Economic Instruments Versus Environmental
Regulations: Its Applicability
to Pacific Island Countries
Biman PRASADl
Abstract
Paci丘c Island Countries (PICs) are coming to grips with global environmental changes that are going to affect them drastically in future. For example, solutions to the problem of sea level rise due to global wanning, deforestation and loss of fisheries stock are being addressed globally. However, more immediate concerns in many of the Pacific Island Countries are the environmental degradation that is taking place at the local level. Strategies and programmes to address these require the use of various economic instruments and regulations. PICs can develop the combmation of both economic instruments and regulations to find solutions to pressing environmental problems m their countries.
Key words: Paci丘c island countries, economic instruments, environmental regulations
Intro d u ction
Economic instruments versus regulation to deal with environmental problems is now firmly on the agenda of governments and policy makers through out the world. The idea of the market economy is now almost an universal economic system. The liberalization of trade and the role of the international organizations such as the IMF, the World Bank and other regional and sub-regional organizations are to move towards a free-market economy based on open trade. The benefits of the market economy and its universality has brought the benefits of consumer choice and sovereignty and has led to unprecede山ed growth in most of仇e developed world and some selected developing countries, however, the market economy offers little for the protection of environment (CAIRNCROSS, 2000). Opponents of globalization of economies point that markets fail where the protection of environment is concerned. While this is true, it is also known that governments also fail. That is markets are not the only sources of inefficiency, political processes also払Il and create inefficiency. Many environmental problems around the world have arisen丘om the血Ilure of political rather than economic institutions (Tietenberg, 1992). However, there is evidence that the previously non-market economies did no better than non-market economies. For example, industrial pollution left in formers Soviet Republics are still a big problem in those countries. Many of the Eastern European counties discharged their industrial wastes into the rivers and血is caused serious pollution problems (Tietenberg, 1992).
Visiting Researcher, Research Center for the Pacific Islands, Kagoshima University, Japan, and Senior Lecturer in Economics, The University of the South Pacific, Fiji
2 South Pacific Study Vol.23, No. 2, 2003.
Political血Ilure to protect the environment occurs because of the rent-seeking behaviour of special interest groups. Powerful interest groups often lobby government sto relax environmental legislations and other requirements. In many of the developing countries, transnational corporations, which usually have economic power bigger than the countries themselves, are able to direct or coerce governments into adopting legislations that may not be in the interest of the environment and the consumers generally.
This paper discusses the link between economic growth and sustainable environment policies and how appropriate economic instruments and government policies could be used to achieve these two objectives. The first part of the paper provides an overview of仇e economic situation in也e PICs. The second p那t brieny discusses the environmental problems. The third part discusses the link between economic growth and environment and the last part looks at the use of economic instruments to achieve sustainable environmental policies and how applicable they are to the PICs.
Economic Background of Pacific Island Countnes (PICs)
Pacific Island countries are a diverse group of countries in terms of their land area, resource endowments, level of economic development, environment problems and in terms of their human development progress. For example, the United Nations assisted the least developed Pacific Island countries including Kiribati, Samoa, Solomon Islands and Vanuatu under the programme of finance for development, social issues, external trade and in丘astructure. Pacific Islands have o洗en been grouped according to their size, resource endowment and the contribution of agriculture in their economies and in terms of their culture and language. Other times they have been grouped according to their level of development. Whatever, grouping one uses, the diversity amongst these islands remain large. In terms of resource endowments and their sizes the larger countries such as Papua New Guinea, Fiji, Vanuatu, Solomon Islands and New Caledonia could be grouped together. All these countries are resource-based economies where mining, agriculture, forestry and fisheries are the main activities. However, countries like Fiji and to some extent New Caledonia and have significant manufacturing activities. In the case of Fiji and Papua New Guinea, manufacturing sector have been promoted for manufactured exports such as garment in Fiji.
