East Asian governments urged to harness market forces to improve environment, save money

Many East Asian countries could save tens of millions of dollars and improve environmental compliance of industries by blending more market incentives into their traditional "command-and-control" legal and regulatory approach to environmental protection, according to a book launched today by the United Nations University.

The authors says East Asian countries rely primarily on a command-and-control approach regulating effluent and emissions standards but typically lack effective institutions for implementation, monitoring, and compliance.

"Generally speaking, a rigid command-and-control approach leads to high compliance costs and widespread under-compliance," according to East Asian Experience in Environmental Governance, published by UNU Press. The problem is compounded in East Asia by "the lack of enforcement capacity as well as insufficient human and financial resources for large-scale investment in environmental protection.

The command-and-control approach in China has been ineffective in part because authorities there "set effluent disposal costs below the marginal cost of reducing pollution. Therefore, it is cheaper for factories to pay the disposal cost instead of reducing emissions," the book says.

In Malaysia, water effluent standards are set on the basis of pollution concentration levels, which invites, at least in principle, "the opportunity for dilution rather than real reduction." Malaysia is credited, however, with one of the region's few effective implementation systems, including "consistent and effective monitoring programmes."

Several East Asian countries have begun experimenting with market mechanisms to aid efforts at environmental management charging polluter fees for effluents, for example.

An earlier World Bank study demonstrated that Beijing and Tianjin, with multiple water pollution sources, could reduce pollution abatement costs from $47 million to $13 million per year by introducing a

Contact: Terry Collins
United Nations University

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