Economic Incentive Instruments Research Articles

Dynamic evolution of policy mix in response to COVID-19: Practice from China.

COVID-19 is a global pandemic. In response to this unprecedented crisis, Chinese government formulated a series of policies. This research is dedicated to exploring the dynamic evolution of China's policy mix in response to COVID-19 in different crisis response stages from a network perspective. First, a three-dimensional analysis framework of "policy subject-policy target-policy instrument" was developed. Then, based on the data sets collected by textual analysis, the dynamic evolution of policy subject, policy target, policy instrument in China's policy mix in response to COVID-19 was discussed by using the method of SNA. This study concluded that the core policy subject, policy instrument, and policy target of China's response to COVID-19 changed with time. National Health Commission (NHC), Ministry of Finance (MOF), Ministry of Transport (MOT) and Ministry of Human Resources and Social Security (MHRSS) have important influences in the network of policy subjects. Other subjects are more at the edge of the network, and there are few joint issuances among policy subjects. The study also found that the core policy target was adjusted over time, with phased dynamic characteristics. At the initial stage of China's response to COVID-19, "reduce infection and mortality" and "steadily carry out economic and social work" were the core policy targets. With the COVID-19 under control, "enterprise development and work resumption" becomes a new core policy target. In addition, this study also revealed the dynamic evolution and unbalanced use of China's policy instruments in response to COVID-19 in different stages. The combination of policy instruments is mainly composed of "mandatory administration instruments" and "economic incentive instruments", and supplemented by "health promotion instruments" and "voluntary plan instruments". These findings may enrich the literature on COVID-19 policy to help researchers understand the dynamics of policy from a network perspective. Moreover, these findings may provide several valuable implications for policymakers and other countries to formulate more effective policies for epidemic response.

Exploring farmers’ perspectives on collective action: a case study on co-operation in Dutch agri-environment schemes

To improve the ecological effectiveness of agri-environment-climate measures (AECM), collective approaches to co-ordinate AECM beyond the farm level have emerged, which are characterised by different levels of co-operation between individual farmers. As participation is voluntary, understanding farmers’ perspectives on collective action in the context of these economic incentive instruments is crucial to improve existing or design novel approaches. We conducted a Q study on farmers’ viewpoints on collective AECM in the Netherlands, where all AECM have to be realised jointly since 2016. Our results reveal three dominant views on collective AECM: a collective-oriented, a business-oriented and an environment-oriented perspective. Clear preferences for the collective approach show that even in cultures with strong values of independence joint action is possible, as farmers’ autonomy can be strengthened through co-operation. Considering different perspectives on collective approaches within the institutional design can help to develop more targeted, and thus successful, incentives.

Economic incentive instruments and environmental innovation in China: Moderating effect of marketization

AbstractAs an influential economic entity, China’s economic growth pattern is changing. The traditional way brought high-speed growth as well as caused environmental damage. The concept of environmental innovation, which combines the advantage of technology innovation and environmental consideration, has become a vital means to achieve sustainable development. Due to the double externality characteristic of environmental innovation, the government plays an important role in its development. Based on provincial panel data from 2008 to 2017, this paper first examines the distinct influences of various economic incentive instruments on environmental innovation. Then, the moderation role of marketization is explored. The results show that governments’ direct financial expenditure on environmental protection has a positive impact on environmental innovation, while the effect of the environmental tax is not significant. In addition, the impact is negatively moderated by marketization.

Problems and Countermeasures of River Management in the Process of Rapid Urbanization in China

The rapid process of urbanization has led to water pollution, reduction of space areas and channel deposition. However, current river protection and management levels are not suitable for city development level and human demand. Therefore, these problems have not yet been solved. China is still in an era of rapid urbanization, which means that the influence of urbanization in rivers will increase in the future—and the task of river protection and management will be more arduous. In order to meet the challenges and opportunities brought by urbanization and promote the sustainable use and management of river, this study puts forward relevant suggestions on river protection and management, such as river management mechanisms, economic incentive instruments, technical support, transformation of development concepts, improving laws, regulations and policies and stimulating public participation.