The second grouping include the bigger Polynesian countries of Tonga and Samoa, These countries have been relatively successful in directing their economic activities. Tonga for example, is an agricultural country and its exports are agricultural based. Samoa has a relatively good tourism development programme but also export agricultural products made from coconuts. The third group includes the very smaller, resource poor and mostly coral atolls. These include Niue, Tuvalu, Tokelau, Cook Islands, Kiribati, Nauru and the Marshall Islands. These countries generally depend on marine resources for也eir livelihood and export hcome. Generally, most of these countries depend on remittances and overseas development assistant (ODA). The ODA has however been declining as a proportion of total public finance and on a per capita
Because of these economic difficulties, almost all the countries had to adopt structural adjustment policies to reduce the size of government and to adopt an export-oriented strategy for growm. The recent trade agreements such as the Pacific Island Countries Trade Agreement (PICTA) and the Pacific Agreement on Closer Economic Relations (PACER) goes further in putting the 'new economic rationalist'agenda on the economic policy programmes of血e PICs.
Therefore, what is clear is that most PICs are not doing well economically. The per capita income growl血has been slow and in some cases negative and population, growth has been rapid where emigration is not possible. The Solomon Islands is a good
example of poor economic performance and high level of population growth. Majority
of the population still live in the rural areas even though in some counties like Fiji and Kiribati, rapid urbanization and high levels of unemployment and other social ills associated with it are common occurrences.
Environmental Problems in the Pacific Island Countries
Apart from the economic difficulties, PICs have to grapple with increasing environmental problems. For the smaller countries, the increasing threat of sea level rise through global warming has been a cause for concern but any action that needs to be taken will have to be part of the broader regional and global action to address the problem of global warming. Most of仙e PICs have very h廿Ie adva山age over仙ese actions as the major players around the world determine the global warming agenda. The failure on the part of the United States and Australia to sign the Kyoto protocol on green house gas emissions demonstrate this view quite clearly.
At the immediate and local level, the environmental problems of the PICs are of immediate concern to them. Natural disasters cause a lot of environmental degradation in the PICs. These include cyclones, floods, droughts and volcanic eruptions. Apart 斤om damaging the environment these natural disasters have a significant economic impact. It is therefore, not always easy for PICs to recover from these disasters easily. For example, the drought in Fiji in 1998 has caused negative economic growth. In PNG, the effect of the cyclones and then drought in 1997 caused negative economic growth. In Samoa, cyclones caused negative economic grow仇rates of 8, 28 and 4 percent in
1990, 1991, and 1992 respectively. Other natural disasters caused by biological processes include the taro blight in Samoa and the coffee rust in PNG in the 1980s.
Apart from the above externally or naturally-induced environmental problems, there are also human-induced environmental damages. These include land degradation through bad husbandry, deforestation and over fishing and pollution丘om mining and rapid urbanization. Table 1 shows environmental indicators for some of the PICs.
Links between economic growth and environment
The South Pacific Regional Environment Programme (SPREP) in its 2003-2005 programme of work includes仙e role of economic development and its links to仙e environment and how economic development policies could be integrated into the mainstream environment policies. This is an important realization on the part of SPREP
4 South Paci丘c Study Vol.23, No. 2, 2003.
because without integrating economic development policies into the environmental policies, environmental policies and programmes are bound to fail.
Table 1 : Environmental Indicators for Selected Pacific Island Countries.
