Issue 113: Meeting the Pollution Control Challenge in Central and Eastern Europe

Protecting environmental quality while pursuing economic development poses a particularly difficult challenge for Central and Eastern Europe, where political and economic systems are changing rapidly after decades of environmental neglect and economic mismanagement. This challenge also confronts advanced industrialized countries, which must make difficult decisions regarding priorities and procedures for providing assistance to the region. In cooperation with researchers at the World Bank, at the International Institute for Applied Systems Analysis, and in Central and Eastern European countries, scholars at Resources for the Future have been investigating some of the pollution problems the region faces and how these problems might be addressed. Highlighted in this issue of Resources are the results of some of these investigations, which were undertaken as part of the World Bank's Environmental Action Programme for Central and Eastern Europe.

The first two articles focus, respectively, on changes in the region's environmental conditions that are likely to result from economic restructuring and on the benefits of improvements in these conditions. The last three articles each deal with the design of effective environmental policies for economies in transition.

Several themes emerge in these investigations. One is that some air pollution problems in Central and Eastern Europe may not be as serious or as ubiquitous as once thought. A second theme is that, given their need to invest heavily in economic restructuring, Central and Eastern European countries must ensure that resources used in pollution control efforts will be directed to the efforts that garner the greatest benefits to society. A third theme is that, given their limited resources, Central and Eastern European countries must identify the most cost-effective mechanisms for dealing with their environmental problems.

Comparisons of incentive-based (IB) and command-and-control (CAC) environmental policies provide additional insights. The cost-saving potential of the IB policies may be limited, and the opportunity for using emission permit trading may hinge on the scope of the trading. But despite the difficulties in implementing them, IB environmental policies are worth pursuing in Central and Eastern Europe.

— Melissa Edeburn