SOME ASPECTS OF STATE GOVERNANCE OF NATURAL ASSETS IN UKRAINE

Topicality. The state of ecological-economic development in Ukraine demonstrates the exhausted disposition of its natural-resource potential due to exorbitant and consumer use, as well as the unbalance of the government functions of use and reproduction of natural capital. Aim and tasks. The purpose of the article is to substantiate the state governance of natural assets, taking into account the factor of environmental conflict in the framework of sustainable development. Research results. Natural assets are considered as resources as a result of their involvement in economic activity a benefit is received due to increased net cash flows, both from their direct use and from the provision of ecosystem services. Within a certain territory, the total volume of natural resources differs from the volume of natural assets by the amount of the passive part of natural capital. State regulation of natural assets is defined as a type of state activity on forming the policy of organizing the practical activity of state bodies, provision technological process of preparation, adoption and execution of managerial decisions regarding economic entities - users of natural assets. Conclusion. Asset management effectiveness depends on the type of the policy that is chosen � traditional, integrated or transformational and, consequently, the level of application alongside regulatory instruments � technological and social innovation and, above all, economic incentive instruments, in particular, the consideration of natural resources in price terms, the establishment of a time-differentiated system of penalties on what is directly harm the environment, new development strategies that ensure the relationship between the objectives of economy's social sphere and environmental security. In resolving environmental conflicts that arise in the field of natural assets management the method of ecological consensus was proposed that is inclusive in nature and is as close as possible to comply with the principle of Pareto optimality.

Assessing economic instruments to steer urban residential sprawl, using a hedonic pricing simulation modelling approach

Over the past centuries, cities have undergone major transformations that led to global urbanization. One of the phenomena emerging from urbanization is urban sprawl, defined as the uncontrolled spread of cities into undeveloped areas. The decrease in housing prices and commuting costs as well as the failure to internalize the real costs associated with natural land, led to households moving-out into the urban fringe – resulting in fragmented, low-density residential development patterns that has multiple negative impacts. Awareness for this problem has fed the need for the implementation of effective policies against urban residential sprawl – a subject that has received considerable attention in literature, albeit little attention has been given to economic incentive instruments. Hence, the objective of this paper is to assess the effectiveness of different economic instruments in steering urban residential sprawl – assessing property taxes, land taxes and public transport subsidies. To this end, the Sustainable Urbanizing Landscape Development (SULD) model is used and adapted, and a case study is provided for the medium-sized City of Aveiro in central Portugal. Results show that a flat property tax and a public transport subsidy for low and middle-income households are the most efficient instruments, leading to a decrease in urban residential area, living space and housing quantity as well as an increase in real estate values. On the other hand, a land tax results in insignificant changes in urban residential development patterns.

Impact of Different Policy Instruments on Diffusing Energy Consumption Monitoring Technology in Public Buildings: evidence from Xi’ an, China

Abstract Energy Consumption monitoring technology (ECMT) can effectively reduce the energy consumption of public buildings (PB) in the operational phase, but it is not used widely in China. The main reason for this is that the existing policies have a poor effect on diffusing ECMT; thus, studying the impact of different policy instruments on ECMT in PB is of great significance to the widespread use of ECMT and its role in decreasing the energy consumption of PB. This paper systematically reviews the policy related to ECMT in China from 1990 to 2018, and, on this basis, divides the promotion stage of China’s ECMT into three stages: the concept stage, the demonstration stage and the gradual promotion stage. A questionnaire survey and semi-structured interview of 313 stakeholders (ECMT suppliers, government officials, and scholars) was used to study the influence of command-and-control instruments (CAC), economic incentive instruments (EI) and exhortatory instruments (EXI) on the diffusion of ECMT in PB. The empirical results show that CAC and EXI contribute to the diffusion of ECMT in PB, whereas EI do not. In more detail, laws and regulations, energy consumption quotes, education and information programs, and energy audits and disclosure also have a significant impact on diffusing ECMT, whereas technical standards, subsidies for adopting ECMT, energy performance contracting, and carbon trading do not. Finally, relevant policies and suggestions are put forward based on the results.

The innovation and performance effects of well-designed environmental regulation: evidence from Sweden

This paper provides novel empirical insights into the Porter hypothesis (PH) and its dynamic nature. The PH posits that well-designed environmental regulations induce eco-innovations at polluting firms that improve both their environmental and business performance via ‘innovation offsets.’ We conduct an econometric test of this proposition, using Swedish pulp and paper plants as empirical application. Swedish environmental regulation of polluting industries provides an interesting case because it has been praised, due to containing elements of ‘well-designed’ regulations, for being conducive to accomplishing the ‘win-win’ situation of mutual environmental and economic benefits. The empirical results indicate that flexible and dynamic command-and-control regulation and economic incentive instruments have induced innovation offsets through improved energy efficiency. Our study bears important implications: empirical tests of the PH that do not account for its dynamic nature, and that do not measure ‘well-designed’ regulations, might provide misleading conclusions as to its validity.

