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Using Economic Policy to Improve Environmental Protection in Pakistan

The author studies Pakistan's major environmental problems, both green and brown, and assesses the extent to which economic policies affect incentives to protect the environment. Experience in other countries shows that nondistortionary economic policies that promote economic growth by improving the allocation of resources also create appropriate incentives for protecting the environment. Sound economic policies alone are not enough, of course. Environmental policies designed to correct market failures are also necessary. Pakistan, like many countries, has relied mostly on command-and-control environmental policies, which have often failed because its regulatory institutions lack the resources to monitor compliance. Pakistan would be better off using incentive- or market-based policies, which use prices to encourage pollution abatement and the appropriate use of resources. Failures in economic policy contribute significantly to Pakistan's"brown"environmental problems, which include industrial and domestic wastewater pollution, as well as air pollution (especially from motor vehicle emissions). Pollution problems exist both in urban and industrial areas, as well as in marine and coastal zone waters. Failures in economic policy also contribute to"green"environmental problems, affecting behavior in forests, rangelands, and both rainfed and irrigated agriculture. Subsidies for irrigation water, for example, encourage farmers to overuse water, exacerbating the problems of waterlogging and salinity that plague irrigated agriculture. Lack of property rights in communal forests and the failure to give local communities incentives to participate in forest-management decisions have contributed to the problems of deforestation and the degradation of Pakistan's rangeland.