Manual on the Development of Cleaner Production Policies ... - Unido

DEVELOPMENT OF CP POLICY
MODULE 4: POLICY TOOLS AND INSTRUMENTS
SLIDE: Policy instruments/2
• Economic instruments, which create incentives or disincentives for
specific behaviours, by changing related economic conditions;
• Information-based strategies, which seek to change behaviour by
providing information. The underlying assumption is that the actors do
not take optimal or correct decisions for lack of information or knowhow.
Present the three categories of instruments in general terms. The objective is
to show that not only direct regulation can be used in environmental policy—
which tends to be an intuitive reaction on the part of participants—but also
that other instruments can be successfully applied. Specific examples from
Latin America and other regions will be presented to illustrate the point.
Note that the different policy instruments are not used in isolation.
Regulatory instruments typically operate in conjunction with a threatened
economic penalty; economic instruments need an appropriate legal
framework; and the provision of information is a necessary element in the
implementation of most types of policy instruments.
Background
Since the inception of environmental policy, the predominant strategy for pollution control has
generally been through the use of regulatory instruments, where a public authority sets standards and
then inspects, monitors and enforces compliance to these standards, punishing transgressions with
formal legal sanctions. These regulations may, for example, specify an environmental goal—such as
the reduction of carbon dioxide emissions by a specified date—or they may mandate the use of a
particular technology or process.
Such an approach gives the regulator maximum authority to control where and how resources will be
allocated in order to achieve environmental objectives, and it provides the regulator with a reasonable
degree of predictability as to the extent pollution levels will be reduced. There are certain situations
where regulatory instruments may be seen as the most appropriate and effective means of achieving a
desired environmental outcome, an example being the control of hazardous materials through specified
restrictions or banning.
The second method that can be used to promote pollution prevention or a cleaner production policy is
the market-based approach, using so-called “economic instruments”. In this case, preventing pollution
and Cleaner Production is promoted through economic incentives or financial penalties rather than
simply through action enforced by the Government. Marketable permits, green procurement guidelines
promoting “cleaner” products, or customs and tax breaks for pro-environmental investments are
examples of a market-based approach. In some cases, a market-based approach is initiated by the
Government, but then left in the hands of economic markets. Market-based instruments show some
theoretical advantages compared to command-and-control regulations in achieving environmental
goals and economic efficiency simultaneously.
Taxes, fees and charges may be used to promote Cleaner Production practices by raising the costs of
unwanted outputs, or by providing incentives to promote the more efficient use of natural resources. In
some instances, it may be appropriate for the revenues from these instruments to be used to support CP
activities, further stimulating preventive approaches. One significant constraint against the more
widespread adoption of market-based instruments is that it is often not politically feasible to set taxes
at a sufficiently high level to achieve the desired environmental goals.
In addition to creating an appropriate regulatory and financial framework for CP, the Government may
further stimulate the adoption of Cleaner Production practices through the use of information-based
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