ABSTRACT
This chapter explores the foundation for understanding the policy approach to controlling the flow of these waste products by developing a general framework for analyzing pollution control. It examines the policy approaches that have been adopted in the United States and in the rest of the world to establish control over waste flows. The amount of waste products emitted determines the load upon the environment. The damage done by this load depends on the capacity of the environment to assimilate the waste products. Pollutant is classified in two types: stock pollutants, and fund pollutants. Two main pollution control policy instruments rely on economic incentives— charges and cap-and-trade. Both of these allow the control authority to distribute the responsibility for control in a cost-effective manner. The allowance approach and the charge approach respond differently to growth in the number of sources, to inflation, to technological change, and to uncertainty.
