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1.4. Organization of Report

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Savings from Economic Incentives


Section 2 examines the principal rationales for greater use of economic instruments as a tool of environmental management. First, the most easily identified and solved environmental problems originated with large point sources. With most of those problems adequately addressed, attention has turned to smaller, more diverse sources. It is these sources where economic instruments can be expected to have a significant advantage over traditional regulatory approaches. Second, economic incentives are likely to require lower compliance outlays for a given level of environmental improvement than traditional approaches. Third, economic incentives provide a strong stimulus for innovation and technical change, something largely absent in the command and control approach.

Section 3 provides estimates of the current and potential cost savings from the application of existing instruments for air and water pollution control and solid and hazardous waste management.

Section 4 reviews potential new applications, including the use of economic instruments for reducing greenhouse gas emissions.

Section 5 provides summary and concluding remarks.

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