The implementation of environmental policies can result in major environmental improvements at remarkably little cost.  Recent reviews in the OECD countries have shown that air pollutants like sulphur oxides, lead, soot and carbon monoxide have declined, water quality has improved, recycling is spreading fast and land protection is improving.  Such pollution control amounts to 1-2% of GDP, creating new jobs in environmental services.  However the remaining pollution problems from greenhouse gases, ground level ozone, nitrates, and persistent organic pollutants may be more difficult and expensive to tackle  (OECD, 1996a).  The key policy implication is that pollution control can be cost-effective and lead to significant improvements when market forces are supported by judicious regulations.

Unfortunately trends in the developing countries, particularly in urban areas, are in the opposite direction.  A preliminary evaluation suggests that pollution and ecological devastation produce economic losses amounting to 10% of China's GNP (Chen, 1995).  In the countries with economies in transition, environmental improvement has been due largely to reduced economic activity and the closing of many polluting industries.

Chen Yali.  1995. "Dollars and Degradation." China Daily, 22 November 1995.

OECD. 1996a. OECD reports for environment ministers 19-20 February 1996, cited in "How clean can you get?" The Economist, 17 February 1996.