Advanced Search
MyIDEAS: Login to save this paper or follow this series

Los Angeles, Mexico City, Cubatao, and Ankara - Efficient environmental regulation : case studies of urban air pollution

Contents:

Author Info

  • Levinson, Arik
  • Shetty, Sudhir

Abstract

The authors review the economic principles that should guide the efficient choice of targeted policies for environmental protection. They recommend policy instruments along three dimensions: (1) whether they use economic incentives; (2) whether they target environmental damage directly; and (3) whether they specify prices, quantities, or technologies. This distinction is helpful in guiding policy choices because many discussions in the economics literature on environmental policies mistakenly claim advantages for incentive-based instruments by showing, for instance, that direct policies of this sort are less costly than indirect non-incentive measures. After analyzing efficient responses to the air pollution problem, the authors come up with somewhat surprising results. For three of the cities (Ankara, Los Angeles, and Mexico City), the efficient instruments selected by this (admittedly limited) exercise are similar: indirect incentive-based policies. Only Cubatao differs in that direct non-incentive regulations are the efficient policy choice. But choosing indirect policy instruments is not without its problems. This category is the broadest one. For instance, while there is only a single direct incentive-based price instrument (emissions taxes), several indirect incentive-based price policies exist including taxes on inputs and on complementary and substitute products. Indirect policies also cannot simultaneously target the incentives to reduce waste generation, production efficiency, and reduce output to reduce pollution. A combination of indirect policies will then be required to control pollution. But if the regulatory costs of controlling additional variables are high they may outweigh the cost of monitoring and enforcing a single direct policy. Finally, indirect regulations may be accompanied by perverse incentives, such as new source bias or reduced marginal costs of polluting. Efforts to offset these perverse incentives by regulating additional variables may be subject to second-best problems: two regulations with opposite results can be costlier than no regulation at all. The main lesson the authors draw from the cases examined: Once decisions are made - whether to concentrate industry, to rely on private vehicles for transportation, to subsidize a particular energy source, or to use a certain environmental policy - they acquire a certain performance. Capital is invested and workers are trained under the prevailing laws, and these are costly to change. Los Angeles cannot reverse its emphasis on the automobile; Brazil cannot easily move its industrial center away from Cubatao; Mexico cannot quickly reduce the concentration in its capital city; and Turkey's development would suffer if energy subsidies were removed abruptly. For this reason, it is important to design policy with an eye toward longer-run concerns. It makes sense, for example, for cities such as Ankara to begin to enact policies to prevent mobile source pollution from worsening over the next decades. The authors also point out the dangers of ignoring intermedia substitution of pollutants. In places such as Cubatao, where air quality has been cleaned up, the improvement may have come at the expense of water quality or the accumulation of hazardous wastes.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1992/08/01/000009265_3961003052254/Rendered/PDF/multi_page.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 942.

as in new window
Length:
Date of creation: 31 Aug 1992
Date of revision:
Handle: RePEc:wbk:wbrwps:942

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

Related research

Keywords: Environmental Economics&Policies; Energy and Environment; Transport and Environment; Economic Theory&Research; Water and Industry;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Stevens, Brandt K., 1988. "Fiscal implications of effluent charges and input taxes," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 285-296, September.
  2. Eric Maskin & John G. Riley, 1984. "Input Versus Output Incentive Schemes," UCLA Economics Working Papers, UCLA Department of Economics 354, UCLA Department of Economics.
  3. Green, Jerry & Sheshinski, Eytan, 1976. "Direct versus Indirect Remedies for Externalities," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 84(4), pages 797-808, August.
  4. Faiz, Asif & Sinha, Kumares & Walsh, Michael & Varma, Amiy, 1990. "Automotive air pollution : issues and options for developing countries," Policy Research Working Paper Series 492, The World Bank.
  5. Tietenberg, T H, 1990. "Economic Instruments for Environmental Regulation," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 6(1), pages 17-33, Spring.
  6. Peter S. Menell, 1991. "The Limitations of Legal Institutions for Addressing Environmental Risks," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 5(3), pages 93-113, Summer.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:942. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.