ABSTRACT
This chapter describes the economic rationale for government intervention in the environment and reviews some of the main government programmes and policy issues related to environmental policy. Environmental demands have created considerable problems in recent years for governments in attempting to balance the achievement of environmental goals with the goals of employment and economic development. The federal, state and local governments have for a long time been involved in the formulation and application of environmental policy. Environmental problems and policy responses represent a classic situation in which there is an externality being imposed on those not taking part in a transaction. There are four methods by which governments have attempted to induce individuals and firms to act in a socially efficient manner: fines and taxes, subsidies, tradeable permits and regulation. In the Australian case, many human activities including the use of natural resources, have a direct impact on the environment.
