Moving to markets in environmental regulation

Project Abstract

The shift towards market-based instruments in environmental regulation has been a significant trend in recent years. This transition is driven by the belief that market mechanisms can achieve environmental goals more efficiently and cost-effectively compared to traditional command-and-control approaches. Market-based instruments include cap-and-trade systems, pollution taxes, and tradable permits, among others. These mechanisms create financial incentives for firms to reduce their emissions and pollution levels by allowing them to trade pollution allowances or credits. This research project aims to investigate the effectiveness and implications of moving towards market-based instruments in environmental regulation. It will analyze case studies from different countries that have implemented market-based approaches to address environmental issues. The research will assess the environmental outcomes, economic impacts, and regulatory challenges associated with these market mechanisms. By examining the experiences of various jurisdictions, this project seeks to provide insights into the potential benefits and drawbacks of transitioning to market-based environmental regulation. The findings of this research can inform policymakers and stakeholders about the opportunities and challenges of adopting market-based instruments to achieve environmental objectives.

Project Overview

<p> </p><div><p>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.</p><p>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.</p><p>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 . . .</p><p></p></div><h3></h3><br> <br><p></p>