Controlling Pollution in Rural Areas by Economic Instruments

The most interesting economic instruments for the control of environmental pollution belong to the categories of taxes (or charges) and of tradeable pollution permits. After the basic theoretical propositions of the seventies and their early applications, the search now is for practical methodologies and for a correct and effective use of such instruments. With this aim in view, the paper begins by introducing the concepts of environmental externality and of optimal level of pollution, then illustrates the two main options of control (taxation and market of tradeable permits) and briefly discusses their application in reducing pollution in wide rural areas.