EU Environmental Law, Governance and Decision-Making. By Maria Lee

EU Environmental Law, Governance and Decision-Making should be on the reading list of any researcher, teacher and student of European Union (EU) environmental law. The 2014 edition updates the previous book EU Environmental Law: Challenges, Change and Decision-Making (2005, Hart Publishing) and introduces new material. ‘EU Environmental Law, Governance and Decision-Making’ provides in 10 chapters a concise yet comprehensive and critical introduction to key cross-cutting themes and substantive areas of EU environmental law. The book’s discussion spans an analysis of EU primary and secondary legislation, as well as in-depth analysis of key cases decided by the European Courts. More specifically the book provides an account of the formal legal framework for EU environmental standards, in particular the primary Treaty law relevant to the protection of the environment, with the first chapter on this topic also including a discussion of the significance of the EU Charter on Fundamental Rights to EU environmental law. The subsequent chapters develop further key themes that provide insights into EU environmental law as a particular type of environmental decision-making. Among these are the often contested role of experts, politics and institutions in environmental decision-making, the pursuit of sustainable development through EU environmental law, as well as a scene-setting chapter on ‘instruments and governance’. The latter introduces the reader to topical developments in environmental regulation, such as the use of economic incentive instruments, voluntary regulation as well as information as a tool of regulation. There are two further chapters that discuss cross-cutting themes, one on participation in environmental decision-making in the Member States, which focuses on the application of environmental assessment, including Strategic Environmental Assessment. A further chapter discusses participation in environmental decision-making at the EU level, which extends also to a discussion of access to information at the EU level as a precursor for the meaningful exercise of rights to participation.

Economic incentives in sustainable water management: a Risk-Based Decision Analysis approach for determining groundwater pollution charges under uncertainty

A risk-based decision analysis methodology is presented, that can be used as a water policy tool in the design of economic incentive instruments, under conditions of uncertainty. A contaminated groundwater resource system with unknown hydrogeological parameters is used as a case study. The polluter has to select the policy to be followed among a series of alternatives, ranging from the extreme and environmentally risky scenario of paying pollution charges as long as the aquifer will remain polluted, up to the conservative option in terms of reduced environmental risks policy of safely rehabilitating the groundwater system. The full-cost price of water, including direct, opportunity, and environmental costs, both actual and probabilistic, as well as the risks of failure of the alternative scenarios due to the uncertainty, as they result from stochastic simulation, are embedded in a risk-cost-benefit decision model, developed for the evaluation of the alternatives. The pollution charges to be imposed by the local water authority are determined through the appropriate development of this model and the use of a proposed algorithm, in a way that these charges can act as incentives to the polluters, forcing them, or the authorities, to select the most environmentally sustainable water policy, namely that of safely restoring the aquifer.

Approaches for Chinese Agricultural Nonpoint Source Pollution

Nonpoint sources of pollution, primarily from agricultural sources, are a major cause of water quality impairment in China. Yet approaches for addressing this issue remain underexplored. This article first introduces the current status of China’s agricultural nonpoint sources pollution.The article then discusses some practical approaches for agricultural nonpoint sources pollution control in terms of China’s current economic development levels and conditions.The article concludes that voluntary programs, command and control programs and economic incentive instruments are feasiable for addressing agricultural nonpoint sources pollution, if such approaches are designed and implemented well.

Economic incentives and nutritional behavior of children in the school setting: A systematic review

The aim of the present review was to examine the existing literature on the effectiveness of economic incentives for producing sound nutritional behavior in schools. Studies published in the English-language literature that included baseline and/or outcome data regarding food and beverage intake of schoolchildren were eligible for inclusion. A systematic search of the literature was conducted to identify relevant primary studies and relevant systematic reviews of primary studies. Altogether, 3,472 research publications were identified in the systematic search, of which 50 papers were retrieved. Of these, 30 publications representing 28 studies fulfilled the criteria for inclusion. The studies addressing price incentives suggest that such incentives are effective for altering consumption in the school setting. Other types of economic incentives have been included in combined intervention schemes, but the inclusion of other intervention elements makes it difficult to draw conclusions about the effectiveness of the economic incentive instruments per se in these studies.

