Economic Instruments and the Pollution Impact of the 2006-2010 Vietnam Socio-Economic Development Plan

The current study derives optimal growth paths for pollution emission charges, in order to control future water pollution emissions in the Vietnamese manufacturing sector. The study builds on a prior study, which estimated the manufacturing sector pollution impact of the 2006- 2010 SEDP development plan for Vietnam (Jensen et al.; 2008). The current study demonstrates that effective implementation and moderate expansion of optimal emission charges, under certain conditions, could have been used, as part of the 2006-2010 SEDP development plan, to control pollution emissions at 2005 levels. Moreover, such a scenario would have been accompanied by a moderate expansion in fiscal revenues and a relatively minor economy-wide efficiency loss. The current study, therefore, suggests that effective implementation and gradual expansion of pollution emission charges should be incorporated into future SEDP development plans, in order to control pollution emissions as development progresses in Vietnam.