Moving to Markets in Environmental Regulation Lessons from Twenty Years of Experience

Over the last decade, market-based incentives have become the regulatorytool of choice when trying to solve difficult environmental problems. Evidenceof their dominance can be seen in recent proposals for addressing global warming(through an emissions trading scheme in the Kyoto Protocol) and for amending theClean Air Act (to add a new emissions trading systems for smog precursors andmercury--the Bush administration's "Clear Skies" program). They are widelyviewed as more efficient than traditional command and control regulation. Thiscollection of essays takes a critical look at this question, and evaluateswhether the promises of market-based regulation have been fulfilled.Contributors put forth the ideas that few regulatory instruments are actuallypurely market-based, or purely prescriptive, and that both approaches can besystematically undermined by insufficiently careful design and by failures ofmonitoring and enforcement. All in all, the essays recommend future researchthat no longer pits one kind of approach against the other, but instead examinestheir interaction and compatibility. This book should appeal to academics inenvironmental economics and law, along with policymakers in government agenciesand advocates in non-governmental organizations.