ACID RAIN IN EAST ASIA: AN ANALYSIS OF SIDE-PAYMENTS

What is it about?

The acid rain problem in East Asia is discussed, specifically in the context of China, Korea, and Japan. The main objective is to analyse the transboundary pollution in East propose an efficient policy to deal with this issue. A downwind country such as Japan importer of sulphur deposition from China and South Korea. For achieving a regional solution, it would be necessary for all participants including polluters to benefit more operating than not. A possible strategy of 'side-payments' by Japan to S. Korea and China be analysed, as well as cost reduction in pollution

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Why is it important?

The potential acid rain problem in East Asia considered, although OECD declares a code of practive the Polluter Pays Principle (PPP), a side-payment by Japan to mitigate the acid rain contributed from China may be feasible because additional abatement resulting from side-payments is positive. However, how much should Japan pay for China is not an easy question because there are a lot of equilibria to ensure for both parties to be better off. Moreover, the long-term SO2 reduction due to the advancement of abatement technology will raise the optimal level of SO2 reduction.

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