VII. ISSUES AND PROBLEMS: SOME POLICY RECOMMENDATIONS
C. Policy reform
To improve environmental management, City Hall of Kuala Lumpur should seriously design cost-effective policy instruments that minimize costs and economize on scarce administrative skills. Environmentally appropriate policies are not inconsistent with policies that foster growth and trade, but they do attempt to correct the bias of market and policy failures that lead to overexploitation of non-priced and underpriced environmental resources such as air and water.
Policy reforms that can be used to achieve improved sustainability can be divided into three categories:
In most cases, City Hall of Kuala Lumpur uses the second approach to enforce environmental compliance. The emphasis on regulatory policies comes with high administrative costs. Therefore, efforts
should be undertaken to use the other two approaches that could bring greater cost-effectiveness and better use of scarce administrative skills.
The most important type of market-based policy reform is pricing reform. Full cost pricing, that is, removing subsidies and costing for the additional burden imposed by the resource use or pollution emitted, is fundamental to reducing the consumption of resources in virtually all sectors. Taxes or tradable permits levied on pollution and congestion are equivalent to raising the price on air, water and land resources, depending on the relative elasticities. Tax-based policies will lead to some increase in financial flows to the owner who is often the government. That revenue can be re-invested in the resource itself, particularly in the case of investments in public infrastructure (e.g., in water supply and public "goods" such as air). Besides, the price increases can help stimulate technological adaptation that favours greater efficiency and reduces pollution.
Non-market-based policy reforms, including regulatory, legal and administrative reforms, must complement market-based ones. It is not possible to rely solely on market-based environmental policies to reduce pollution. The command and control approach to pollution control, in which governments specify allowable factory emissions and technologies to be used, is very common. Examples of other types of non-market-based reforms are non-tax methods to reduce transport emissions and congestion, such as emissions standards, aggressive vehicle inspection programmes, traffic management, tighter zoning and investments in public transit alternatives to private cars (all those steps have been taken in Singapore).
Rquirements for public disclosure of point-source pollution data can lead to direct negotiations between polluters and communities, consumer boycotts or liability court cases. Disclosure is relatively low cost, requires relatively little direct government involvement and brings the power of the market into the environmental arena. (Increased local participation, however, is not a substitute for more comprehensive environmental policies). A subtle form of that approach was used by the federal authorities recently to persuade Malaysian companies that were party to forest clearing in Kalimantan, Indonesia, to pay for the subsequently necessary corrective action. However, using that form of approach will to a large extent depend on the political leadership and the commitment to environmental preservation by the government of the day.