ECONOMIC POLICY INSTRUMENTS AND URBAN
ENVIRONMENTAL MANAGEMENT: THE CASE OF CHARGE
SYSTEMS FOR PARKING LOTS IN ADDIS ABABA STREETS
BY
GETACHEW ABEBE
ADDIS ABABA UNIVERSITY
MSC. PROGRAM
A proposal submitted for the teaching workshop in urban
environmental accounting to be held in Addis Ababa
THE ISSSUE
Poor air quality due to pollution is a serious environmental problem in most
urban areas. The greatest burden of pollution is on human health. Urban air
quality management requires an integrated approach that determines which
are the most serious problems; identifies the measures that offer costeffective and feasible solutions across a range of economic sectors and
pollution sources, and builds a consensus among key stakeholders
concerning environmental objectives, policies, implementation measures,
and responsibilities (the world bank group, 1998).
It is usually argued that developed countries are more concerned in
protecting their environment and ultimately their quality of life from the side
effects of economic activities, primarily air and water pollution, hazardous
wastes, and more recently, global climate change. This concern mostly
emanates from their achievement in high level of economic development
with unrestricted access to resources.
To this end, developed nations have through their history introduced
different economic policy instruments (either market based incentives or
command and control) for environmental protection especially in urban and
industrial cities where wastes, water and air pollution (most are transport
generated) are at the heart of the issue. Many governments see the solution
to transport generated air pollution primarily as one of technological clean
up. In some respects this is right. For example, elimination of lead in
gasoline is an important and effective step that Governments can take, both
because of the relative ease and low cost with which lead removal can be
implemented, and because of the heavy environmental impact of leaded fuel.
The rationale behind introducing instruments is theoretically assumed to
bridge the wedge between private and social costs by internalizing all
external costs to their sources.
Despite in many developed nations the economic, social, political, and
institutional environment is
suitable for successfully adopting different
policy instruments, there is
a challenge for developing and transitional
economies in identifying and adopting instruments that integrate
environmental and economic policy and that are parsimonious in their use of
scarce development and management resources; instruments that allow
differential response by economic units and adjust flexibility to changing
circumstances.
Panayotou (1995) contends that the search for instruments of environmental
management in these nations is a search for instruments of sustainable
development. This implies that instruments to be good it must address
sustainability and long run growth.
Economic instruments for environmental and natural resource management
take many forms, but usually grouped under property right, market creation,
fiscal instruments, liability system, financial instruments, bonds and deposit
refund system, and charge system (see Panayotou 1995, for details of these
category).
Our concern here is on the last one i.e., a charge system which can be
defined as payments for use of resources, infrastructures, and services.
Charges are prices for public goods or publicly provided private goods. Of
course, they are different from market prices for private goods in that
charges are not market determined but are administratively set by types a
government agency, a public utility or other types of regulated natural
monopoly.
For Panayotou the primary objectives of charges should be the change in the
incentive structure facing the users of scarce resources as to induce a
realignment of their behavior with social interests. In this sense, user charges
are instruments for reducing wasteful use, managing demand, and inducing
conservation and secondarily are instruments for recovering cost or
financing supply expansion.
In this regard, recently in Addis Ababa, the capital of Ethiopia where
congestion, air pollution, and solid wastes become increasingly a problem,
different command and control, and charge systems are being introduced.
For instance, heavy trucks are not allowed to enter the city between 7:00 am
in the morning and 7:00 pm in the evening. In addition, there is a charge
system for parking lots to manage the traffic. But I believe that apart from
managing traffics and generating revenue from the charge the system has
also a direct effect in controlling urban pollution since the policy result in
less time on the street and constrain heavy trucks from access to the road
during peak hours. In addition, the policy is likely to be efficient if the
revenue from the charge is used to subsidize a public transport, which is less
polluting and more affordable, by low-income groups.
It is argued that
increasing public transport share, particularly for the journey to work is
important since it reduces total vehicle kilometers and enables remaining
vehicles to flow more freely, thus reducing emissions
Therefore, the objective of the paper will be to review the policy instruments
currently used in the city with their prime objectives, to see the awareness
and attitudes of motorists towards those policy instruments with regard to
urban pollution control, to find out the most serious pollutants in the city and
hence we can able to know whether transport generated pollution is
significant or not. Finally, implication for urban environmental policy
formulations will be forwarded.