ABSTRACT
Although variously described as 'fiscal' or 'market-based' instruments, for present purposes reference throughout will be to 'economic instruments'. These instruments represent a significant development beyond the traditional assumptions about the implementation and enforcement of policy affecting the environment. Those assumptions, which rest very largely on the adoption of regulatory models, tend to be characterised as 'command and control' approaches to environmental regulation. As such, they have necessarily relied on the law as an essential vehicle for their implementation and enforcement. It will be seen below that such traditional approaches display certain limitations, particularly when compared with economic instruments which, among other things, tend to influence behaviour affecting the environment rather more sensitively and effectively. However, it is necessary to arrive at any evaluation through a careful appreciation of the respective merits of both types of environmental control. Any such appreciation is made that much more difficult by virtue of the different features of economic instruments in particular. Before those features are examined in rather more detail through the remainder of this chapter it is instructive to look at the claims made for economic instruments although, again, it has to be borne in mind that there are numerous types of instrument, each with their own peculiar characteristics. Nevertheless, it is claimed that they generate incentives to develop and apply clean technology and other innovation in environmental management, that they limit the cost of environmental protection in resource and transaction cost terms, and that they facilitate more effect control of pollution from diffuse sources. In some cases of course tax revenues will benefit. Nevertheless, whatever their nature, these instruments still depend on the law for the most part in order to enable monitoring and measurement as well as enforcement. Indeed, the law plays a part both for these purposes and by virtue of the general acceptance that economic instruments are generally complementary to traditional regulatory arrangements.
