Economic Instruments In Environmental Policy Research Articles

The Development and use of Economic Instruments in Environmental Policy: The Case of Israel

Recently, Israel has undergone several changes in its environmental policy. This paper reviews the shift in environmental policy, from regulatory-based instruments to more flexible economic instruments in Israel. A substantial change has taken place in this respect over the last few decades in many OECD countries. In recent years, environmental policy in Israel has been going through a similar change, in part due to the recent accession to the OECD. Yet, Israel still lacks the use of certain main economic tools, such as greenhouse gas emissions trading and carbon taxes, which are available in many OECD countries.

Application of Economic Instruments in Environmental Policy

The search for smarter ways to control pollution has generated heated debate. The issue of choosing the means or policy instruments to meet environmental goals – can be a surprisingly complex task for policymakers. The traditional forms of environment regulation took the form of a so-called command-and control regulatory approach. However economists have consistently endorsed the use of market based instruments. At least in theory market based instruments minimize the aggregate cost of achieving a given level of environmental protection. Despite these advantages, market based instruments have been used far less frequently than command-and-control standards. The paper seeks to identify, and evaluate economic instruments in achieving the goal of cleaner environment; to address the concerns of a developing country regarding environmental protection and to look into few country's examples which have successfully achieved solutions to their environmental problems through use of these instruments.

Tradable Permits versus Tradable Credits: A Survey and Analysis

This article compares tradable permits with tradable credits, two distinct economic instruments of environmental policy. It is demonstrated that under credit trading, which is an addition to (relative) emission standards, residual emissions are free of cost. Under permit trading (cap-and-trade), residual emissions always have a cost. The economic consequences of this difference are surveyed and analyzed with regard to various issues, including economic efficiency, political acceptance, incentives for adopting clean technologies, and incentives for legal compliance. The review concludes that permit trading is less costly to society than credit trading, but imperfect markets for output may change this ranking. The article reveals several gaps in the literature and formulates some new hypotheses for future research.

Environmental Tax Reform in the European Union: Impact on CO2 Emissions and the Economy

Economic instruments in environmental policy try to correct prices in order to internalise externalities. The environmental tax reform is a specific policy approach, which raises taxation of ‘bads’ such as resource use or emissions and reduces other taxes on ‘goods’ such as labour that are felt as a burden so that the total tax revenue remains constant. On a small scale some European countries introduced this instrument, and the results have been evaluated broadly positive by the literature. The paper at hand gives answers to the question, what might happen to CO2 emissions and the economy, if this instrument would be used in all European countries in a scale that allows reaching the European CO2 emission targets. The instrument of the analysis is the global economy-energy-environment model GINFORS. The simulation results show that the targets can be met with only small losses in GDP and gains in employment.

EU Emissions Trading Scheme as Implemented in the Czech Republic

The paper reports on the implementation of the European Emissions Trading Scheme (EU ETS) in the Czech Republic. Trading in CO2 emission allowances is one of the most dynamic and progressive economic instruments of environmental policy. Since coming into force in January 2005, the system has incorporated into company decision making a truly new phenomenon – the price of carbon in the form of allowances tradable on the European market, where the price of the allowance represents the costs of a company when emitting one ton of CO2. The incentive, given by the opportunity costs should motivate operators of installations emitting CO2 to analyze options for carbon emission reduction and to behave rationally. In total, the system should result in a quite significant reduction in the compliance costs of CO2 reduction when compared to alternatives such as taxes or emission limits, as a result of flexibility given by the market.The most controversial and sensitive part of the system is the initial distribution of the allowances to emitters. The so-called National Allocation Plan has to provide answers to very difficult questions – to whom, how and how many allowances will be given. This paper focuses on a detailed description of the sectors and companies in the Czech Republic that are affected by the system and discusses various aspects of the scheme.

