Abstract
The high rates of economic activity and environmental degradation in Asia demand the implementation of creative and cost-effective environmental policy instruments that provide polluters with more flexibility to find least-cost solutions to pollution reduction. Despite their many theoretical advantages, the use of market-based instruments (MBIs) is a relatively recent phenomenon in Asia, partly due to policymakers being unfamiliar with MBIs and countries lacking the institutional capacity to implement and enforce them. This paper reviews the Asian experience with MBIs intended to reduce air pollution emissions and synthetizes lessons to be drawn and areas for improvement.
Highlights
Air pollution is one of the world’s leading health risks
We review the Asian experience with market-based instruments (MBIs) intended to reduce air pollution emissions
This paper focuses on experiences in developing countries including China, Mongolia, the Philippines, Vietnam, Lao PDR, Cambodia, Thailand, Indonesia, Malaysia, Bangladesh, Sri Lanka, India, and Nepal
Summary
Air pollution is one of the world’s leading health risks. Each year, more than 6.5 million people globally die prematurely from illnesses caused by breathing polluted air. The inherent tension between the need to improve air quality while the sheer growth in economic activity pushes for large absolute increases in pollutant emissions has become increasingly problematic in recent years This has increased the demand for more creative and cost-effective approaches than the usual command-and-control (CAC) regulations, such as environmental laws, standards, regulations, and enforcement mechanisms. This paper focuses on state-based MBIs that require the steering of local governments, for instance, taxes, subsidies, and the regulation of information, which rely on existing markets to be effective, as well as the creation of property rights and tradable credits in areas like emissions control and resource management.
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