The basic principles of environmental policy - "polluter pays", "prevention is better than cure", "precautionary principle" and the "stand-still principle" guide policy makers in their choice of instrument. An instrument that maximises the effect within a given budget, or minimizes costs for a desired objective should be chosen.
Isolated measures regarding single pollutants or products are no longer seen as the core of environmental policymaking. Regulations will continue to play an important role, although should be applied in a way to create opportunities rather than restrictions. Instruments that create awareness and provide incentives to consume and produce in an environmentally responsible way are becoming increasingly important.
A thorough examination of policy and economic instruments, as well as the importance of communication, awareness-raising and the role of instituions is given in Chapter 7 of the URBAIR guidebook.
Recent innovations in policy approaches may be categorized into four main groups:
- Using markets
- Creating markets
- Using Environmental Regulations
- Engaging the Public
A summary of these approaches is given below. For a more detailed description and useful general case studies, see environmental economics and indicators at the World Bank Group website.
Using market and price signals can provide the most powerful policies for improved environmental management. Environmental resources are often underpriced - either through the use of subsidies, which actually reduce the cost of polluting the environment, or through market prices which only reflect the private costs, thereby ignoring damages from emissions.
Market-based policies, although seeming less robust than other approaches, are often much easier to administer and implement. They may have important fiscal consequences for governments by either reducing costs (i.e. subsidies) or raising revenues (fees or taxes).
Common approaches include:
- Subsidy reduction: reductions or elimination of subsidies normally results in reduced environmental impacts
- Environmental taxes: can account for 'external' costs of resource use
- User fees: payment for benefits gained from use of the environment
- Performance bond or deposit-refund systems: discourages non-compliance with environmental standards by requiring a financial guarantee
- Targeted subsidies: an explicit subsidy is offered to achieve a socially-desirable outcome.
The lack of markets for environmental resources and services is one of the most persistent problems for sustainable development.
- Establishing property rights: more appropriate for land and water issues, but of interest.
- Privatization and decentralization: private sector participation can provide valuable capital to run-down systems (e.g. public transport), creating more efficiency and revenues.
- Tradable permits and rights: the explicit creation of a market in environmental resources, encouraging efficient use (e.g. pollution emission permits)
- International offset systems: creating markets for environmental resources across country boundaries. (e.g. carbon trading)
Regulations are the most common approach to environmental problems, although require significant costs in effective monitoring and enforcement. Standards, bans, permits and quotas are often used as they promise certainty of outcome - and thus may be the only feasible instrument to achieve public policy aims. However, some approaches to regulating are more efficient than others - and oftentimes a mix of market-based and regulatory instruments works best.
Information disclosure, community pressure and public participation are crucial in creating the political will to take effective action. Two main sets of instruments have been identified:
- Information disclosure: allows consumers to make more informed choices and demand more environmentally friendly goods and services. Eco-labeling is increasingly common for products, energy rating etc. The disclosure of information about pollutant emissions can also allow the public to monitor the performance of individual firms and their compliance.
- Public participation: for example, a requirement for public discussion of environmental assessments of major projects, raising awareness and encouraging participatory approaches.
Institutional arrangements, laws and regulations are an important part of any Air Quality Management Strategy. Different levels of government have different roles and responsibilities - for example, air quality standards or guidelines are usually set at the national level, while local governments develop and enforce regulations to control local pollution levels, and usually have responsibility for developing and running the monitoring program, assessing air quality, determining impacts, setting air quality goals and developing action plans.
Institutions responsible for the reduction and control of air pollution have the following important functions:
- Risk assessment and risk reduction: Estimating the form, dimensions, and characteristics of the risks. Each country/local authority must first identify and target the problems that pose the greatest risk to human health and the environment.
- Pollution prevention: Revising regulations to incorporate source reduction, and educating industries and households on source-reduction techniques.
- Regulatory development: Legislative mandates are enforceable requirements with which the regulated community must comply. They are legally binding, and can include operating procedures, reporting and record-keeping guidelines, and standards.
- Enforcement: Once regulations are established, the enforcing institutions have the responsibility of encouraging and ensuring compliance. An enforcement program should ensure that information on the regulations is available to those who must comply. In addition, there should be a basis for determining compliance. This includes policies that deter unlawful behavior and necessary sanctions against those who do not comply.
- Scientific research and technologic innovations: Scientific research and technology play a fundamental role in providing a basis for sound environmental policy. Industries and universities could participate in research and development programs.
- Regulatory education: Informing the public about regulations is an important respnsibility of environmental and regulatory agencies. A well informed and involved public is fundamental to successful air quality management.
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