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Environmental Protection in a Knowledge-Based Economy

Environmental Protection in a Knowledge-Based Economy. Delhi Sustainable Development Summit February 6-9, 2003 Charles D. Kolstad 3M Visiting Professor of Environmental Economics, MIT and Donald Bren Professor of Environmental Economics & Policy, University of California, Santa Barbara.

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Environmental Protection in a Knowledge-Based Economy

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  1. Environmental Protection in a Knowledge-Based Economy Delhi Sustainable Development Summit February 6-9, 2003 Charles D. Kolstad 3M Visiting Professor of Environmental Economics, MIT and Donald Bren Professor of Environmental Economics & Policy, University of California, Santa Barbara

  2. Economic Solutions to Environmental Problems • Price emissions (pay to emit) • Charge urban polluters based on where, when, what • Power plants pay for using the public air • Set up tradable rights for emissions • Polluters buy and sell right to emit • Aggregate emissions kept under control • BUT what works in theory does not always work in practice!!!

  3. Two fundamental problems with economic solutions to environmental problems • Distributional – where the burden falls • Often falls disproportionately on the poor • Eg, older polluting cars often owned by poor • Burden often falls on narrow sectors • Certain industries bear much of the cost of cleanup • Coal-rich countries bear cost of climate control • Monitoring – Need to know who, what, where • Easiest sources – big stationary sources • Tough sources: smaller diffuse sources • Cost of monitoring often not justified • Thus technology regulations

  4. Technology Advances in MonitoringExample 1: Road Congestion • Levying tolls is the economic solution but is difficult and costly • Automatic toll collection becoming reality • Transponders • Automatic Number Plate Recognition Technology

  5. Technology Advances in MonitoringExample 2: Auto Emissions • Technology 1: Routine vehicle emission tests coupled with tamper-proof odometers • Technology 2: remote sensing of emissions tied to number plate recognition

  6. Conclusions • One of the great obstacles to using economic incentives (prices) to manage the environment has been reliable, cheap monitoring • The knowledge-based economy and the computer revolution is causing this obstacle to disappear • In a few decades, this may well be the most important innovation in environmental management

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