DP482 Are the Costs of Cleaning Up Eastern Europe Exaggerated? Economic Reform and the Environment

Author(s): Gordon Hughes
Publication Date: November 1990
Keyword(s): Air Quality, Eastern Europe, Economic Reform, Energy Policy, Environmental Policy, Pollution
JEL(s): 052, 123, 722
Programme Areas: Applied Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=482

Widespread concern has been expressed that the costs of reducing environmental pollution in Eastern Europe will divert resources that would otherwise be available for industrial modernization. In fact, apart from a number of severely damaged areas, the general level of exposure to major pollutants in Eastern Europe is not high by comparison with the OECD countries. Even without specific environmental policies the process of general economic reform, together with the energy conservation induced by higher energy prices, will reduce emissions by nearly 50%. A modest fraction of general investment in industrial modernization will deal with the remaining problems of current emissions provided that sensible systems of environmental charges are enforced. The countries will then be faced with the problem of cleaning up the aftermath of past industrial activity, but as in other countries, this can be tackled over an extended period.