F o re st A v e ra g e N a tio n al G D P p e r u n it C a rb o n d io x id e A re a ( $ o f A n n u a l ra te o f P ro te c te d a re a s o f en e rg y U se E m issio n s (P er lan d a re a d e fo re stad 0 n (% o f lan d a re a ) ( 19 9 5 U S $ p e r C a p ita M e tric
2 0 0 0 ) (% ) k g O il E q u iv a len t T o n s ) 2 0 0 0 19 9 9 -2 0 0 0 19 8 5 1 9 9 9 1 9 9 0 1 9 9 8 19 9 0 1 9 9 8 C o o k Islan d s 9 5 .7 0 .0 F iji Islan d s 4 4 .6 0 .2 0 ●3 1●0 1 .2 1 ■0 K irib a ti 3 8 .4 0 .0 0 .3 0 ■3 M a rsh a ll Is 0 .0 M ic ro n e sia F e d . S ta te s o f 2 1 .7 4 .5 N a u ru 0 .0 P ap u a N e w G d n e a 6 7 .6 0 .4 < 0 .1 < 0 .1 0 .6 0 ■5 S am o a 3 7 .2 2 .1 0 .8 0 .8 S o lo m o n Islan d s 8 8 .8 -0 .2 0 ●0 0 .5 0 ■4 T o n g a 5 .5 0 .0 0 .8 1 ■2 T u v a lu V a n u atu 3 6 .7 -0 .1 0 .5 0 ■4
Sol汀ce: Asian Development Bank, 2002
The view that economic growth is always damaging to the environment has somewhat been over debated. Economic grow血inevitably involves exploitation of natural and environmental resources. There is some degree of air pollution, water pollution, land degradation and overuse of some resources. However as CAIRNCROSS (2000, pi55) points out all economic activity does some environmental damage. In that sense, true sustainable development will always be an ideal rather than a reality. But environmentally丘Iendher growl血is feasible. It is possible to satisfy human wants from the same volume of environmental resources. However, the concept of sustainable development is vital for tackling the problems of poverty and environmental degradation. Poverty and environmental degradation in most of developing countries are intertwined and economic grow血is necessary to tackle both of them (Gillis and Vincent, 2000). Others such as Dasgupta (1996) and Galbraith and Salinger (1978) have pointed out that economic growl山is neceヲsary for the improvement in the quality of life of people as well as to protect the environment. Dasgupta (1996) for example, states the following: Economic growth itself has brought with it improvements in the quality of a number of environmental resources. The large-scale availability of potable water, and the increased protection of human populations against both water-and air-borne diseases in industrial countries, have in great measure come in the wake of growth in national income these countries have enjoyed over the past 200 years or so. Moreover, the physical environment inside the home has improved beyond measure with economic grow血 such positive links between economic grow血and environment quality go unnoticed by environmentalist in the west". This reflects the
familiar saying the rising tide lifts all boats" but there is also increasing evidence in many of the developing countries that economic growth has not necessarily led to improvements in the environment and the reduction in poverty. To this the response 丘om those who advocate economic growi血as the panacea for reducing environmental degradation and reduction in poverty, is that it is not because of economic grow血but institutional failures in many of the developing countries (Gilhs and Vincent)
Gillis and Vincent (2000) and Schmandat and Ward (2000) point out that 'markets血il and the costs of environmental degradation is not internalized and governments have failed to adopt policies to internalize these market failures. Environmental damage in their view has been mcreased because of the failure on the part of governments to use economic policies to internalize environmental costs. In effect, what they are saying is both markets and governments have not only failed to protect仙e environme山but have also insti山ted policies which have led to more environmental degradation.
The廿aditional approach to environmental protection was也rough regulations and standards, the usual, command and control approach. This approach may have been more appropriate in the developed countries, but even the developed countries now using market based economic instalments. This does not mean that the command and control approach is no longer useful, but in some cases, it may be appropriate to use economic instruments. Command and control measures are in the form environmental legislations and regulations about how people should behave and what sort of approvals they need to seek, to take to undertake certain activities relating to the environment, hi the case of Fiji, these rules and regulations were embedded in different ministries and local government legislations. Command and control measures are usually legally binding and they could be legally enforced and penalties levied by the legal system in
仙e case of violations of也e legislations.
In the developing countries however, the command and control approach has been less successful (Gillis and Vincent, 2000). This is because many of the local environmental problems in the less developed countries are connected to the livelihood of the poor. For example, the Asian Development Bank (1997) points out that in Asia the local environmental problems such as water pollution, freshwater depletion, waste disposal, soil erosion, deforestation are也e most pressing environmental problems. As we point out earlier; these are immediate environmental problems in many of the PICs as well. Poor people depend on the exploitation of some of the resources such as forest, fisheries and use water and other amenities for their daily survival. To these people, environmental legislation and control is irrelevant as far as their livelihood is concerned. So therefore they continue to use resources from forestry, fisheries, land and water despite the fact that the returns they get continues to diminish over a period of time. In the absence of any incentives and alternatives for their livelihood, the poor would continue to exploit the resources.
