NEW YORK, 29 October 1998 -- Economic instruments, specially designed to fit the specific needs and circumstances of developing and transitional economies, can be powerful instruments of change toward sustainable development, according to a new study released here today by the United Nations Environment Programme (UNEP).

With countries preparing to meet next week in Buenos Aires to examine how best to implement the UN Climate Change Convention and its Kyoto Protocol, the issue of economic instruments has never been higher on the global environmental agenda. Issues such as internationally tradeable greenhouse gas emission permits and credits, joint implementation activities and carbon offsets, and the Protocol's Clean Development Mechanism will be extensively discussed in the Argentine capital beginning on Monday, 2 November.

The new study, "Instruments of Change: Motivating and Financing Sustainable Development", has been written for UNEP by Dr. Theodore Panayotou of the Harvard Institute for International Development, and makes a major contribution to that debate, says UNEP Executive Klaus Toepfer. "The new study examines in a comprehensive fashion how the proper uses of market-based incentive systems and improved institutional arrangements can offer policy-makers, especially in developing and transitional economies, a menu of effective economic tools in their efforts to protect the environment and conserve natural resources", he said.

According to the study, sustainable development can only proceed if environmental policy and economic policy are inextricably linked. Although developing countries and transitional economies increasingly look towards the experience -- both positive and negative -- of the developed world, economic instruments are clearly not a panacea. But they can help bridge the financing gap of sustainable development by encouraging behavioral change among consumers and polluters, while also raising revenue for environmental protection efforts.

Conventionally, Governments have employed tough command and control regulations to protect the environment. The author argues whether consumers and polluters can realistically change behaviour patterns through the imposition of tough laws when enforcement is weak. Also, can weak institutions and backlogged courts enforce such new regulations? Can developing countries afford such new instruments, even if they can enforce them? The book takes stock of the available economic and related instruments such as tradeable permits, user fees, pollution charges, subsidies, environment taxes, fines, among many others.

The experience of both developed and developing countries with the use and mis-use of economic instruments is analysed. And, finally, the study explores ways in which such instruments might be better designed and adapted to the specific needs of developing and transitional economies as agents of change towards sustainable development.

Dr. Theodore Panayotou is a fellow at the Harvard Institute for International Development in Cambridge, Massachusetts. He is also a lecturer in the Department of Economics and the John F. Kennedy School of Government at Harvard University. He is the recipient of the 1991 Distinguished Achievement Award of the Society for Conservation Biology for his wide-ranging efforts to use economic analysis as a tool for conservation.

"Instruments of Change: Motivating and Financing Sustainable Development", UNEP, 1998, is available from Earthscan Publications Limited, London, at fax: (44-171) 278-1142, e-mail: earthinfo@earthscan.co.uk; or from the UNEP Environment, Economics and Trade Unit, Geneva, fax: 41-22-796-9240, e-mail: eteu@unep.ch The price is œ19.95.

Note for journalists: The book will be launched at a press conference at UN Headquarters at 11:30 a.m on Thursday, 29 October. For interviews with Dr. Panayotou and Dr. Toepfer, please contact Jim Sniffen, UNEP Information Officer, at 1-212-963-8094, fax: 1-212-963-7341, e-mail: sniffenj@un.org.