Are the Costs of Cleaning Up Eastern Europe Exaggerated? Economic Reform and the Environment

Widespread concern has been expressed that the costs of reducing environmental pollution in Eastern Europe will divert resources that would otherwise be available for industrial modernization. In fact, apart from a number of severely damaged areas, the general level of exposure to major pollutants in Eastern Europe is not high by comparison with the OECD countries. Even without specific environmental policies the process of general economic reform, together with the energy conservation induced by higher energy prices, will reduce emissions by nearly 50%. A modest fraction of general investment in industrial modernization will deal with the remaining problems of current emissions provided that sensible systems of environmental charges are enforced. The countries will then be faced with the problem of cleaning up the aftermath of past industrial activity, but as in other countries, this can be tackled over an extended period.