Introduction

In this part, we present and assess the types of environmental policy instruments that play an important part in the academic and political debate.

For a “fair” comparison of the properties of various instruments, it is indispensable for them to be dealt with in the same analytical framework. In particular, it must be assumed that the alternative instruments are being used to attain the same ecological objective. The hypothetical nature of the ceteris paribus construction considered here is consciously accepted for this. It distinguishes this book from one concerned mainly with analyzing practical environmental laws. The uniform objective the instruments are to serve is presumed to be keeping a preset absolute emission ceiling (“aggregate emission standard”) for a particular pollutant i within a certain region (per unit of time). The environmental policy instrument is supposed to make the sum of the absolute emission quantities of all producers of the relevant pollutant in the region concerned not exceed this maximum. To distinguish them from the “internalization strategies” concerned with charging for the (monetized) external damage, the instruments for reaching the objective described are called “standard oriented.”

Let us briefly pause for a “terminological warning”: there is a possible source of confusion in how the term “standard” has been used in the literature. On the one hand, “standard” means an aggregate level of emissions. The goal of environmental policy is to make sure that equilibrium aggregate emissions do not exceed this target.