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Transboundary air pollution: an opportunity for innovation

Author: Ayres, Robert U. INSEAD Area: Economics and Political Science Series: Working Paper ; 93/41/EPS Publisher: Fontainebleau : INSEAD Centre for the Management of Environmental and Social Responsibility (CMER) 1993.Language: EnglishDescription: 22 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: The paper discusses the problem of transboundary air pollution originating in Eastern Europe as an instance where the "polluter pays principle" (PPP) is neither economically feasible nor socially desirable. In fact, the polluter cannot afford to pay. Whereas PPP would require a wealth transfer from the poorer to the richer, the "victim pays principle" has the disadvantage that, if the wealth transfer is fungible, it creates an a priori incentive for the poor country to continue to pollute so as to continue to get paid... It is suggested that the risk can be minimized and the benefits maximized by taking an overall system approach and exploiting economies of integration. An example of an integrated technological approach to the soft-coal based industrial region known as the "black triangle" in Eastern Europe is discussed briefly in the appendix
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The paper discusses the problem of transboundary air pollution originating in Eastern Europe as an instance where the "polluter pays principle" (PPP) is neither economically feasible nor socially desirable. In fact, the polluter cannot afford to pay. Whereas PPP would require a wealth transfer from the poorer to the richer, the "victim pays principle" has the disadvantage that, if the wealth transfer is fungible, it creates an a priori incentive for the poor country to continue to pollute so as to continue to get paid... It is suggested that the risk can be minimized and the benefits maximized by taking an overall system approach and exploiting economies of integration. An example of an integrated technological approach to the soft-coal based industrial region known as the "black triangle" in Eastern Europe is discussed briefly in the appendix

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