INCE NTIVE SYSTEMS IN ENVIRONMENTAL REGULATION*

Abstract

ABSTRACTThe central problem of environmental and other regulation is identified as a control problem similar to that faced by principals in controlling their agents. An incentive systems framework, featuring the concept of incentive relation, is offered as a means of integrating and systematizing discussion of alternative means of regulation. The distinction of incentive and directive means of environmental regulation, together with the levels of their targets and the penalties for enforcement, are employed to develop a typology of regulatory means and to categorize environmental regulatory alternatives. Shifting from control of regulatees to control of regulators, some results of a study of the incentive systems facing state reclamation inspectors are reported. Dual external incentive relations (to the mining industry and to the federal Office of Surface Mining) are observed, and the design consequences for regulation in the federal system are discussed.