A note on permits, standards, and technological innovation

Montero (J. Environ. Econom. Manage. 44 (2002) 23) contrasts the incentives to invest in new abatement technologies under different regulatory instruments and argues that one needs to consider the induced output effects that derive from lower abatement costs. Montero shows that, once one takes into account these effects on output, command-and-control instruments can generate stronger incentives to innovate than market-based instruments. This result rests on strategic output effects under command-and-control. However, he maintains that, under perfectly competitive conditions, market-based instruments will continue to weakly dominate command-and-control regulation. This note clarifies two issues raised by Montero. First, I use Montero's approach to show that in fact performance (concentration) standards will generate greater incentives to innovate than market-based instruments in perfectly competitive markets. One does not require strategic effects to get this result. Second, Montero abstracts from production costs and concentrates solely on abatement costs. He implicitly assumes that marginal production costs are constant. I show that some of Montero's results change once increasing marginal production costs are considered. When marginal costs are increasing, the benefit of additional output is tempered and market-based instruments again look more favorable.     

Cap-and-trade, taxes, and distributional conflict

Enacting market-based environmental regulation, such as emissions taxes and cap-and-trade programs, often create rents that are contested by agents. In this paper, we create a framework that compares social welfare from alternative market-based environmental policy instruments under the presence of rent seeking. We show that, contrary to the commonly held view, non-revenue-raising instruments (NRRIs) are in many cases preferable over revenue-raising instruments (RRIs). We find that the choice of instrument depends on the size of a potential revenue-recycling effect and the level of preassigned rents.     

Inefficient environmental instruments and the gains from trade

The primary result from the trade and environment literature is that countries never lose from trade liberalization as long as they implement optimal pollution targets or if they hold emissions constant. These results are derived in models where the regulators use efficient instruments such as tradable permits or emission taxes. Regulators, however, continue to prefer command and control instruments. I show that regulation under these inefficient instruments (such as design standards or concentration standards) can lead to net losses under trade liberalization even if emissions are optimally adjusted for trade. Furthermore, holding the line on emissions need not guarantee welfare improvements either. The problem is that institutional distortions, the excess costs of inefficient instruments, can rise with trade and offset the material gains from trade. Hence the presumption that we can achieve gains from trade by considering only the level of emissions fails to recognize that the mode of regulation also matters.     

An economic evaluation framework for land-use-based conservation policy instruments in a changing climate

Climate change is a key threat to biodiversity. To conserve species under climate change, ecologists and conservation scientists suggest 2 main conservation strategies regarding land use: supporting species’ range shifts to enable it to follow its climatic requirements by creating migration pathways, such as corridors and stepping stones, and conserving climate refugia (i.e., existing habitat areas that are somewhat buffered from climate change). The policy instruments that could be used to implement these conservation strategies have yet to be evaluated comprehensively from an economic perspective. The economic analyses of environmental policy instruments are often based on ecological effectiveness and cost-effectiveness criteria. We adapted these general criteria to evaluate policy instruments for species’ conservation under climate change and applied them to a conceptual analysis of land purchases, offsets, and conservation payments. Depending on whether the strategy supporting species’ range shifts or conserving climate refugia is selected, the evaluation of the policy instruments differed substantially. For example, to ensure ecological effectiveness, habitat persistence over time was especially important for climate refugia and was best achieved by a land-purchase policy instrument. In contrast, for the strategy supporting range shifts to be ecologically effective, a high degree of flexibility in the location of conserved sites was required to ensure that new habitat sites can be created in the species’ new range. Offset programs were best suited for that because the location of conservation sites can be chosen comparatively freely and may also be adapted over time.     

