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The Use of Economic Incentives in Developing Countries: Lessons from International Experience with Industrial Air Pollution

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  • Blackman, Allen

    () (Resources for the Future)

  • Harrington, Winston

    () (Resources for the Future)

Abstract

To what extent should developing countries eschew conventional command and control environmental regulation that is increasingly seen as inefficient and rely instead on economic incentives? This paper addresses this question as it pertains to industrial air pollution. The paper discusses the advantages and disadvantages of various economic incentive instruments, presents in-depth case studies of their application in Sweden, the United States, China, and Poland, and proposes a number of policy guidelines. The authors argue that both design deficiencies and pervasive constraints on monitoring and enforcement impede the effectiveness of economic instruments in developing countries. The latter are difficult to rectify, at least in the medium term. As a result, tradable permits are generally not practical. Suitably modified however, emissions fee policies probably are appropriate. They can provide a foundation for a transition to an effective economic incentive system, and can raise much needed revenue for environmental projects and programs. In addition, if political opposition can be overcome, environmental taxes constitute a second-best but potentially effective pollution control instrument.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-99-39.

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Date of creation: 01 May 1999
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Handle: RePEc:rff:dpaper:dp-99-39

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References

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Citations

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Cited by:
  1. Pizer, William & Kruger, Joseph, 2004. "The EU Emissions Trading Directive: Opportunities and Potential Pitfalls," Discussion Papers dp-04-24, Resources For the Future.
  2. Blackman, Allen, 1999. "Informal Sector Pollution Control: What Policy Options Do We Have?," Discussion Papers dp-00-02-rev, Resources For the Future.
  3. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile," Discussion Papers dp-08-51, Resources For the Future.
  4. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435 Elsevier.
  5. Coria, Jessica, 2009. "Environmental policy, fuel prices and the switching to natural gas in Santiago, Chile," Ecological Economics, Elsevier, vol. 68(11), pages 2877-2884, September.
  6. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," The Journal of Development Studies, Taylor and Francis Journals, vol. 41(4), pages 513-541.
  7. Blackman, Allen, 2009. "Alternative Pollution Control Policies in Developing Countries: Informal, Informational, and Voluntary," Discussion Papers dp-09-14-efd, Resources For the Future.
  8. Blackman, Allen, 2005. "Colombia's Discharge Fee Program: Incentives for Polluters or Regulators?," Discussion Papers dp-05-31, Resources For the Future.
  9. Blackman, Allen & Nelson, Per-Kristian & Mathis, Mitchell, 2001. "The Greening of Development Economics: A Survey," Discussion Papers dp-01-08, Resources For the Future.
  10. Blackman, Allen, 1999. "The Economics of Technology Diffusion: Implications for Climate Policy in Developing Countries," Discussion Papers dp-99-42, Resources For the Future.
  11. Kahn, James Randall & Franceschi, Dina, 2006. "Beyond Kyoto: A tax-based system for the global reduction of greenhouse gas emissions," Ecological Economics, Elsevier, vol. 58(4), pages 778-787, July.
  12. Juan C. Belausteguigoitia & Gustavo Merino & Ricardo Samaniego, 2002. "La Inserción de la Gestión Ambiental en las Políticas Sectoriales de Latinoamérica y el Caribe: El Caso de los Sectores Energético e Industrial en México," IDB Publications 9064, Inter-American Development Bank.
  13. Blackman, Allen & Sisto, Nicholas, 2005. "Muddling Through while Environmental Regulatory Capacity Evolves: What Role for Voluntary Agreements?," Discussion Papers dp-05-16, Resources For the Future.
  14. Kruger, Joseph, 2005. "From SO2 to Greenhouse Gases: Trends and Events Shaping Future Emissions Trading Programs in the United States," Discussion Papers dp-05-20, Resources For the Future.

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