Market-based policies

The policies span a range of regulatory approaches. The main alternative is between command and control (CAC) and market-based (MB) instruments, and a relevant role can also be played by the insurance sector. 

Similarly to other environmental taxes, carbon taxes are defined as priced-based policy instruments for the correlated effects to increase the price of certain goods and services, thereby decreasing the quantity demanded. On the other side, tradable permits are defined as quantity-based environmental policy instrument. Although both policy instruments are MB, their implementation is different carbon taxes fix the marginal cost for carbon emissions and allow quantities emitted to adjust, whereas tradable permits fix the total amount of carbon emitted and allow price levels to change according to market forces. 

Baldursson, F.M., von der Fehr, N.-H.M, 2004. Price volatility and risk exposure on market-based environmental policy instruments. Journal of Environmental Economics and Management 48(1), 682-704. 

Alternatively, a process of double sorting can be accomplished whereby first human resources questions are sorted for, then a market-based sort within the first selected group can be applied. The result would be all policies or procedures that relate to human resources and new market sourcing or expansion. 

The introduction of the EU ETS in Germany was characterised by a series of difficult general conditions (time pressure, large number of installations, data, inexperience with market-based instruments etc.). In Germany, a country which is characterised by a strong corporatist policy style and by a diversity of diverging interests, the political system s ability to manage complex political processes of this kind, on the basis of very uncertain and incomplete information, is remarkably limited. 

Raymond, L. 2003. Private Rights in Public Resources Equity and Property Allocation in Market-Based Environmental Policy. Washington, DC Resources for the Future Press. 

Frank Convery, B.Agr.Sc., M.Agr.Sc., M.S., Ph.D., is Heritage Trust Professor of Environmental Policy at University College Dublin. He is active on a number of EU-wide investigations and bodies. He has written extensively on resource and environmental economics issues with particular reference to agriculture, forestry, energy, minerals, land use, urbanisation, environment and development in developing countries. At present, his research relates to EU environmental policy with particular reference to the use, potential and effectiveness of market-based instruments. 

A more effective approach to clean air policy, and one example of a sensible program being implemented by the federal government, is the Clean Air Interstate Rule or CAIR, intended to reduce emissions of particulate matter and NO in the eastern United States. EPA finalized the CAIR rules on March 10, 2005 in response to a finding of non-attainment of National Ambient Air Quality Standards (NAAQS) for fine particulate matter and ozone formation. CAIR requires reductions in SOj and NOj emissions from coal-fired power plants the emissions limits spelled out in the CAIR plan affect electric utilities in 28 eastern states and the District of Columbia. Emissions reductions are to be achieved through a market-based cap-and-trade system similar to other air pollution programs EPA has put into practice over the last few decades. 

Market-Based Approaches to Environmental Policy A Refresher Course ... 

Stavins, R. N. (2003). Experience with market-based environmental policy instruments. In Handbook of Environmental Economics, Volume I, Karl-Goran Maler and Jeffrey Vincent, (Eds.), Elsevier Science Amsterdam, pp. 355- 35. 

The overall goals of this interdisciplinary conference were to summarize scientific and policy lessons learned from the attempt to mitigate acid deposition, and to discuss the future of transboundary pollutants and market-based emission control systems. Anthony Janetos, Vice President of the Heinz Center for Science, Economics and the Environment gave the keynote address providing the conferees with an historical perspective on lessons learned from the acid deposition research experience. In the evening address, Paul Portney, the former President and Senior Fellow of Resources for the Future discussed economical benefits and costs of air pollution... 

The OECD could contribute to the identification of appropriate policy practice by monitoring and evaluating developments in policy approaches to organic agriculture, including market-based approaches, and facilitating dialogue with stakeholders. ... 

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