Economics for environmental policy in transition economies : an analysis of the Hungarian experience

This book offers original economic analyses on the economy-environment relationship in Eastern and Central Europe. Drawing on the Hungarian experience, it provides empirical evidence on the reform of environmental policy which can be applicable to similar problems in other transition economies. The macroeconomic shocks of the transition process in Central and Eastern Europe have been exceptional in both their intensity and speed. The implications of this adjustment process are examined in relation to their effects on environmental policy, with special emphasis on the rethinking of standard environmental policy recommendations for transition economies. The authors focus on a variety of issues including the environmental concerns raised by the privatization process and to what extent the less rigorous environmental regulations in Hungary attract foreign direct investment. There is also a critical overview of the existing literature and an examination of the costs of reducing air pollution and the use of the contingent valuation method to measure the economic benefits of improving air quality in Hungary. In addition the authors assess the effects of industrial restructuring on emissions and analyse incentive-based policy measures including prospects for emission trading. Their conclusions challenge the common perception that energy pricing policy is the most important policy measure to induce structural changes in transition economies that are beneficial to the environment. Economics for Environmental Policy in Transition Economies will be of interest to policymakers, academics and postgraduates working in the fields of transition economics, environmental economics and environmental valuation