Abstract
This paper provides a succinct review of the main developments in the literature on incentive-based policy mechanisms in the contexts of pollution control and biodiversity conservation, dating from the early beginnings of the science in the 1960s. A focal point in the review is on the design features of these policy mechanisms. Key developments in policy design were originally established in controlling externalities arising from pollution and have since been extended to policy design tailored towards biodiversity conservation. Special emphasis is given to the spatial characteristics of the environmental problems underlying both pollution control and biodiversity conservation. The paper concludes by drawing some lessons and setting out elements of a future research agenda in both policy domains.
Highlights
Incentive-based policy instruments have long been argued by economists to be a more efficient means of achieving environmental goals such as reductions in polluting emissions and fostering the delivery of ecosystem services (Hanley et al 2006)
Efficient permit market design is much simpler for CO2 than is the case for non-uniformly mixed pollutants such as SO2 and NOX, since for uniformly mixed pollutants policy designers do not need to worry about the spatial location of discharges
This paper has provided a brief overview of the main economic incentives which have been developed to reduce pollution, to increase the supply of desirable ecosystem services and to enhance biodiversity conservation
Summary
Incentive-based policy instruments have long been argued by economists to be a more efficient means of achieving environmental goals such as reductions in polluting emissions and fostering the delivery of ecosystem services (Hanley et al 2006). We will first present a bird’s eye view of the main incentive-based mechanisms that have been developed in the context of pollution control, since this was the problem which first shaped economists thinking on the use of incentives to improve environmental performance in an optimal or a cost-effective manner Once this account has been established, we aim at showing how such schemes have been “translated” for use in the context of biodiversity protection and conservation. We will discuss the main properties of (Pigouvian) taxes and tradeable pollution markets, and will try to establish and identify the current status of these mechanisms This will serve as a stepping stone for the discussion of the main developments and implementation of incentive-based schemes in the context of biodiversity conservation in Sect.
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