Efficiency in Transboundary Pollution Abatement: a scheme for sharing the costs of reducing sulphur emissions in Europe

Abstract

It is becoming common knowledge that a cooperative European programme to reduce sulphur emissions might lead to considerable cost advantages over isolated, national strategies. Shaw (1989) for example showed that the funds required for a 50 percent uniform reduction in emissions could be applied in a more efficient way to reduce sulphur deposition to 3–4 g/m² instead of 5–8 g/m². Such a cost-effective, targeted abatement strategy, however, implies an uneven distribution of pollution control efforts and associated costs, since the most cost-effective measures will be concentrated in a limited number of countries. Consequently, countries which have to carry the cost burden are likely to oppose to the abatement strategy. To implement cost-effective strategies, inter-country transfers of funds within Europe are therefore probably indispensable. A scheme for these transfers has to be designed such that it is beneficial for all countries to participate.

L. Bergman is Professor of Economics, Stockholm School of Economics, H. Cesar is Ph.D Student, European University Institute, Florence, and G. Klaassen is Research Scholar, International Institute for Applied Systems Analysis, Laxenburg, Austria. The authors wish to thank Markus Amann and Rod Shaw of the Transboundary Air Pollution Project at IIASA, Netherlands for providing valuable advice and comments. The financial support from the Foundation IIASA as well as the University Simulating Fund (USF) and the Institute for Environmental Studies of Free University, Amsterdam, are gratefully acknowledged.