An overview of the environmental finance policies in China: retrofitting an integrated mechanism for environmental management

Considering the significant roles of the policies in developing environmental finance, an overview is conducted on the environmental finance policies （EFPs） in China. This paper analyzed the definition, scope, evolution and main instruments of EFPs. The implementation progress of financial activities on each instrument are investigated respectively. Then the experiences learned from and failures discovered in the development of the EFPs are discussed well recommendations for further improvement of the EFPs and their implementation are provided. Our study found that the EFPs have been established in China after a four-phase evolution since the early 1980s. The policies have played a critical role in leading to a rapid development in environmental finance by involving more financial instruments to accomplish the objective-led environmental plans. Driven by the policies, the new green credit （GC）, green security （GS）, and green insurance （GI） instruments have been phased in as supplements to the conventional command and control approaches to improve the environmental governance of financial activities and pollution sources. However, the market mechanism of financial institution is limited due to their defensive and incapable performance on implementation some of EFP instruments. To further strengthen the effectiveness of EFPs in facilitating environmental man- agement, recommendations are made mainly on the aspects including developing more specific policy guidelines, enhancing information sharing and disclosure, providing sufficient economic incentives, establishing environmental liabilities with financial activities, and involving issues related to climate change, and biodiversity and ecosystem service.     

Two-goal regional environmental policy: The case of the Santa Ana river basin

In determining public policy measures, the value of information about the functional relationships between targets and instruments can hardly be understated. In the present paper these macrorelations are obtained for a competitive industry by way of aggregation over many individual firms following simple behavioristic patterns. With the exact knowledge of the macrorelations, obtaining the numerical values of the instruments becomes a simple mathematical programming problem. These principles are applied in examination of the water pollution problems generated by the dairy industry in the Santa Ana River Basin where local governments face the problem of controlling environmental quality with minimum opportunity costs in terms of output.     

Policy relevance of three integrated assessment tools—A comparison with specific reference to agricultural policies

The Common Agricultural Policy (CAP), a system of market support instruments, direct income transfers, and rural development measures, has been put through an ongoing reform process in recent decades. This paper introduces three policy impact assessment tools (SIAT, SEAMLESS-IF, MEA-Scope tool) and analyses how these tools have responded to a number of challenges for integrated assessment modelling as reported in the international literature. Significant progress has been made with regard to modelling linkages whereas other challenges, particularly those related to issues of scale and uncertainty management, require further efforts. It is also analysed which CAP instruments are represented and what kinds of effects can be analysed at different scales. Market instruments and direct payments are comparatively well represented, while the ability to model rural development measures is mostly beyond the scope of these tools. Because each tool has found a different solution for coping with the common challenges of integrated assessment modelling, the choice of one of the tools for a particular application depends strongly on the policy questions being asked. The SIAT provides the big picture via its ability to represent broad changes in policy instruments with EU-wide cross-sector impacts. The most comprehensive analysis of agricultural policy instruments can be obtained with SEAMLESS-IF. The MEA-Scope tool complements the other two approaches with detailed regional profiles.     

Ergebnisorientierte Honorierung ökologischer Leistungen der Landwirtschaft

Background and Objectives

As an instrument of agro-environmental economic policy, remuneration to farmers for implementing ecologically sound practices are often identified as beingthe alternative to inefficient or unpopular legal instruments. This paper shows that such an approach assumes to be an idealized conception of the way in which economic instruments work. Only result-oriented payment is capable of matching such an idealized conception; hence, the conditions are accordingly ambitious.

Key aspects

Starting from a definition of result-oriented remuneration for ecological benefits, this approach is systematically contrasted by action-oriented payments. Either is examined in respect to its comparative efficiency enabling assessment of the potential of both instruments. In the second section, the limits of the approach using result-oriented payments are discussed in relation to the corresponding prerequisites set down for them.

Results

The key criterion for distinguishing between result-oriented payments on the one hand and action-oriented payments and legal instruments on the other is the number of options available to the farmer when he/she chooses to take advantage of the payments. On the basis of this criterion, the following advantages emerge from the economic (rewards-based) approach: it promotes self-interest, increases innovative potential, reduces informational asymmetries, promotes continuity, promotes co-operative practice, promotes intrinsic motivation and, finally, it achieves a distribution of risks between farmers and society. However, one essential requirement for applying such instruments are indicators attached to payment. The attempt to develop such indicators reveal three central problems: the complexity of cause-and-effect relations, the diversity of environmental objectives and the normativity of the process by which indicators are devised. These problems simultaneously define the limits of the instrument of result-oriented payments for ecological benefits.