Protection of Environment in the Pacific Island Countries
Most Pacific Island countries are now fully aware of the dangers of global environmental change and are organizing themselves as a group to present也eir views in the international forums and are actively participating in the international negotiations. Issues such as Climate Change, sea level rise due to global warming, deforestation and the depletion of fisheries resources are global concerns but may have
6 South Paci丘c Study Vol.23, No. 2, 2003.
a lot of impact locally on the PICs. However, apart from these global environmental changes there are a lot of local level environmental changes that affects the lives of ordinary people on a daily basis. In this respect, what are the ways in which PICs are dealing with these issues. What sort of tools are they using to reduce local level environmental damage? Which type of tools are likely to work be仕er? Command control approach or market based economic instruments? Fig. 1 shows the components of economic instruments and command and control approach that could be used. There are a number of them and their applicability would depend on the particular situation prevailing in each country.
Command and Con trol Approach
This is also known as direct regulation'. Gilpin (2000) points out that direct regulation has been the normal approach for pollution and control and environmental protection throughout history. Gilpin (2000, pi 14) provides a list of the characteristics of the command and control approach.
The passing of environmental laws and regulations by government at national, state and local levels;
The creation of an environment protection agency to implement the legislation The distribution of various duties among other branches of government
The drafting and introduction of codes and regulations relating to pollution
control;
The draRing and introduction of codes relating to environmental planning;
The drafting and introduction of codes implementing international conventions; The formulation of procedures for environmental impact assessment at policy programme and project levels;
Procedures for the establishment and maintenance of national and marine parks, nature reserves and public open space
The protection of rare and endangered species
The identification and preservation of places, buildings and assets of heritage value;
The estabhshme山of procedures for仙e conduct of public enquines h
appropriate instances;
The enforcement of laws and regulations relating to pollution of air, water and land; excessive noise; environmentally hazardous chemicals, contaminated sights, nuisances; noxious accumulations; and odours;
The creation of systems for the prior approval of proposed developments and the
licensing of discharges;
The creation and maintenance of adequate monitoring and recording systems;
The creation of environmental plans at national, state, regional and local level to
promote good town and regional planning and contribute to the strategic control of pollution
The promotion of the aims of natural resources conservation, recycling, cleaner production, efficient waste disposal, litter reduction, and beautmcation;
The establishment of policies and plans to integrate economic, social and environmental progress and further the objectives of sustainable development.
Source: Asafu-Adjaye, 2000, p79.
Fig. 1 : Government Policies for Integrating Environmental Considerations into Economic Decisions
g South Paci丘c Study Vol.23, No. 2, 2003.
The above list is a comprehensive list of command and control approaches.
However, this is relevant to many of the developed countries as they have the resources and也e hst血tions to enforce and impleme山仙ese procedures. In many of仙e PICs,仙e creation of even a ministry of environment is a recent phenomenon. In most cases, environmental laws have been distributed to different ministries. In the case ofFiji, the ministry of environment was created in 1992 but lumped with housing environment and urban development. Prior to this, different ministries would have their own regulations in respect of the specific areas. For example, the ministry of urban development and local government would look a洗er regulations relating to urban areas and those relating to land and mineral resources would go to another ministry, fisheries, and forestry to another. PICs need to review their environmental legislation and built a comprehensive package which includes both regulations and economic instruments.
Economic Instruments
While economic instruments have not been widely used in血e past,比ey are now recognized as an important tool and if used properly with the command and control 叩proach it could produce much better results for仙e environme山. Gilpin (2000) points out that the uses of economic instruments have been actively promoted by the OECD and many of then are now using it. The idea behind the use of economic instruments comes from economists who believe that environmental costs should be internalized to the enterprises which pollute. The polluter pay-principle must be applied to firms which do not take into account the damage they do to the environment. The cost of the environmental damage is a social cost to the consumers and if these are not internalized to the polluter then the society has to pay for it. The polluter pay-principle also leads to the reduction in pollution as丘rms reduce production to a more socially desirable level. The use of taxes or charges forces firms to move towards a socially optimal level of production in也e long run.
