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For the most part, economic instruments have not taken hold in the countries in transition.Demonstration emissions-trading and transferable-permit systems with a handful of managed trades were actively pursued in Kazakhstan, Poland, and the Czech Republic.
They are limited in application and some are still essentially experimental.
Their gradual introduction to resolve specific problems and practical applications has helped to address these concerns and build constituencies for further use.
Most of these innovations are aimed at raising revenue for infrastructure investment rather than encouraging pollution reduction.
Charge levels, set too low to provide an incentive for discharge reduction, instead guarantee a fairly regular income stream.
Utility companies are pleased that they, rather than the government, decide the most cost-effective way to comply.
Although much is made of the success of this program, the reality is that most U. environmental programs continue to use traditional regulation because the alternatives pose significant technical and political challenges.However, the donors have rarely asked whether the approaches they are urging, which have recently had some success in Europe and the United States, can be implemented effectively in developing countries with limited resources and little experience with market-based policies of any kind.We worry that these highly sophisticated instruments have been pushed too hard and too fast, and that those who promote them say little about the context and conditions in which they thrive.With hindsight we can see that these countries simply lacked many of the prerequisites for an effective market-based approach.And we should keep in mind that in many ways these countries are stronger candidates for market strategies than are the developing countries.They seemed the right targets for this message, as they are in most respects “developed” industrialized economies rather than “developing” countries.Typically, they have excellent universities, high rates of literacy, a technically trained civil service, and an existing system of environmental regulation.An elaborate Slovak system is scheduled to begin in 2002.But these were only experiments, and they did not deliver on their promise of enabling these countries to avoid the mistakes committed in the name of environmental protection in the West.Utilities participating in the program were required to have expensive equipment for continuous monitoring. EPA records transfers to make sure that a unit’s emissions do not exceed the number of allowances it holds and makes this information available to the public.The transparency in the system provides a level of reassurance to the public and competitors alike. Allowance trading has undoubtedly accelerated program implementation and saved money.