The economics of environmental policy in Poland: implications for countries in transition

The objective of this article is to generate insights into the problems and opportunities faced by countries in transition in implementing environmental policy based on the recent experience of Poland. There is much to be learned from the experience of the country that arguably took the riskiest and boldest path of environmental and economic institutional change. The experience of Poland can be enlightening in terms the problems and opportunities in establishing an institutional framework that can validate the long term legitimacy of sustainable development as a national goal. From the unique set of circumstances facing Poland, lessons can be derived for other countries in transition. At the deepest level, Poland's experience can also contribute to expanding our theoretical understanding of economic change and development. The paper begins by introducing the basic welfare economics of institutional choice. The theoretical arguments are presented in terms general to institutional design and specific to environmental policy. Subsequently, the recent experience of Poland in terms of the problems faced and key environmental policy innovations are documented. The concluding section presents policy implications that can be drawn from the Polish experience and speculates about their applicability to other countries in transition.