Abstract
We take stock of the lessons learned from using market-based instruments in chemicals management and discuss the potential for increased use of risk-based taxation in the management of pesticides and other hazardous chemicals. Many chemical substances cause significant diffuse emissions when emitted over wide areas at individually low concentrations. These emissions are typically very difficult and costly to control. The targeted chemical may exist in many products as well as in a wide variety of end uses. However, the current regulatory instruments used are primarily bans or quantitative restrictions, which are applied to individual chemicals and for very specific uses. Policy makers in the area of chemicals management have focused almost solely on chemicals with a very steep marginal damage cost curve, leading to low use of price regulations. The growing concerns about cumulative effects and combination effects from low dose exposure from multiple chemicals can motivate a broader use of market-based instruments in chemicals management.
Highlights
Policy instrument choice in the area of chemicals is surrounded by uncertainties in terms of the damage costs from chemical production and consumption as well as the abatement or substitution costs of replacing chemicals of concern
In comparison with other environmental policy areas, we find a relatively limited use of market-based instruments for chemicals management
As chemical policy has targeted the prevention of health and environmental damage from a limited number of highly hazardous chemicals, bans and use restrictions have been the most frequently used policy instruments
Summary
Policy instrument choice in the area of chemicals is surrounded by uncertainties in terms of the damage costs from chemical production and consumption as well as the abatement or substitution costs of replacing chemicals of concern. The two main arguments in favor of market-based instruments is that they can be more cost-effective in reducing use, and better at promoting innovation than bans, use restrictions and technology standards [13,14] These command and control policies typically allow for very little flexibility in the means of achieving specific targets. For example when the health or environmental damages increase steeply due to increased exposure to a hazardous chemical, where effects are location-specific, and where threshold effects, i.e., an abrupt spike in the damage function after a given threshold, are likely In such situations, bans and use restrictions are more appropriate [1,15]. We discuss our results and outline some opportunities for further research
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