, expenses for botanical and zoological gardens as well as natural
areas and protected objects of nature increased over time, as did expenses for
municipal management and environmental protection. However, their growth rate
was higher than the growth rate of total expenses (Table 3) in all researched groups
of municipalities, which was related to their low initial level and quite intensive
investment support from EU funds.
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 Section ECOLOGY AND ENVIRONMENTAL STUDIES

Due to a similar upward trend, expenses on botanical and zoological gardens

as well as natural areas and protected objects of nature were positively correlated
with total expenses in all municipalities, in particular in urban and urban-rural
municipalities due to the lower frequency and amplitude of fluctuations in these
expenses in these units. On the other hand, the irregularity and volatility of the
studied expenses in rural municipalities resulted in the lack of their statistically
significant correlation with total expenses (Table 4).
Table 3. The average rate of change of the researched parameters (category 2) in
Polish municipalities in the years 2003-2018 [in %]
Specification Average rate
of change
average rate of change in total expenses in all municipalities 8.66%
average rate of change in expenses for botanical and zoological
gardens as well as natural areas and protected objects of nature in all 18.35%
municipalities
average rate of change in expenses for botanical and zoological
gardens as well as natural areas and protected objects of nature in 20.07%
urban and urban-rural municipalities
average rate of change in expenses on botanical and zoological
gardens as well as natural areas and protected objects of nature in rural 15.93%
municipalities
Source: own compilation on the basis of data from the Ministry of Finance.
Table 4. Pearson correlation coefficients for the studied parameters (category 2)
in Polish municipalities in the years 2003-2018
Correlation coefficient between: Average rate
of change
between total expenses and expenses for botanical and zoological
gardens as well as natural areas and protected objects of nature of all 0.4989*
municipalities
between total expenses and expenses for botanical and zoological
gardens as well as natural areas and protected objects of nature of 0.7704**
urban and urban-rural municipalities
between total expenses and expenses for botanical and zoological
gardens as well as natural areas and protected objects of nature of -0.1825
rural municipalities
* - significance level p <0.05; ** - significance level p <0.001

CONCLUSION
Pro-environmental expenses are conducive to sustainable and smart
development of cities and villages because they contribute to improving the quality
of life of the residents in terms of health and image on an ongoing and long-term
basis. In the budgets of Polish municipalities, these expenses can be found in two
items of the budget classification regarding: (1) municipal management and
environmental protection; and (2) botanical and zoological gardens as well as
natural areas and protected objects of nature. The analysis of these expenses in the

43
years 2003-2018, taking into account the division into urban and urban-rural, and
rural municipalities, allowed the formulation of the following specific conclusions:
expenses in both groups mentioned above systematically increased
over time, with the average annual growth rate being higher than the
growth rate of total expenses (the exception being the slightly lower
growth rate of expenses on municipal management and environmental
protection in urban and urban-rural municipalities),
the share of expenses on municipal management and environmental
protection in the budgets of municipalities in Poland ranged from 6%
to 11% and was definitely higher in urban and urban-rural
municipalities,
the share of expenses on botanical and zoological gardens as well as
natural areas and protected objects of nature ranged from 0.01% to
0.05%, and was characterised by a very high variability in time due to
periodic funding of expenses from European Union funds (e.g. Natura
2000 programme) .
The observed trends positively indicate the awareness of spending funds on
environmental goals and can be treated as conducive to the development of smart
local government units in the long-term development perspective. However, due to
the multitude and intensity of ecological problems observed in Poland, including
the problems of large industrial urban agglomerations, it can be stated that the
budget changes observed in this respect are not sufficient and the level of financing
ecological tasks is too low. This is a very difficult problem to solve due to the
municipalities' significant burden of own and commissioned tasks. This causes
serious problems with the choice of current and strategic directions, and also
contributes to excessive indebtedness of local government units that want to cope
with the challenges of the modern world, even at the cost of a significant
deterioration in the economic and financial situation. Therefore, in the future it is
necessary to develop new strategies and methods of financing urban and rural
development, not only in the commercial area of technical infrastructure but also in
the less spectacular and attractive ecological and social area, where media interest
and immediate effects are much harder to obtain. Nevertheless, without these
activities and investments one cannot speak and write about smart cities and
villages.

ACKNOWLEDGEMENTS
This paper was financed from the resources of the Silesian University of
Technology Faculty of Organization and Management, project no. BK-235/ROZ-
1/2020 and BK-239/ROZ-0/2020.

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