ABSTRACT
Many economists and analysts claim that extended use of pollution charges in environmental policy mil have substantial efficiency advantages in transition economies. This chapter challenges this view and argues instead that the proposed policy presumes the existence of an already-functioning institutional framework. By focusing on Russian case, it discusses a number of reasons why it is difficult to implement pollution charges in an economic system in which Communist behavioral patterns and jurisdictions are still prevalent. By drawing on the new institutional economics literature, the chapter identifies institutional obstacles related both to enterprise behavior and to environmental monitoring. It then discusses alternative ways of controlling pollution in Russia and stresses the importance of improving the legitimacy and basic trust for environmental legislation. The ongoing transition from a totalitarian to a democratic political system in Central and Eastern Europe (CEE) and the former Soviet Union (FSU) has led to recognition of the broad-scale environmental degradation that took place during Communist era.
