Instrument Choice: Generally

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  • strict warning: Declaration of views_handler_argument::init() should be compatible with views_handler::init(&$view, $options) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_argument.inc on line 744.
  • strict warning: Declaration of views_plugin_style_default::options() should be compatible with views_object::options() in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/plugins/views_plugin_style_default.inc on line 24.
  • strict warning: Declaration of views_plugin_row::options_validate() should be compatible with views_plugin::options_validate(&$form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/plugins/views_plugin_row.inc on line 134.
  • strict warning: Declaration of views_plugin_row::options_submit() should be compatible with views_plugin::options_submit(&$form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/plugins/views_plugin_row.inc on line 134.
  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Declaration of views_handler_filter::options_validate() should be compatible with views_handler::options_validate($form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_filter.inc on line 607.
  • strict warning: Declaration of views_handler_filter::options_submit() should be compatible with views_handler::options_submit($form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_filter.inc on line 607.
  • strict warning: Declaration of views_handler_filter_boolean_operator::value_validate() should be compatible with views_handler_filter::value_validate($form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_filter_boolean_operator.inc on line 159.

Environmental policy instruments fall broadly into three categories: command and control regulation, market-based incentives, and voluntary initiatives.  

Early environmental regulation tended to use command and control regulations.  In command and control regulation, the regulator determines particular emissions levels, concentration levels, or technologies that firms must use.  For example, a regulation may require the use of the best available control technology or to eliminate a pollutant to the extent feasible.  

Command and control regulations have been criticized as inefficient because the regulator is unlikely to know the optimal emissions level or technology for a particular firm.  As a result, environmental regulations have shifted (although far from completely) toward market-based incentives.  The three major forms of market-based incentives are pollution taxes, tradable permits, and subsidies.  A pollution tax is a tax on an emitter equal to the marginal harm from emissions.  Tradable permits set the total level of emissions at a fixed amount but allow firms to trade the right to emit.  Subsidies are payments to firms for reducing emissions equal to the marginal benefit from the reduction.  In all cases, firms are allowed to choose emissions levels and technology, thereby taking advantage of knowledge held by the firms but not by the regulator.

Voluntary initiatives tend to take the form of information provision or disclosure in the hope that it will cause firms or individuals to  reduce emissions.  For example, firms may be required to disclose when they release a toxic chemical.  The expectation of community reaction due to the disclosure may cause firms to reduce the likelihood of release in the first place.  Similarly, labeling laws or voluntary labeling initiatives may change behavior.

The literature on instrument choice is focused on when, or under what conditions, each of these options is preferable.