ENVIRONMENTAL POLICY
◗ Government expenditure
Government expenditure can help achieve environmental goals where the
costs of taking remedial action are too great for individual producers or
citizens to bear (Jacobs 1991 :ch.13). The classic form of government expen-
diture is a subsidy, which might encourage producers to buy cleaner tech-
nologies, farmers to shift to less intensive forms of agriculture, or citizens
toinsulate their homes. Some forms of voluntary action may also benefit
from government investment in basic infrastructure, such as the provision
of recycling facilities or public transport, that must exist before people will
recycle bottles and newspapers, or reduce car usage. Governments can sub-
sidise nascent green industries such as wave or wind energy. Subsidies are,
however, an inefficient means of changing behaviour, notably because they
cannot discriminate between people who were going to do something (e.g. fit
loft insulation) anyway, and those who were only persuaded to do so by the
subsidy. Even so, there is scope for governments to adopt a far more ambi-
tious approach to public expenditure in pursuit of sustainable development.
Forexample, in many Northern European countries a publicly funded home
energy conservation programme could create employment, reduce carbon
emissions, slash domestic energy bills and even prove popular with the elec-
torate–trulyawin–win strategy. However, despite the benefits of reduced
welfare payments and higher tax revenues from the new jobs, the huge cost
of such massive public works programmes obviously limits the potential of
government expenditure as a policy instrument.◗ Market-based instruments
◗ The case for market-based instruments
In addition to its alleged ineffectiveness, regulation is criticised for itsinef-
ficiencyas a means of achieving policy objectives (Turner et al. 1994 :144).
Where a regulation imposes a technology or emissions standard on indi-
vidual factories it may be costly for the government regulator to obtain
information from the polluter in order to agree, monitor and enforce these
rules. Some polluters will find it easier than others to reduce pollution.
Rather than impose a single standard that all polluters have to meet, it
might be more efficient to concentrate effort on those who can reduce
their pollution most cheaply. Regulations offer no incentive for polluters
toreduce their pollution beyond what is required by law. MBIs can provide
that incentive.
The aim of MBIs is to prevent market failure by applying the polluter pays
principle (PPP). Market failure occurs when environmental resources are
over-exploited because of open access to goods whose market price does not
incorporate the external costs of using those environmental resources. The
PPP holds that the price of a good or service should fully reflect the total cost