The Costs and Benefits of Environmental Regulation

The Costs and Benefits of Environmental Regulation

Imad A. Moosa and Vikash Ramiah

The Costs and Benefits of Environmental Regulation presents a thorough investigation into environmental regulation, its economic and financial effects and the associated costs and benefits. A variety of issues, pertaining to regulation in general and environmental regulation in particular, are examined. These issues include the theories of regulation and how it is viewed in terms of the free market doctrine, forms of regulation, command-and-control regulation as opposed to market-based regulation and the cost–benefit analysis of environmental regulation.

Chapter 4: Environmental regulation: some basic issues

Imad A. Moosa and Vikash Ramiah

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental governance and regulation, politics and public policy, environmental governance and regulation

Extract

Environmental regulation is a formal response to the risk faced by the society posed by environmental changes. Only true believers in the free market would dispute the evidence for the serious and perhaps irreversible damage that we have been inflicting on the planet. Environmental regulators are in a position to adopt some strategies that may make it possible to slow down, put an end to or ideally reverse serious environmental damage, but the problem is the political and economic constraints. According to Gunningham and Sinclair (1998), environmental regulation should include not just conventional forms of direct command-and-control regulation but also much more flexible, imaginative and innovative forms of social control with the objective of harnessing not just governments but also business and third parties. It is therefore suggested that environmental regulation should include self-regulation and co-regulation, as well as the utilization of commercial interests and non-government organizations. The use of command and control in environmental regulation means that the government or a similar body will ‘command’ the reduction of pollution (for example, by setting emission levels) and ‘control’ the manner in which it is achieved (for example, by installing pollution control technologies). Three types of standards are involved: (i) environmental standards, such as legally enforceable numerical limits; (ii) target standards, such as a specified maximum level that is not to be exceeded; and (iii) performance standards that determine what releases of a pollutant into the environment are acceptable.

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