Considerable improvement in environmental pollution has been achieved, primarily due to targeted environmental policies rather than general economic developments. Some countries in central and eastern Europe have managed to reduce emissions even after the gross domestic product once again began to increase. Everywhere in the region, however, the cost-effectiveness of environmental spending is questionable. Most countries have established systems of earmarked resource and pollution taxes, which provide a sizable share in financing environmental investment. With stationary sources of pollution brought under increasingly effective control, the environmental problems in central and eastern Europe, and eventually in the newly independent states, will start to resemble those of developed market economies. As more activities become affected by environmental protection measures, cost-effectiveness considerations deserve increased attention.

Key terms cost-effectiveness; environmental pollution; policy reform