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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.

Suggested Citation

  • Blackman, Allen & Harrington, Winston, 1999. "The Use of Economic Incentives in Developing Countries: Lessons from International Experience with Industrial Air Pollution," RFF Working Paper Series dp-99-39, Resources for the Future.
  • Handle: RePEc:rff:dpaper:dp-99-39
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    Cited by:

    1. Allen Blackman, 2010. "Alternative Pollution Control Policies in Developing Countries," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 234-253, Summer.
    2. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile," RFF Working Paper Series dp-08-51, Resources for the Future.
    3. Blackman, Allen, 2009. "Alternative Pollution Control Policies in Developing Countries: Informal, Informational, and Voluntary," RFF Working Paper Series dp-09-10, Resources for the Future.
    4. Blackman, Allen, 1999. "The Economics of Technology Diffusion: Implications for Climate Policy in Developing Countries," Discussion Papers 10574, Resources for the Future.
    5. Kruger, Joseph, 2005. "From SO2 to Greenhouse Gases: Trends and Events Shaping Future Emissions Trading Programs in the United States," RFF Working Paper Series dp-05-20, Resources for the Future.
    6. Daniel A. Brent & Lata Gangadharan & Anca Mihut & Marie Claire Villeval, 2019. "Taxation, redistribution, and observability in social dilemmas," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(5), pages 826-846, October.
    7. 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.
    8. Blackman, Allen, 2005. "Colombia's Discharge Fee Program: Incentives for Polluters of Regulators?," Discussion Papers 10869, Resources for the Future.
    9. 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.
    10. 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.
    11. Blackman, Allen & Sisto, Nicholas, 2005. "Muddling Through while Environmental Regulatory Capacity Evolves: What Role for Voluntary Agreements?," RFF Working Paper Series dp-05-16, Resources for the Future.
    12. Blackman, Allen, 2000. "Informal Sector Pollution Control: What Policy Options Do We Have?," World Development, Elsevier, vol. 28(12), pages 2067-2082, December.
    13. 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 (Working Papers) 9064, Inter-American Development Bank.
    14. Kruger, Joseph & Pizer, William A., 2004. "The EU Emissions Trading Directive: Opportunities and Potential Pitfalls," Discussion Papers 10679, Resources for the Future.
    15. Coria, Jessica, 2008. "Environmental Policy, Fuel Prices, and the Switch to Natural Gas in Santiago, Chile," RFF Working Paper Series dp-08-28-efd, Resources for the Future.
    16. Raufer, Roger & Li, Shaoyi, 2009. "Emissions trading in China: A conceptual ‘leapfrog’ approach?," Energy, Elsevier, vol. 34(7), pages 904-912.
    17. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 513-541.
    18. Blackman, Allen & Nelson, Per-Kristian & Mathis, Mitchell, 2001. "The Greening of Development Economics: A Survey," RFF Working Paper Series dp-01-08, Resources for the Future.
    19. Coria, Jessica & Villegas-Palacio, Clara & Cárdenas, Juan Camilo, 2011. "Should we tax or let firms trade emissons? An experimental analysis with policy implications for developing countries," Working Papers in Economics 516, University of Gothenburg, Department of Economics.
    20. repec:dau:papers:123456789/5272 is not listed on IDEAS

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