Conclusions

No general statements can be made about whether result-oriented payments are preferable to other instruments, as this depends on the concrete circumstances and, in particular, on the specific environmental issues involved, along with the possibilities of developing environmental indicators. However, from the economic point of view, the benefits of result-oriented payments are obvious, as long as the prerequisites for the application of this instrument can be met.

Further Research and Recommendations

Given the persuasive benefits of result-oriented payment from an economic point of view, more efforts should in future be made to test the practicability of such instruments. Two examples of result-oriented payment are discussed in this paper.     

Accepting market failure: Cultural worldviews and the opposition to corrective environmental policies

To explore whether and why people sometimes reject environmental policies that improve individual and collective outcomes, we create an experimental market in which transactions generate a negative externality. Market participants endogenously determine whether to implement corrective policies. We consider three policy instruments (Pigouvian taxes and subsidies, and quantity regulation) and two levels of policy efficiency (full and half). We then explore how individual cultural worldviews might contribute to the rejection of policies that correct the market failure. Our results indicate that people often oppose policies that improve their material outcomes, and we find that such opposition is significantly explained by cultural worldviews. Interesting connections emerge between individual worldviews and specific policy instruments.     

„Kochsalz verbieten?“ – ein nachdenkliches Vorwort zur Beitragsserie Regulatorische Ökotoxikologie

This series of articles titled “Regulatory Ecotoxicology” is intended to (i) elucidate the legal background, general principles and instruments of ecotoxicological risk assessment of chemicals, (ii) exemplify the thinking and functioning of regulatory decision making, (iii) illustrate the consulting and decision making processes in risk assessment of chemicals, (iv) communicate different positions on controversial regulatory topics and (v) highlight recent trends in regulatory ecotoxicology. Both discussion papers and scientific articles are contributed by authors representing all stakeholders involved (administrative bodies, industry, academia, environmental associations). The issues addressed cover all relevant substance groups, methods and regulatory instruments (biocides, plant protection products, pharmaceuticals, wastewater treatment, REACH, Water Framework Directive).     

A policy alternative for lagoon management: case study of Sre Ambel coastal marine fisheries,Cambodia

Sre Ambel is the most productive coastal area for marine fisheries in Cambodia. This paper explores the management concept of extractive reserve instruments to find the most effective application in the coastal areas of Cambodia. Since there are various extractive models in the world, the most important objective is to determine which extractive reserve model is best suited to real practices where the ability of the fisheries’ residents to apply laws and guidelines vary from one place to another. To reflect these objectives, this paper looks at various examples around the world, especially from various Latin American countries. The level of local ability to apply laws and regulations is determined by the weight average index method. These results shows that fishers’ education levels are sufficient to apply laws and regulations, but their understanding of existing fisheries guidelines is still below average. Although the level to which they satisfy the guidelines is poor, local people are willing to establish new appropriate guidelines for future effective application. Therefore, local fishers have the ability to apply laws and regulations under new extractive reserve aspects. An extractive reserve policy combines all available instruments to manage the lagoon. The best alternative is to develop strong collaboration among the various stakeholders in the area. This converts an open-access to common property resource use regime. All instruments of extractive reserve were satisfied by the local fishers. However, extractive reserve seems to be similar with fish refuge concept which currently proposed by Southeast Asian Fisheries Development Centre (SEAFDEC).     

Environmental policy à la carte: Letting firms choose their regulation

Under uncertainty, the optimal choice between price and quantity instruments depends on the technology of the regulated firms, which is often private information. We consider an environmental policy that delegates the prices-versus-quantities decision to the firms by offering them the choice between an emissions tax and permit trading. Such an approach is currently used in Swiss climate policy. We provide a detailed characterization of the optimal policy and show that this approach reduces expected social costs compared to a pure tax or permit-trading regime. We demonstrate that an optimal allocation of firms to instruments can be achieved despite substantial informational constraints, and that all firms gain from the introduction of the instrument choice compared to optimally designed single-instrument policies. Furthermore, we discuss the conditions under which this approach is likely to be preferable to a hybrid regulation.     

