Effectively reconciling private goals with public interest is the central challenge in designing environmental policies. Chapter 1 outlined how command and control regulations, market-based instruments, mandatory information-disclosure programs, and voluntary clubs are policy approaches to this end, each with its own strengths and weaknesses. Calls for government to enact tough regulations arose in the 1960s and 1970s primarily because firms were not adequately controlling pollution and safeguarding public health. After early successes, command and control regulations have struggled to make additional environmental gains, at least in the US, leading to calls for new approaches that harness the benefits of command and control while avoiding its pitfalls.
Green clubs' policy promise stems from their similarities with market-based and information-disclosure programs and from their potential to improve firms' environmental performance and strengthen their compliance with command and control regulations. Like command and control regulations, green clubs require firms to take concrete steps to protect the environment. Like market-based mechanisms, green clubs harness the power of market incentives to reward club members for their progressive environmental action. Like information-based policies, green clubs reduce transaction costs for stakeholders to differentiate the environmentally progressive firms from the laggards. In our perspective, command and control will continue to form the backbone of environmental governance, with green clubs and other policy instruments as complements to it in a multifaceted environmental governance system.