Economic and fiscal instruments and the environment: an european overview.
| Autor | Bernat Mullerat |
| Páginas | vLex |
'The use of economic and fiscal incentives will increasingly become a more decisive part of the general approach to fix prices and generate market-based incentives or more environmentally friendly behaviours. (...) It is important that this range of instruments be applied in a cost-effective manner in order to prevent the Community's economy from unnecessary cost adjustments, to minimise negative consequences on distribution and to obtain an optimum environmental benefit.'
European Community, Fifth Environmental Action Programme[1]
-
INTRODUCTION
In the Western world, environmental awareness has been up and running for at least two decades. However, recently policy-makers, economists and lawyers have realised that the traditional policy instruments need be re-considered.
By way of example, while the European Union (EU) has adopted over 500 legal measures, it is widely accepted that the accomplishments of EU environmental law and policy are rather scarce. While one of the reasons for the EU's failure in this regard is the difficult implementation of environmental legislation at national level[2], it may be argued that a major reason is that most EU legislation is based on regulatory controls.
At the close of the XXth Century, great attention is brought to the use of economic and fiscal instruments for environmental protection. Many writers point out that such instruments are not the panacea, but the reality is that, as others argue, they must be taken into account because they may be the most efficient way to modify the existing patterns of production and consumption.
-
COMMAND AND CONTROL v ECONOMIC AND FISCAL INSTRUMENTS
The traditional approach to environmental protection consists in the imposition of institutional measures aimed at directly influencing the environmental performance of polluters by regulating processes or products used, by abandoning or limiting the discharge of certain substances, and so on.[3] These measures are commonly known as the "command and control" approach.
At the other end of the spectrum, we may find market-based instruments or economic and fiscal instruments, which are those instruments influencing the costs and benefits of the different options offered to the economic agents with a view to modifyng the decision-making and the behaviour of economic agents in favour of environmentally sound alternatives[4].
Both direct regulations (command and control measures), and economic and fiscal instruments may lead to the same result: for example, the limitation of emissions of a particular substance into the air. The first one by imposing quantitative or qualitative standards; the second one by imposing a tax on emissions of that substance.
However, there are great differences between both approaches. Without aiming to provide a full account of such differences, attention should be drawn to the following:
-
Direct regulations (command and control measures) require great administrative involvement and costs, both at the stage of determining the applicable limits as well as at the inspection and control stages.
-
Direct regulations (command and control measures) do not provide incentives to industry: once emission limits are complied with, businesses may be reluctant to reduce them through technology innovation or through modifications to the industrial process. On the contrary, economic and fiscal instruments provide "dynamic efficiency" and innovation; taxes may be an incentive to reduce emissions[5].
-
Direct regulations (command and control measures) seldom reward companies which use great efforts to reduce pollution.
-
Economic and fiscal instruments may be flexible since they grant economic operators freedom to respond to the costs and benefits of environmentally sound performance.
-
Economic and fiscal instruments provide revenues for the state which may, in turn, be used for environmental protection purposes.
According to K. Deketelaere, direct regulations at EU-level "impose a (very) low level of environmental protection; they are often badly implemented by national and regional environmental policies; they are mostly badly applied in national and regional environmental policies; and they are normally difficult to control in national and regional environmental policies"[6].
Although market forces may in the long run achieve greater environmental protection than the "command and control" approach, the prevalence of economic and fiscal instruments is not absolute:
- Direct regulations may be necessary under certain circumstances: in monopoly situations, when emissions of a specific substance are completely banned or in very polluted areas[7].
- To be effective, market-based instruments need to be well designed and aimed at the appropriate industrial sectors (i.e. public companies may not respond to cost reduction incentives)[8].
-
-
TYPES OF ECONOMIC AND FISCAL INSTRUMENTS
These instruments are aimed at using incentives to promote decisions which are beneficial for the environment. The following are some...
Para continuar leyendo
Solicita tu prueba