On the Political Economy of Environmental Policy

In the past there was hardly any use of economic instruments in environmental policy, mainly command and control measures were used. More recently, ecological taxes as well as tradable permits became more popular and voluntary agreements have been implemented. Using the Public Choice approach we ask for the reasons of this wider acceptance of economic instruments. We conclude that the use of market based instruments in environmental policy has not increased very much and their impact on the actual situation is still rather low, but there is hope of a at least some increase in the future.

On the Political Economy of Environmental Policy

In the past there was hardly any use of economic instruments in environmental policy, mainly command and control measures were used. More recently, ecological taxes as well as tradable permits became more popular and voluntary agreements have been implemented. Using the Public Choice approach we ask for the reasons of this wider acceptance of economic instruments. We conclude that the use of market based instruments in environmental policy has not increased very much and their impact on the actual situation is still rather low, but there is hope of at least some increase in the future.

Reducing VOC emissions from solvents in Europe: the potential role of economic instruments

This paper considers the feasibility of harmonized use of economic instruments in environmental policy in the EU and Central and Eastern European Countries (CEECs). It is argued that the effectiveness of economic instruments in CEECs (which are already well developed in some of these countries) may be affected by the economic problems accompanying the transition process, by incomplete market reform in some countries and industries, by inefficiencies in public spending and by pre-existing market distortions. The paper then focuses specifically on the example of a possible tax on solvents to reduce VOC emissions. A brief summary is given of the solvent – VOC policy issues and of the possible role of economic instruments. The potential environmental and economic impacts of a tax on solvents are considered, with special attention for three industries (paint, printing and pharmaceutics). The article concludes that in the present situation a differentiated tax (with lower rates in CEECs than in the EU) would be preferable to a uniform tax throughout Europe. Furthermore, the tax revenues should (at least in the CEECs) be used to support investments in (VOC) pollution abatement. © 1998 John Wiley & Sons, Ltd and ERP Environment.

Estratégias empresariais e instrumentos econômicos de gestão ambiental

The economic instruments of environmental policy can assume a new roll in Brazilian reality: to influence the companies in formulation of theirs strategies.

Environmental information in policy design and enforcement: Water protection policy in Wallonia, Belgium

AbstractThe formulation and implementation of legal or economic instruments in environmental policy is characterized by an enormous need for information. Although governments are able to collect data relating to the quality of ecological resources or the extent of environmental degradation, a significant amount of data must also be provided by the firms whose activities have an impact on the environment. However, the amount of data that is supplied spontaneously by companies is often limited. In Belgium, as in many other European countries, firms are nonetheless legally obliged to reveal some aspects of their environmental situation when they request licenses or are subject to environmental taxes. The information provided is likely to be valuable in the formulation of environmental policy as long as the data are readily available and reliable. The role of information provision is analysed in relation to the water protection policies of the Walloon Region, Belgium.

Promoting sustainable development: Environmental incentives in Denmark and the Netherlands

AbstractAlthough command and control environmental regulation continues to form the foundation of environmental policy, the status of market‐based mechanisms in promoting sustainable development is growing. Keith Clement reviews the growth of economic instruments in environmental policy throughout the EC, and focuses on the schemes applied in Denmark and the Netherlands, two of the leading advocates of economic instruments in environmental policy.

The scope for economic instruments of environmental policy in the EC

This article discusses the role of economic instruments in environmental policy at the EC level. After an overview of important elements of EC environmental policy, recent developments, with the emphasis on the establishment of the Internal Market, are discussed. The application of economic instruments in the wider context of the OECD, as well as recent activities at the EC level are described. The fiscal harmonization process regarding mineral oil products shows some of the problems that may emerge in the introduction of economic incentives. The article continues with a discussion of the scope of economic instruments at the EC level, based on the main principles of EC environmental policy, and concludes that such instruments have a role to play. This can be made more clear if economic instruments are separated from the fiscal harmonization process and if these instruments are studied in a case-by-case setting.