Environmental Issues in Newly Industrializing Economies: A View from North America

While one’s view of environmental issues in newly industrializing countries is in many ways the same regardless of the observer’s country of origin, considering nuances of thinking about the environment that differ among countries can be useful. In addressing this task, the present paper considers environmental issues in two parts. First, issues are considered that are internal to each country, meaning that concern is with environmental effects that extend only to citizens of a single country. In these situations, externalities do not extend across country boundaries. Much of the concern in this part of the paper is with differences in how countries choose to deal with their internal environmental problems. Countries differ for a variety of reasons that may lead to differences in their actions toward the environment. We consider reasons why countries may differ in their choice of environmental actions, helping to understand international differences. We then consider implications of the fact that more highly developed countries have experience that can ease the burdens faced by newly industrialized countries in dealing with the environment. Technologies that reduce emissions have been developed that reduce costs. These technologies, if transferred, can make dealing with the environment by the newly industrializing countries less costly than it initially was in the more developed countries. Ways for fostering this transfer are discussed. The developed countries have conducted institutional experimentation, such as substituting tradable emission rights for command and control strategies in some cases. These are proving successful in reducing costs of dealing with environmental problems. As with technology transfer, adoption of these newer institutional approaches, if fostered, can be of benefit to newly industrialized countries. The final topic in considering internal environmental problems of countries has to do with indirect effects between countries. We discuss the fact that differences in the way countries deal with their internal environmental problems may affect competitiveness in international trade. We consider the implications of this phenomenon for world welfare. The second part of the paper deals with environmental externalities that extend across country boundaries, particularly externalities with global consequences. We consider ecological effects generally and global warming more specifically. All these phenomena involve long-term uncertain effects. The basic problem of what to do about such phenomena is discussed. A seven point framework is presented for dealing with these phenomena. Difficulties in valuation of effects, probabilistic considerations, discounting in an intergenerational context and irreversibilities figure in the discussion. Superimposed on the problem of how to deal with such phenomena are distributional and political considerations, including problems of achieving international cooperation.