The use of economic instruments for pollution control in Latin America: lessons for future policy design*

Abstract

I review the few programs implemented in Latin America to control pollution with direct economic instruments, and draw general lessons for the future implementation of these instruments in the region. The available evidence suggests that a combination of low capacities and political economy issues negatively affected the implementation of these programs. As a result, the capacity of the economic instruments to induce emission reductions cost-effectively and their future political viability in these countries in the short or medium run may have been compromised. This present state of affairs provides more evidence in favor of the policy recommendation that Latin American countries should build local capacities before implementing direct economic instruments, than in favor of the alternative that these countries should adapt direct economic instruments to their institutional and political characteristics. 1

The effect of transport policies on car use: A bundling model with applications

“…Some households will find it optimal to purchase the car-bundle (i.e., use the car for both peak and off-peak hours), others to rely exclusively on public transportation (bus-bundle), yet others to "two-stop shop" (e.g., car for peak travel and buses for off-peak travel). 4 One of the advantages of the model is that it can be calibrated and utilized for policy simulations (including estimations of policy costs) using few observables at the city level, namely, the fraction of households owning either none, one, or more cars, the share of car trips at peak hours, the share at off-peak hours, and the ratio of peak trips over off-peak trips (we also need to make an assumption about the distribution of horizontal and vertical preferences in the population).…”

“…In GMS we find that this adjustment period is no more than a year in the two applications we study. There can be longer-run effects (e.g.,changes in agents location within the city) but our model does not consider them 4. Note that only the car-bundle comes with a discount because the same car can be used for both…”

Monitoring, firms’ compliance and imposition of fines: evidence from the Federal Industrial Inspection Program in Mexico City

“…For a more general analysis of the design, implementation, and performance of economic incentives based on environmental policies in Latin America, seeCoria and Sterner (2010) andCaffera (2011).3 These amounts refer to the sum of five different pollutants: particulate matter (PM 10 ), sulfur dioxide (SO 2 ), carbon monoxide (CO), nitrogen oxide (NOx), total organic carbon (COT) and vegetal carbonized (COV).…”

Efficacy of Command-and-Control and Market-Based Environmental Regulation in Developing Countries

“…Although a number of papers examine various aspects of MBIs in developing countries, including their advantages and disadvantages relative to CAC (Blackman and Harrington 2000;Caffera 2010), evidence on their actual effectiveness is thin-significantly thinner than the evidence on CAC. We were able to find only eight studies that met our criteria for inclusion (Table 3).…”