Protecting the Environment and the Poor: A Public Goods Framework, and an Application to Indonesia

Redistributive objectives influence the optimal provision of a pure public good— such as air quality— only if costless transfers are not available. In an urban program, the emphasis in the control strategy will shift somewhat toward goods and services consumed predominantly by the wealthier, such as transportation services, vehicles and fuels. If instruments affect rural areas as well, optimal air pollution control will typically be reduced by redistributive objectives, because many rural households are net losers, and they are poorer. ________________________________________________ The authors thank participants at seminars at the World Bank, Resources for the Future, and the Annual Meeting of the Association of Environmental and Resource Economists. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent.