Comparative economic characteristics of environmental protection tools

Abstract

The relative advantages of the tools for the environmental protection have been assessed in the article. From the economical point of view emission taxes, subsidies for abatement of emissions, and market-based permit system are more preferable in comparison with the control and management systems. The control of emissions for each organization can be achieved only in case when the marginal costs of abatement for each pollutant are known, which is unlikely in practice. In case of immiscible pollution, the determination of the marginal costs of organizations to control emissions is not required only for permitting schemes, which gives them an advantage over other tools. The least expensive for achieving a particular purpose in the fight against pollution is the tool of minimum technological requirements for the protection of the environment. The long-term effect of the instrument depends on the net income effect and the effect of technological innovation. Subsidy schemes or alternative methods of initial distribution of market permits at the expense of positive effects of income can increase the size of the industry, which is undesirable from the ecological point of view. In order to neutralize this effect, the organizations of the subsidized industry may be obliged to make one-time payments, the amount of which is the total cost of subsidies. The second way is the induced impact on the pace of technological innovation. Control and management tools have weak incentives for innovation. An emissions tax (or emission control subsidy) will encourage environmentally sound innovation. In the market scheme, emission reductions reduce taxes. Pollution control instruments have different consequences for the distribution of income in the economy and the competitiveness of the economy.