East Asia's Environment: Principles and Priorities for Action

This paper examines policy options for addressing environmental degradation in East Asia. Drawing on environmental analyses done in the region, the principal threats to the environment, their underlying causes and the most promising avenues for addressing them are identified. The role of economic incentives, or, market-based policies is highlighted. While much has been accomplished in East Asia, the main areas that remain high on the agenda are the removal of remaining subsidies for environmentally-damaging activities (particularly water use and forestry), the clarification of property rights (particularly of land in ecologically-vulnerable areas) and, most importantly, the imposition of taxes on polluting activities. The latter option is examined in some detail in terms of: increased efficiency relative to current practices, the potential for increasing government revenues in a non-distorting manner and the experience of developed and developing countries in using such instruments. The paper concludes that taxing environmental 'bads" such as pollution and overuse of natural resources instead of economic "goods" such as profits, wages and trade makes too much sense to be ignored.