Wednesday, September 17, 2014

Command-and-control vs. Incentives

More reading on command-and-control vs Incentive-based policies:



Kara Dale said...

After reading the articles comparing CAC (Command and Control) and EI (Economic Incentives) I agree that there is not just one solution that will fix our environmental policies and problems. I think it will take a mixture of Command and Control standards and Economic Incentives to take steps toward balancing pollution and production. I like the fact the Command and Control demands action and standards. I also like the fact that Economic Incentives gives reasons for polluters to do more than just merely meet standards required by policy. I also think a Cap and Trade method could be beneficial if we could all agree to implement such a program. Bottom line... We need to START somewhere!

Viana McFarlane (CERMES) said...

After reading the article from Austin (1999) on the “Economic Instruments (EI) for Pollution Control and Prevention” I realized that economic/ fiscal policies are very effective in preventing and reducing pollution. EI are a relatively new form of command and control method but its use is gradually increasing. The article revealed that EI are more effective than traditional command control regulations in controlling pollution. However, traditional command control regulations are more widely used. EI that are currently used includes: fees, tradable permits, deposit refunds schemes and subsidizes. All are effective but their levels of effectiveness vary. They are mechanisms that are very beneficial in protecting the environment. EI can influence producers to alter production processes to reduce/control pollution. Producers want to avoid paying fees and levies or want to receive subsidizes so they will do everything in their power to control pollution.
According to Austin (1999) market failures or not accounting for externalities caused by production and consumption are the main reasons for pollution and other environmental problems. Externalities / market failures must be identified in order for command controls methods like EI to be used, in order to control/ reduce pollution. He also posits that EI need to be used more and it should also be used together with traditional command regulations to effectively control pollution. I agree that a combination of EI and traditional command control regulations should be used to address the pollution problem.

Viana McFarlane (CERMES) said...

The article and by Dawn Anderson (1989) of the Environmental Literacy Council on Regulatory Policy vs Economic Incentives showed that economic incentives benefits in addressing environmental problems surpasses the benefits of Regulatory Policies. Regulatory policies require a lot of monitoring and it limits the development of technology needed to abate pollution emissions. On the other hand Economic Instruments often force companies and industries to invest in new technologies to reduce pollution. This is done to avoid paying fees and levies or in order t have extra market permits to sell to other companies or the can benefit from government subsidies.
Economic Instruments although effective in addressing pollution, many industries are not in support of it. What I also found interesting about the article was that even politicians are not in favour of Economic Instruments because of fear of losing voters support.
After reading the articles by Austin (1999), Harrington and Morgenstern (2007) and Anderson (1989) it appears that Economic Instruments seems to be the most beneficial measure/ method for combating pollution and environmental problems. However, they all noted that Economic Instruments should not be used alone rather it should be used in conjunction with or to complement convectional regulatory measures.