Strategies to control air pollution would be altered by redistribution objectives. In an urban program, the emphasis in the control strategy would shift toward services and goods consumed by the rich, including transport. In a program including rural areas, optimal air pollution control would be reduced because many rural households would be net losers, and they are poorer.
As is evident from public finance principles, redistribution objectives do not influence environmental policies if there are other, costless means of redistribution. How does optimal environmental protection depend on redistribution objectives?
Eskeland and Kong develop a framework that treats air quality as a pure public good, and tracks net beneficiaries as those who value air quality improvements more than their costs in a pollution control strategy.
The framework highlights the distributional characteristics of the public good and of the costs for the control strategy. One critical parameter for the distributional characteristics of the public good is the elasticity (with respect to income) of willingness to pay for environmental improvements.
Strategies to control urban air pollution would be altered by redistribution objectives—to be more aggressive in reducing emissions from luxury goods such as transport (private and general) and less aggressive for goods more heavily consumed by the poor (including several energy sources).
Some air pollution control strategies cover urban and rural areas. For those, optimal pollution control would typically be reduced by redistribution objectives, as rural households are net losers, and they are poorer.
This paper—a product of the Development Research Group—is part of a larger effort in the group to study environmental problems and policies in developing countries. The study was funded by the Bank's Research Support Budget under the research project "Pollution and the Choice of Economic Policy Instruments in Developing Countries" (RPO 676-78). Copies of this paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Cynthia Bernardo, room MC2-501, telephone 202-473-1148, fax 202-522-1154, Internet address cbernardo@worldbank. org. Gunnar Eskeland may be contacted at geskeland@worldbank.org. (32 pages)
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