Moving to Markets in Environmental Regulation : Lessons From Twenty Years of Experience

## Abstract Over the last decade, market-based incentives have become the regulatory tool of choice when trying to solve difficult environmental problems. Evidence of their dominance can be seen in recent proposals for addressing global warming (through an emissions trading scheme in the Kyoto Protocol) and for amending the Clean Air Act (to add a new emissions trading systems for smog precursors and mercury — the Bush administration's “Clear Skies” program). They are widely viewed as more efficient than traditional command and control regulation. This collection of essays takes a critical look at this question, and evaluates whether the promises of market-based regulation have been fulfilled. Contributors put forth the ideas that few regulatory instruments are actually purely market-based, or purely prescriptive, and that both approaches can be systematically undermined by insufficiently careful design and by failures of monitoring and enforcement. All in all, the essays recommend future research that no longer pits one kind of approach against the other, but instead examines their interaction and compatibility. This book should appeal to academics in environmental economics and law, along with policymakers in government agencies and advocates in non-governmental organizations. Over The Last Decade, Market-based Incentives Have Become The Regulatory Tool Of Choice When Trying To Solve Difficult Environmental Problems. Evidence Of Their Dominance Can Be Seen In Recent Proposals For Addressing Global Warming (through An Emissions Trading Scheme In The Kyoto Protocol) And For Amending The Clean Air Act (to Add A New Emissions Trading Systems For Smog Precursors And Mercury--the Bush Administration's Clear Skies Program). They Are Widely Viewed As More Efficient Than Traditional Command And Control Regulation. This Collection Of Essays Takes A Critical Look At This Question, And Evaluates Whether The Promises Of Market-based Regulation Have Been Fulfilled. Prescriptive Environmental Regulations Versus Market-based Incentives / Jody Freeman & Charles D. Kolstad -- Market-based Environmental Policies : What Can We Learn From U.s. Experience (and Related Research)? / Robert Stavins -- Are Cap-and-trade Programs More Environmentally Effective Than Conventional Regulation? / A. Denny Ellerman -- Tradable Permits In Principle And Practice / Tom Tietenberg -- International Experience With Competing Approaches To Environmental Policy : Results From Six Paired Cases / Winston Harrington & Richard D. Morgenstern -- Tradable Permits With Incomplete Monitoring : Evidence From Santiago's Particulate Permits Program / Juan-pablo Montero -- The Market-based Lead Phasedown / Richard G. Newell & Kristian Rogers -- Cost Savings From Allowance Trading In The 1990 Clean Air Act : Estimates From A Choice-based Model / Nathaniel O. Keohane -- Subsidies! The Other Incentive Based Instrument : The Case Of The Conservation Reserve Program / Hongli Feng [and Others] -- An Assessment Of Legal Liability As A Market-based Instrument / Kathleen Segerson -- An Economic Assessment Of Market-based Approaches To Regulating The Municipal Solid Waster Stream / Peter S. Menell -- No Net Loss : Instrument Choice In Wetlands Protection / James Salzman & J.b. Ruhl -- Tradable Pollution Permits And The Regulatory Game / Jason Scott Johnston -- Environmental Trading Schemes And The Constitutional Leverage Effect / Daniel A. Farber -- A Proposal To Use Transactions To Leverage Environmental Disclosure And Compliance / Michael B. Gerrard -- Design, Trading, And Innovation / David M. Driesen. Edited By Jody Freeman And Charles D. Kolstad. Papers Given At A One-day Workshop In Santa Barbara, Calif. In 2003. Includes Bibliographical References And Index. Contains essays that bring together some of the best academic minds from economics and law to take a retrospective look at the performance of market-based instruments for environmental protection. This book is intended for academics in environmental economics and law, along with policymakers and advocates