Economic instruments. Application to environmental problems

摘要

The report contains a review of various approaches to pollution control. Increasing cost of the command and control approach induced developed countries to explore the market approach which is based on application of economic instruments. The market approach uses market power to harmonize polluter's choice with the social choice. It offers cost effectiveness, flexibility and incentive to reduce pollution. Experience with market creation indicated substantial savings in achieving pollution control compared to the command and control approach that usually involved prescribing technology to the polluters. Although developing countries may not have the appropriate markets and infrastructure to introduce the economic instruments to replace the existing system of standards and regulations, a beginning is required to be made in this direction. This will ensure that the market system for pollution control will also develop along with the development of market economy. At the international level, economic instruments, especially a tradeable permit system, offer the most efficient and equitable solution to global environmental problems. Efforts are needed to shape accepted mechanisms like joint implementation in such a way that they can simulate efficient economic instruments like tradeable permits. (au) 25 refs.