Despite a tremendous amount of dollars being lost, efforts to thwart click fraud have not reduced it by much. In fact there was a miniscule 0.2% drop in click fraud this quarter over last according to Click Forensics. 16% is still high of course but I have heard advertisers compain about rates of 30% in the past.
As long as there is an incentive to create fraudulent clicks — and it seems there always will be, click fraud will present a large drag on the pay per click or PPC industry. Sadly, search engines make money when click fraud exists and some advertisers question how hard the search engines are really trying to clean this problem up.