The Political Nexus between Water and Economics in Brazil: A Critique of Recent Policy Reforms

The reform of water policies in Brazil has involved a combination of regulatory norms and economic-incentive instruments. Nonetheless, contrary to its formal objectives, the process has largely failed to prevent widespread environmental impacts and growing spatial and sectoral conflicts. The main reason for such failures is the perverse influence of market rationality, which is particularly evident in the reorganization of the public sector, the quantification of the monetary value of water, and the payment for environmental services. JEL codes: Q25, Q28, Q, 56

Driving on liquid sunshine – the Brazilian biofuel experience: a policy driven analysis

AbstractThis paper analyses Brazil's experience with biofuels, focusing on the central role of the federal government as the main force driving the implementation of alternative locally produced ethanol (ethyl alcohol) and biodiesel. The pioneering, large scale ethanol programme that started over 30 years ago can be considered the most successful experience with the use of biofuels to date, as the government was able to rapidly implement the use of ethanol (ethyl alcohol) as a substitute for petrol in the 1970s and 1980s. The work contributes to the general discussion of sustainable and renewable energy sources and sets out the key policy mechanisms used. The paper also innovatively looks at the second large governmental intervention in the renewable fuels market – the biodiesel programme. In addition to the contribution to the debate surrounding command‐and‐control measures and economic incentive instruments, the paper analyses how lessons learned from the ethanol experiment were taken into consideration in the design and implementation of the biodiesel mandate, including social and environmental facets. It emphasizes the uniqueness of producing sugarcane ethanol in the Brazilian context and how attempts to carry out similar fast growing biofuels programmes may not be possible in other parts of the world. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.

The Use of Economic Incentives for Environmental Protection in Less Developed Countries

The use of economic incentive instruments to address the environmental problems in less developed countries has been a policy concern in the literature as well as for the environmental policy makers. The issue boils down to how to introduce and implement the economic incentives in those countries. This paper discusses the problems and challenges in the application of economic incentives and recognizes the major dimensions of a successful transition from traditional command-and-control to economic incentive paradigm in environmental policy in less developed countries. In addition, we present a simple graphical model in order to capture the dynamic aspects of the suggested progression.

Cost-Effectiveness of Reducing Sulfur Emissions from Ships

We model cost-effectiveness of control strategies for reducing SO2 emissions from U.S. foreign commerce ships traveling in existing European or hypothetical U.S. West Coast SO(x) Emission Control Areas (SECAs) under international maritime regulations. Variation among marginal costs of control for individual ships choosing between fuel-switching and aftertreatment reveals cost-saving potential of economic incentive instruments. Compared to regulations prescribing low sulfur fuels, a performance-based policy can save up to $260 million for these ships with 80% more emission reductions than required because least-cost options on some individual ships outperform standards. Optimal simulation of a market-based SO2 control policy for approximately 4,700 U.S. foreign commerce ships traveling in the SECAs in 2002 shows that SECA emissions control targets can be achieved by scrubbing exhaust gas of one out of ten ships with annual savings up to $480 million over performance-based policy. A market-based policy could save the fleet approximately $63 million annually under our best-estimate scenario. Spatial evaluation of ship emissions reductions shows that market-based instruments can reduce more SO2 closer to land while being more cost-effective for the fleet. Results suggest that combining performance requirements with market-based instruments can most effectively control SO2 emissions from ships.

The Use of Economic Incentives in Developing Countries: Lessons from International Experience with Industrial Air Pollution

To what extent should developing countries eschew conventional command and control regulation that is increasingly seen as inefficient and rely instead on economic incentives to control industrial air pollution? The article discusses the advantages and disadvantages of various economic incentive instruments; presents in-depth case studies of their application in Sweden, the United States, China, and Poland; and proposes policy guidelines. The authors argue that both design deficiencies and pervasive constraints on monitoring and enforcement impede the effectiveness of economic instruments in developing countries. The latter are difficult to rectify, at least in the medium term. Therefore, tradable permits are generally not practical. Suitably modified, however, emissions fee policies probably are appropriate. They can provide a foundation for a transition to an effective economic incentive system and can raise revenue for environmental projects and programs. If political opposition can be overcome, taxes on goods associated with pollution constitute a second-best regulatory instrument.

Pigovian Taxation at the Supranational Level: Fiscal Provisions of the International Oil Pollution Compensation Fund

The International Oil Pollution Compensation Fund, viewed from the perspective of the public finance economist, encompasses a unique and little known effort to impose the generic features of a Pigovian environmental tax at the international level. The tax is part of an eclectic insurance and fiscal scheme for internalizing the negative externalities of oil pollution in international waters. Its link to the insurance component of the policy format tends to obscure its tax characteristics and to make it politically more acceptable as well. The IOPC Fund regime was established under the umbrella of two international treaties signed in 1969 and 1971 in the wake of the disastrous Torrey Canyon oil spill in British waters several years earlier. The tax may serve as a prototype for the use of economic incentive instruments in other international environmental problem areas.