Transitional politics: emerging incentive-based instruments in environmental regulation

This paper proposes a positive theory of environmental instrument choice. We study a democratic society that seeks to lower the level of pollution from industrial sources to a pre-specified target. The target can be implemented by one of three instruments: [S]: uniform emission standards; [P]: tradeable permits; and [T]: emission taxes. The conflict of interest between special-interests, representing polluters, and the electorate is resolved by an elected politician. We characterize when each of the three policy instruments is chosen in political equilibrium and show that the transition, observed in many countries, from [S] to either [P] or [T] can be understood as a natural consequence of increasingly ambitious environmental targets.     

External devices on penguins: how important is shape?

Many researchers use external recording or transmitting devices to elucidate the marine ecology of fish, mammals and birds. Deleterious effects of these instruments on the parameters researchers wish to measure are hardly ever discussed in the literature. Research has shown that, in penguins, volume and cross-sectional area of instruments negatively correlate with swimming speed. dive depth and breeding success, and that device colour affects bird behaviour. Here, a large (200 g, cross-sectional area 2100 mm²) streamlined device was attached to the lower back of Adélie penguins (Pygoscelis adeliae on Ardley Island, South Shetland Island in 1992) and its effects on bird swimming speed and energetics were measured in a water canal in Antarctica. Although the device was 10.5% of penguin cross-sectional area, swimming speed was reduced by only 8.3% and mean power input increased by only 5.6% while swimming. Although our streamlined device was five times more voluminous than one of our older units, the effect on swimming energetics could be reduced by 87%.     

Einstufung und Kennzeichnung: das Instrumentarium von GHS und REACH für das Risikomanagement

For the safe use of chemicals it is necessary to identify risks in different fields of application. Not until then harmful effects to man and the environment can possibly be reduced by adequate measures. Here the identification of intrinsic properties of chemicals is an important fundamental for evaluation. Broad examination of exposition follows. REACH and GHS deliver new instruments which, due to their requirements on information quality and transparency as well as on harmonization, contribute to the improvement of risk management measures (RMM). With the coming into force of the CLP-regulation and the implementation of the GHS within the EU on 20.?1.?2009, as suggested in the white book on European Chemicals policy in 2001, the new system of European chemical law has been completed at a regulatory level. This article shows the development so far from the first directive on the regulation on the labeling of chemicals, to the establishment of application and test procedures, and then to the instruments of risk communication and risk management introduced by REACH and the CLP-regulation.     

The Impact of Economics on Environmental Policy

Environmental economists have seen their ideas translated into the rough-and-tumble policy world for over two decades. They have witnessed the application of economic instruments to several environmental issues, including preserving wetlands, lowering lead levels, and curbing acid rain. This essay examines the impact of the rise of economics in the policy world on the making of environmental policy. I focus on two related, but distinct phenomena—the increasing interest in the use of incentive-based mechanisms, such as tradable permits, to achieve environmental goals; and the increasing interest in the use of analytical tools such as benefit–cost analysis in regulatory decision making.I argue that economists and economic instruments have had a modest impact on shaping environmental, health, and safety regulation, but that economists will play an increasingly important role in the future. Although the role of economics is becoming more prominent, it does not follow that environmental policy will become more efficient. This apparent inconsistency can be explained by the political economy of environmental policy.     

The practice of coastal zone management in Portugal

The practice of coastal zone management in Portugal is very recent. Key issues and considerations about natural shoreline dynamics, main policy instruments, and lessons learned from the EU Demonstration Programmes on Integrated Coastal Zone Management in Portugal will be outlined in this paper in an attempt to understand how the practice of ICZM and its prospects are. Coastal zone management problems and their associated side effects, as well as national and international evolution patterns will be drawn. Some means of achieving better coastal zone management practices and ways of addressing some of its forefront issues are also identified. Special attention will go to erosion problems. The pressure induced by urban development and economic activities on coastal areas is increasing. Poor sediment availability combined with years of neglected management and over-exploitation of resources have had a negative impact, and there are many areas showing evidence of coastal erosion. There is a need to improve policies and instruments of coastal planning and management. Coastal zone management plans are being developed for the nine sectors of the continental Portuguese coast, providing a full analysis of coastal systems and a delimitation of uses in relation to the carrying capacity of the shoreline.