Examples of economic instruments in some of the OECD countries and other developed countries such as the US include carbon taxes, sulphur taxes, nitrogen taxes, water pollution charge schemes in the Netherlands, France and Germany, landfill levis and taxes, user-pays principle, load based licensing, product charges or ecotaxes, subsidies, environmental levis, special charges and rates and tradable permits or quotas
(Gilpin, 2000). While it is generally argued that these instruments are appropriate for
developed countries and not for small developing island nations, many developing countries are moving towards these instruments. Economic instruments could be used to provide both incentives and disincentives for firms and individuals to change their production or behaviour towards environmentally丘Iendly practices. In many of也e PICs incentives mechanism could work much better than command and control approach. For example, if policy makers want people in the rural areas to cut less trees for fuel wood and then there has to be incentives for use of other facilities to cook rather than using fuel wood. Either there is a tax incentive for kerosene stoves or more fuel-efficient stoves; these will have to be provided at a subsidized cost. Subsidies in this case, could provide the right incentives for people to change from one method of cooking to another. Disincentives mechanism can also work in some cases where the polluter-pay principle is applied. Pollution taxes could be levied on polluter for仙e
duration of time and according to the type of pollution, they generate丘0m their activities.
Some economic instruments are used alone; others combined with the command and control approach provide a good combination of policies. In Papua New Guinea, the PNG Bottle Industry Pty Ltd has a scheme where it offers refunds for returned bottles and cans. The average returnable rate for bottles is 85% within the country, while in Port Moresby, it can be as high as 90%, and i.e. the same bottle is reused about 9 times. Aluminum cans are exported as raw materials and this is collected based on the offer of reasonable refunds by the company which exports aluminum. This indicates clearly that resources are not dumped as waste but hstead it helps to conserve resources and helps the people, especially the poor to raise some income. This strategy would be very useful for the urban areas as it could reduce the problem of solid waste disposal. The types of instruments that could be used are performance bonds. Firms that engage in activities where there are possibilities of pollution being created or environmental damage done should pay deposit in the form of bonds. The appendix I and II provide details of performance of policy instruments against selected criteria and policy and market failures and economic instruments. The applicability of each in the PICs would depend on their particular environmental problems and the institutional arrangements that are inplace.
Concluding Comments
A number of economic instruments could be used based on the particular economic and social conditions prevailing in each of the PICs. It is more likely that people and firms would respond more easily in some circumstances to economic instruments than to regulations. Many of the PICs are currently restructuring their economies to meet the requirements of the regional and global trading arrangements. However, many of them are now more than ever, ware of some of the environmental problems facmg their countries. In terms of the global environmental changes such as sea level rise through warming, deforestation and depleting stocks of fish, they have to work with the international organizations and developed countries to achieve global and regional solutions. Nevertheless, in the case of local and national environmental problems, they have to devise strategies to ensure that the policies they adopt are sustainable in the long. The use of economic instruments together with regulations in some of the circumstances may work better for many of the PICs. Regulations in many counties are too costly to implement and there is always room for corruption and ineffectiveness. The biggest
problem in many of仇e PICs is the enforcement of some of仇ese regulations. In也e
case of Fiji, for example, there are regulations with respect to the sizes of fish and crabs that could be caught, but these regulations are openly flouted and authorities are not in a position to do much about it. There are many other instances of regulations not working in effectively in many of the other PICs.
The use of economic instruments should be explored seriously by the policy makers and regional organizations such as SPREP. The issue of economic development should be integrated with environmental policies. Environmental policies and incentives are
more likely to work if it is integrated with people's economic concern. Majority of the
people are still living in the rural areas in most of the PICs. Most of them depend on
10 South Paci丘c Study Vol.23, No. 2, 2003.
land and sea resources for their livelihood. It is therefore vital for policy makers to understand仙e link between environmental policies and people's response to these policies. Unless, there are good economic alternatives to people for their daily livelihood, they will continue to use resources the way they feel serves their economic
livelihood best. There would not be any incentive to change血e me也od and也e level of
exploitation of resources.
