Efficiency in Transboundary Pollution Abatement: a scheme for sharing the costs of reducing sulphur emissions in Europe

It is becoming common knowledge that a cooperative European programme to reduce sulphur emissions might lead to considerable cost advantages over isolated, national strategies. Shaw (1989) for example showed that the funds required for a 50 percent uniform reduction in emissions could be applied in a more efficient way to reduce sulphur deposition to 3–4 g/m2 instead of 5–8 g/m2. Such a cost-effective, targeted abatement strategy, however, implies an uneven distribution of pollution control efforts and associated costs, since the most cost-effective measures will be concentrated in a limited number of countries. Consequently, countries which have to carry the cost burden are likely to oppose to the abatement strategy. To implement cost-effective strategies, inter-country transfers of funds within Europe are therefore probably indispensable. A scheme for these transfers has to be designed such that it is beneficial for all countries to participate.