ABSTRACT
Governments are increasingly relying on market-based incentives to reduce or eliminate environmental damages. Such incentives include creating markets for environmental resources and introducing taxes or other charges on producers that use the resources or pollute the environment. The increased use of taxes and charges has brought flexibility and reduced the cost of meeting environmental standards. Other market-based incentives that have grown in popularity include tradable permits, payment for environmental services schemes and voluntary mechanisms. Unfortunately, environmentally damaging subsidies are still pervasive and contribute significantly to environmental impacts worldwide.
