ABSTRACT
Economic incentives as instruments of environmental management in developing countries have several advantages over command-and-control regulations. First, they can achieve the desired effect at the least possible cost; this is vital to developing countries with limited resources and a dire need to maintain their competitiveness in world markets. Second, economic incentives are easier to enforce; this is important for countries with limited enforcement capability. Third, economic incentives present fewer opportunities for rent-seeking behaviour than do regulations and therefore they are likely to be both more effective and more equitable. Finally, unlike regulations which require bloated bureaucracies and large budgets, economic incentives generate revenues that should be welcomed by countries facing tight budgets and budgetary deficits.
