A breath of fresh air?

Edward McMillan, Jakarta

That Jakarta's air is polluted is no great secret. Tall buildings seem to be perpetually covered in a dirty-brown haze, while traffic policemen peer out from ominous filter-masks and trees wilt in the face of constant chemical attack.

The temptation is to ignore it. After all, there's nothing much that can be done on a day-to-day basis, and what's the point in worrying about things out of our control? Nonetheless, it's a sobering thought that every breath you take is potentially killing you. Each year, Jakarta's air pollution causes six thousand premature deaths. The city's rate of respiratory infection is twice that of the country as a whole. Indonesian asthma rates are at their highest in Jakarta and Bogor. One in every ten children living in Jakarta suffers from shortness of breath.

To read what we're inhaling makes for depressing reading. Sulphur dioxide, emitted primarily by factories and power plants, is a harsh lung irritant. Nitrogen dioxide, produced by vehicles, is associated with oedema, bronchitis, pneumonia and asthma. Ozone, produced when nitrogen dioxide reacts to sunlight, causes eye, nose and throat irritation. Soot particles have been linked to lung cancer. And so on. To live in Jakarta is, almost literally, death by breath.

The solutions to air pollution have long been known and are actually pretty obvious: Install filters in factory chimney stacks to purge emissions of key pollutants, enforce strict vehicle emission rules, provide public transport alternatives to commuters, and plant more trees to purify the air.

The problem is, these solutions aren't politically attractive. While the politicians have certainly mastered the art of talking tough -- recall President Soeharto's "Year Of The Environment" in 1993 and President Megawati's "Green Jakarta" program in 2003 -- their words haven't been backed up by deeds.

The fundamental problem is what economists refer to as the "down-up" phenomenon: Sensible policies may incur short-term costs before realizing long-term benefits. Elected politicians have little incentive to antagonize voters with painful policies that may reap rewards only after they have left office. Hence Jakarta's ongoing pollution problems. After all, why annoy car owners with higher fuel prices and jeopardize industrial growth with stricter regulations when the political benefits are intangible and potentially years away?

What is needed is a mechanism to shape politicians' long-term thinking, just as periodic elections shape their short-term policies. And economists think they have it: The incentive contract.

The concept is simple. Candidates must brandish incentive contracts when campaigning for office. The contracts stipulate that, in the event of subsequent re-election, the politician's pay in the second term will depend on specific policy outcomes -- for instance, a low unemployment rate or more public hospital beds -- arising from the first term.

It doesn't matter whether candidates draw up their own incentive contracts or whether the contracts are imposed by an independent third-party: The effect is the same. It serves to reward politicians who undertake necessary but painful reforms in their first term, knowing that the benefits will only become apparent after their initial term of office has expired.

Much of the academic work on political incentive contracts has focused on economic variables such as unemployment and inflation. But the concept lends itself rather well to tackling Jakarta's air quality, which can be easily monitored and quantified. The fight against air pollution need not "crowd out" other pressing policy concerns such as education and law-enforcement: Politicians would still be able to roam freely between policy areas.

But the fact would remain that if politicians did not achieve certain measurable improvements in air quality, they would be forced to forego a fraction of their pay. And if that failed to remedy the problem, the financial penalty could be progressively ratcheted up until it did provide sufficient incentive to act.

Of course, there would be practical issues to overcome. For example, when the United Nations reported in the 1990s that Jakarta was the third most polluted city on the planet, the politicians' response wasn't to clean up their act: Instead, they "improved" air quality merely by moving the monitoring stations to less polluted areas. Such "massaging" of the figures would have to be strictly regulated.

Nonetheless, introducing an element of financial incentive -- something that has long existed in the private sector -- to the political sphere would finally push politicians into addressing painful-but-necessary reforms. "Read my lips: No new taxes", George Bush Senior's 1988 pledge to U.S. voters, might in future very well become "Read my contract: No more sulphur dioxide."

The writer is a British freelance writer based in Jakarta.