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TABLE 17.1 National Environmental Policy Instruments and Evaluative Criteria



Environmental effectiveness


Meets distributional considerations

Institutional feasibility

Regulations and Standards

Emission levels set directly, though subject to exceptions

Depends on deferrals and compliance

Depends on design; uniform application often leads to higher overall compliance costs

Depends on level playing field; small/new actors may be disadvantaged

Depends on technical capacity; popular with regulators, in countries with weak functioning markets

Taxes and charges

Depends on ability to set tax at a level that induces behavioral change

Better with broad application; higher administrative costs where institutions are weak

Regressive; can be improved with revenue recycling

Often politically unpopular; may be difficult to enforce with underdeveloped institutions

Tradable permits

Depends on emissions cap, participation and compliance

Decreases with limited participation and fewer sectors

Depends on initial permit allocation, may pose difficulties for small emitters

Requires well-functioning markets and complementary institutions

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