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The high rates of economic activity and environmental degradation in Asia demand the implementation of creative and cost-effective environmental policy instruments that provide polluters with more flexibility to find least-cost solutions to pollution reduction. Despite their many theoretical advantages, the use of market-based instruments (MBIs) is a relatively recent phenomenon in Asia, partly due to policymakers being unfamiliar with MBIs and countries lacking the institutional capacity to implement and enforce them. This paper reviews the Asian experience with MBIs intended to reduce air pollution emissions and synthetizes lessons to be drawn and areas for improvement.

We analyze the interplay between policies aimed to control transboundary and local pollu- tants such as greenhouse gases and particulate matter. The two types of pollution interact in the abatement cost function of the polluting firms through economies or diseconomies of scope. They are regulated by distinct entities, potentially with different instruments that are designed according to some specific agenda. We show that the choice of regulatory instrument and the timing of the regulations matter for efficiency. Emissions of the local pollutant are distorted if the regulators anticipate that transboundary pollution will later be regulated through emission caps. The regulation is too stringent with diseconomies of scope, and not enough with economies of scope. In contrast, we obtain efficiency if the transboundary pollutant is regulated by tax provided that the revenues from taxing emissions are redistributed to the local communities in a lump-sum way.

Road pricing can improve air quality by reducing and spreading traffic flows. Nevertheless, air quality does not depend only on traffic flows, but also on pollution dispersion. In this paper we investigate the effects of the temporal variation in pollution dispersion on optimal road pricing, and show that time-varying road pricing is needed to make drivers internalize the social costs of both time-varying congestion and time- varying pollution. To this end, we develop an ecological economics model that takes into account the e¤ects of road pricing on integrated daily commuting patterns. We characterize the optimal road pricing when pollution dispersion varies over the day and analyze its effects on traffic flows, arrival times, and the number of commuters by car. JEL: Q53, Q58, R41, R48

Voluntary forest certification is an increasingly popular tool allowing producers who meet stringent environmental standards to label their products in the marketplace and potentially achieve greater market access and receive higher prices for their products. The voluntary nature of certification programs implies, however, that it is difficult to determine the effects of forest certification due to selection bias. This paper contributes to the impact evaluation of forest certification by estimating the effects of certification of non-industrial private forest owners in Sweden – one of the countries with the largest total area of certified forests. We rely on official forest inventory data at the plot level, information on certification status, and standard impact evaluation methods to identify the causal effect of certification on three environmental outcomes: environmentally important areas preserved during the felling, number of trees and high stumps left after the felling, and area set aside for conservation purposes. Moreover, we analyze the effect of the two most important certification schemes: the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC). Our results indicate that certification has not improved any of these outcomes. Furthermore, we find no differences between the FSC and PEFC schemes. Our findings suggest that for forest certification to have an effect, the standards should be tightened and the monitoring and enforcement of forest certification schemes strengthened. JEL: L15, Q12, Q23, Q28

We analyze the interplay between policies aimed to control global and local pollution such as greenhouse gases and particulate matter. The two types of pollution interact in the abatement cost function of the polluting firms through economies or diseconomies of scope. They are regulated by distinct entities (global versus local), potentially with different instruments that are designed according to some specific agenda. We show that the choice of regulatory instrument and the timing of the regulations matter for efficiency. Emissions of local pollution are distorted if the local regulators anticipate that global pollution will later be regulated through emission caps. The regulation is too (not enough) stringent when abatement e¤orts exhibit economies (diseconomies) of scope. In contrast, we obtain e¢ ciency if the global pollutant is regulated by tax provided that the revenues from taxing emissions are redistributed to the local communities in a lump-sum way. JEL: D62, Q50, Q53, Q54, Q58