Alternative policies for the control of air pollution in by Robin W. Bates

By Robin W. Bates

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The phrase sustainable development has been widely used, but we are still some way from a generally-recognized, operational definition of the concept. In particular, such a definition must be set in a usable analytical framework. This paper attempts to show how appropriate economic incentives in the economy at large, and the use of specific economic instruments targeted at air pollution, can make an important practical contribution to sustainable development. The focus here is on the use of a common natural resource, namely the air we breathe, and ways in which it can be protected.

7 Final Energy Demand Calculations Total final energy demand in the economy ultimately depends on the level of economic activities in different sectors and the energy intensities of these activities. Energy intensities will vary across alternative technologies that can be used to accomplish the economic activities under consideration. Projection of final energy demands requires projection of all these component influences. To express these ideas more formally, suppose the economy is divided into j = 1, , J sectors.

Mine-mouth coal prices were at export parity, and liquid fuel prices reflected all production and delivery costs, as well as substantial taxes in the latter case. Prices of network fuels to households in mid-1992, while well above 1990 levels, still 14The projections are based on national income accounting conventions derived from the previous economic regime, which placed little emphasis on measuring services. Page 20 needed to increase another 50100 percent to reflect economic costs. A basic assumption underlying the study, as noted in Chapter 3, is that full economic pricing of all final energy sources will be in place by 1995: price is assumed to reflect the full marginal cost of supply plus any excise taxes that are applied.

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