The use of economic incentives in environmental protection:

Abstract

This paper reviews the two main approaches that have been implemented to Project the environment: command and control regulations and economic based instruments. It discusses the main advantages and disadvantages of each option and explains the main reasons why the use of command and control regulations have been predominant, although economic incentives usually are more cost efficient in reducing pollution.Between the different economic incentives available, the paper also discusses the main advantage and disadavantage of using market permits and effluent fees to reduce pollution. Although both instruments are efficient, their applicability depends on the specific characteristics of the problem being tacked, so the paper also discusses in which situations one of these instruments is superior to the other.