Finally, PICs need to undertake economic valuation of their natural resources. This would give policy makers an accurate idea about仙e costs involved in也e manageme山 of the resources. It is also important for the people to know, how these resources are valued and why it is vital to use it in a sustainable manner. There are a number of
economic valuation techniques which could be used to quantify or estimate the costs
and benefits of using resources in a particular way. This would give more credibility to the application of economic instalments to achieve sustainable management of resources.Reference s
ASAFU-ADJAYE, J. 2000. Environmental Economics: An Introduction for the Non-Economist. World Scientific Publishing, New Jersey, London, Singapore, 2000, p.79.
Asian Development Bank 1997. Emerging Asia: Changes and Challenges, ADB: Manila.
CAIRNCROSS, F. 2000. Economic tools, international trade and the role of business, in Schmandt, J and Ward, and Ward, C.H. (eds) Sustainable Development: The Challenge of Transition, Cambridge University Press : Cambridge.
Commonwealth Secreatariat. 2001. Background Material, prepared for the South Pacific Regional Workshop on Integrating Economic and Environmental Policies and Practices for Enviromentally Sustaianble Development, Apia, Samoa, 1 1-15 June, 2001.
DASGUPTA, P. 1996. The Economics of the Environment, Beyer Discussion Paper No.80, Stockholm.
Galbriath, J. K. and Salinger, N. 1978. Almost Everyone s Guide to Economics, Penguin: Harmondsworth.
Gilpin, A. 2000. Environmental Economics: A Critical Overview, John Wiley, New York.
Gillis, M. and VINCENT, J. R. 2000. `'National self-interest in the pursuit of sustainable development", in Schmandt, J and Ward, and Ward, C.H. (eds) Sustainable Development: The Challenge of Transition, Cambridge University Press: Cambridge.
Tietenberg, T. 1 992. Environmental and Natural Resource Economics, Harper Collins Publishers Inc: New York.
Appendix 1 : Performance of policy instruments against selected criteria.
Policy Instrum ent Evaluation Criteria
Economic Efficiency
A dm inistrative Costs
Equity D ependability
C om m and and ControlA p roaches
Em issions Likely tobe D ependson the N odirect H igh
Standards poor,i.e. numberand size of redistribution
excessive abatem entcost variable
poll山erS effect,butifthe
costsofm eeting thestandardsare passed ontothe consumers accordhg t0 incom egroup
Standards for Likely tobe Lowerthan Asforem issions Sam easem issions
inpi;止S poor em ission standards stand∬dS standards.Provided
thatthe relationship between mputand em issionsareknow
Technological Poor Lowerthanothers Asforem issions H igh fornew
standardsfornew stand∬ds,m ay sourcesbutlittle
source also actasa
barrierto entry
effectoverall
Technological Poor Lowerthan others Asfornon- M oreassurance
standards for transferable thantechnological
existing sources em issions
quotas-schem e m ay favournew sources
standardsfornew sources
Econom icInstrum ents
Emissionstax G ood Less血an em ission Sam eas Variabledepending
tax em issiontax onthetax level
Sam easem issions taxprovidedthat therelationship between inputand em issionsare known Differentiated V ery sim ilartoan inputtax.Thedifferenceisthattheem issionsvarywith the inputtax quality oftheinput,asw ellaswiththe quantity.
Tradable G ood Couldbehigh V ariable Sam easCAC
emission quotas depending onthe
allocation of initialquotas
em ission standards
･1 South Paci丘c Study Vol.23, No. 2, 2003.
