Government interventions in the marketplace are often controversial and problematic, especially for an objective as bold as ‘eco-restructuring.’ The five chapters in this part of the book address challenging public policy issues related to industrial ecology. Here we survey the range of policy options and strategies for implementation.

The major instruments by which governments can influence economic activity are tax and regulatory policies: corporate and personal income taxes, excise taxes, subsidies, rate of return regulations, labor laws, and standards for processes, products, and equipment. Governments may also use advertising, education, moral suasion, or signaling. The list of policy options is essentially the same in all countries. But there are differences related to degree and pattern of industrialization that merit some elaboration.

Advanced Industrial Economies

In the advanced industrialized world, the 1970s represented a decade of environmental regulation, spearheaded by passage of the U.S. National Environmental Policy Act in 1970. The 1980s marked a shift in emphasis from command and control regulation toward fiscal incentives and market mechanisms, designed to internalize environmental externalities, as embodied in the sulfur emissions trading provisions of the 1990 Clean Air Act Amendments. The 1990s may turn out to be a decade in which firms and communities become increasingly proactive in seeking environmental improvements, with less micromanagement by government. See the chapter by Andrews, ‘Policies to Encourage Clean Technologies,’ for a survey of current policies in key members of the Organization for Economic Cooperation and Development, and that by Griefahn, ‘Initiatives in Lower Saxony to Link Ecology to Economy,’ for a closer look at such policies.