Environmental policy instruments: out with the old and in with the new?

The deployment of ‘new’ environmental policy instruments (NEPIs), namely market-based instruments (MBIs) such as eco-taxes and tradable permits, voluntary agreements (VAs), and informational devices such as eco-labels, has grown spectacularly in recent years. In 1987, the Organisation for Economic Cooperation and Development (OECD) reported that most national environmental policies still relied upon a regulatory or ‘command and control’ mode of action, but since then the number of MBIs has grown ‘substantially’. Some estimates put the growth in MBIs in OECD countries at over 50 per cent between 1989 and 1995. VAs, too, are becoming much more popular. In 1997, the European Environment Agency (EEA) put the total in the European Union (EU) at around 300, with more and more being adopted each year.

The putative shift from traditional (‘command and control’) regulation towards NEPIs is not, of course, confined to the EU Member States. Golub suggests that the eagerness to extend the environmental policy toolbox is producing a ‘fundamental transition’ around the globe. In Japan, one estimate put the total number of VAs at around 30,000. The US Environmental Protection Agency (USEPA) recently conducted an audit and discovered ‘an enormous number’ at the federal and state level, with ‘literally thousands’ at the substate level. The sheer diversity of instruments now employed in the USA, the report continued, is also ‘remarkable’.