Market-Based Environmental Regulation

Market-based environmental regulation involves the use of one or more economic policy instruments by government agencies to regulate the environment. Such regulation is enacted as a means to an end—usually incentives to cost-effectively control air, water, or land pollution—though similar policies have been enacted for other purposes. These include payments for ecosystem services and controlling overfishing. Sometimes such market-based environmental regulation is considered neoliberal and is strongly promoted by free-market advocates, but in most [Page 1857]cases, these programs are instituted to maximize the cost-effectiveness of government action. This form of regulation has increased in popularity around the world following the success of the U.S. Environmental Protection Agency's Acid Rain Control Program, which began in the early 1990s. The main categories of market-based environmental regulations are ...