Appendix II: Policy and market血Ilures and economic instruments
P olicy/ m a rket failu re
(N on -S u stain ab le O u tco m e)
E X 叩 taヴA C血n R eq〟w ed
A griculture gov ernm en t sub sidies for rem o va lof p olicy failure 仲oth inp u t) irrigation w ater,pe sticides a nd ou 申u t)
and fertilizers,in secure secure p rop er,少ri gh ts
property rights tax on irrig a tion w a ter,p esticid es a nd
(d eforestation for fertilizers
agricu lture,lan d/w ater subsid iesfor environm en tally f riendly po lli山on, so ilero sion , techn o log ies
ov erg raz in g) tra cta b le q vo tm ーfor livestock p rod uction
eco lab elline
E n ergy gov ernm en t sub sidies rem o va lof p olicy failure
reducin g the p rice of fu els tax/tra dab le p erm its o n a i,〝'w a ter
an d electricity em issio ns
prices do not re且ect social en viro nm en talsu bsid iesfor clean er costs of air p ollu tion fr om
fu el and electricity production an d u se (m e丘cient en ergy production an d con sum ption ,lack of in cen tive for en ergy effi cient m easures. w ater/air/lan d p ollution )
fuels and tech nolog ies
F ish eries op en access,in secu rity of rem o va lof p olicy failure existin g p rop ert y righ ts at tra ゐb le q vo tm ー
lo cal,regional and clearly defined secure p rop erty righ ts in ternation al levels
capitalin ten siv e fi sh in g, ov er 丘sh in s
fishing inp utp rice
F orestry gov ernm en t incentiv es for rem o va lof p olicy failure deforestation an d lan d secure long -term p rop erty rig hts
clearan ce,in secure co ncessions
property rights,lack o f forestp rod uctp ricing in cen tives for su stain able roy alty /p rofit/con cession tax es m an agem ent an d n on- p erform a nce bo nd s/def oresta tion tim b er pro ducts,in efficient ch arg e
tax ation o frev en ues,lack of en viro nm en tal controls (d eforestation ,an d reSd ta皿t loss of biodiversity
ca rbo n off sets/jo in tim p lem en ta tion ag reem en ts
P U恥 and M arket F au ures, and E con om ic Instrum en 血
M inin g gov ernm en t incentiv es for m in ing m rem oval of p olicy f ailur e sh ortterm ,in secu re prop erty rights, p erfo rm a nc e bonds in effi cient tax ation of revenu es,lack o f em issions tax
environm entalcon trols roy al￠//p rof it tea -levy
(environm entalim p acts fr om m in ing , b ased on m in e 's ou 申u t lo ss of revenu e due to in effi cient eq u砂p articip a tio n- lo ca l
tax ation) p eop le ow n ing sha res in
Tourism ow nership/m anagem entw hich excludes rem ovalof policyfailure the localpeople,m e丘w entpricing of entrance charge app lied
the sites and revenuesatleast
(overuse oftourism sites,air/land/w ater p artially redistributed to pollution,poaching,loss ofbiodiversity localcom m unities
and revenue p rop erty rightsfor local
p eople
p erform ance bonds Transport policy failure encoura ging excessive use rem ovalof policyfailure
ofvehiclesand roads especially in urban road pricing
enⅥ∫ontnent diff erentialfueland
(airpollution,congesdon,noise) vehicle ぬXeS
investin/subsidisep ublic transp ort
W aste lack ofcollection/disposal facilities, rem ovalof policyfailure
lack ofeffectiveusercharges forw aste (fullcostpricing)
m anagem ent dep ositrefunds and
(generation ofexcessive w aste,no P eゆ rm ance bonds incentive forrecycling,health hazards p roductcharges on f
r om uncollected/ineffi ciently disposed p ackaging w astes;airand w ater/land pollution,lost landfill比Ⅸ-Pm り′
revenue fr om recycling) em issions tax
● reqscling incentivessuch as credits top arties to collectrecyclable waste collection and disposal charge
W ater governm entsubsidies m aking dom estic, rem ovalof policyfailure
industrialand irrigation w ater cheaper (m arginalcostp ricing) indus廿y allow ed to discharge used com m unal/privatew ater
w aterw ithouttreatm ent rights
(excessive use,w ater shortages,w ater usercharges
logging,and surface and groundw ater diff erentialland/water u.ye
pollution) taxes
sewage and effl uent charges
tra血ble water rights w atertrading across nationalborders
