Thesis Abstract

Abstract
Environmental regulation has traditionally relied on command-and-control approaches where regulatory authorities set specific standards and rules for businesses to follow. However, there has been a growing interest in exploring market-based mechanisms as alternatives to traditional regulatory approaches. This shift towards market-based environmental regulation is driven by the belief that market mechanisms can achieve environmental goals more efficiently and cost-effectively by harnessing the power of market forces. This research project aims to examine the effectiveness of moving towards market-based mechanisms in environmental regulation. By analyzing case studies and empirical data, this study seeks to evaluate the impact of market-based instruments such as emissions trading systems, pollution taxes, and subsidies on environmental outcomes. Additionally, the research will assess the implications of market-based approaches on regulatory compliance, innovation, and overall environmental performance of regulated entities. The research will also investigate the challenges and opportunities associated with the implementation of market-based environmental regulation. Factors such as market design, regulatory oversight, stakeholder engagement, and enforcement mechanisms will be explored to understand the key determinants of success in transitioning to market-based approaches. By identifying best practices and lessons learned from existing market-based schemes, this study aims to provide valuable insights for policymakers, regulators, and businesses seeking to enhance the effectiveness of environmental regulation. Overall, this research project contributes to the ongoing debate on the future of environmental regulation by shedding light on the potential benefits and drawbacks of market-based mechanisms. By examining real-world examples and empirical evidence, this study aims to inform decision-making and policy development in the realm of environmental governance. Ultimately, the findings of this research have the potential to shape the design and implementation of environmental policies that are both environmentally effective and economically efficient in achieving sustainable development goals.

Thesis Overview

INTRODUCTION

Over the last decade, market-based incentives have become the regulatory tool of choice when trying to solve difficult environmental problems. They are widely viewed as more efficient than traditional command and control regulation. This collection of essays takes a critical look at this question, evaluates whether the promises of market-based regulation have been fulfilled, and recommends future research that no longer pits one kind of approach against the other, but instead examines their interaction and compatibility.

This book had its genesis in conversations that took place over a period of months in 2002, conversations that were helped along by fine Santa Barbara County wine. Our topic was environmental regulation—in particular the long-standing debate over command and control versus market-based environmental regulation—and our discussions made us wonder: How could two scholars—one of us an economist, the other a lawyer—be so concerned about the same problem yet have such different perspectives? The literatures we drew on seemed to have little in common, and our normative frameworks seemed like ships passing in the night. Were we typical? In what ways did economists think about these regulatory design issues differently than legal scholars? Beyond the differences in approach, what did each field actually know? Now that we had some experience with market-based regulations, what did the experience tell us? In particular, if we could draw on the most interesting and recent work in both fields, what would it tell us about how well market instruments had performed, relative to prescriptive regulation, to date? To answer these questions, we invited some of the brightest minds concerned with environmental regulation, from both economics and law, to prepare papers and convene for a focused one-day workshop in Santa Barbara in August 2003. Our hope was that the whole emerging from such a dialogue would be much more than the sum of the two disciplinary parts.

The result was quite remarkable. Over the course of the very long day, the intensity never waned. The conversation was relentlessly interesting and truly cross-disciplinary. There were fascinating moments of translation and synergy, agreement and disagreement. The interchange frequently surprised the group and led to questions and issues we had not . . .