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Voluntary agreements

Depends on program design, including clear targets, a baseline scenario, third-party involvement in design and review, and monitoring provisions

Depends on flexibility and extent of government incentives, rewards and penalties

Benefits accrue only to participants

Often politically unpopular; requires significant number of administrative staff

Subsidies and other incentives

Depends on program design; less certain than regulations/standards.

Depends on level and program design; can be market-distorting

Benefits selected participants; possibly some that do not need it

Popular with recipients; potential resistance from vested interests. Can be difficult to phase out

Research and development

Depends on consistent funding, when technologies are developed, and policies for diffusion. May have high benefits in long term

Depends on program design and the degree of risk

Initially benefits selected participants; potentially easy for funds to be misallocated

Requires many separate decisions; depends on research capacity and longterm funding

NOTE: Evaluations are predicated on assumptions that instrument are representative of best practice rather than theoretically perfect. This assessment is based primarily on experiences and literature from developed countries, since peer-reviewed articles on the effectiveness of instruments in other counties were limited. Applicability in specific counties, sectors, and circumstances—particularly developing counties and economies in transition—may differ greatly. Environmental and cost effectiveness may be enhanced when instruments are strategically combined and adapted to local circumstances.

SOURCE: Gupta et al. (2007).

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