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Price-Based Measures
Not all pricing and taxation measures employed by a government
are aimed at environmental protection. They may be used to
promote other goals and may have an unintended impact on the
environment. This paper will focus on those that are specifically
targeted at environmental goals and in particular the goal
of pollution control and reduction.
The most common form of price-based measure is a charge.
A charge can be considered as a 'price' that the polluter
pays for polluting the environment (OECD 1989). There are
various types of charges, including effluent charges, user
charges and product charges. Effluent charges are used mainly
in the area of water pollution control and are based on the
content and quantity of a firm's waste stream. They are kept
low because of political pressures from industries not wanting
to pay higher charges, and concerns that higher charges might
encourage illegal dumping and evasion of the charges. User
charges are fees charged for using a resource or for being
provided with a service. Product charges are charges added
to the price of products: they are used to discourage disposal
or encourage recycling.
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Rights-based measures
The Commonwealth defines rights-based measures "create rights
to use environmental resources, or to pollute the environment,
up to a predetermined limit, and allow these rights to be
traded."
Some economists argue that environmental degradation occurs
because of incomplete ownership of rights to use valuable
resources. Many environmental resources have traditionally
been commonly owned by everyone (or, alternatively, owned
by no-one) and open to use by anyone. These economists say
there is a strong tendency for people to overexploit and degrade
common property resources because of the 'tragedy of the commons'
principle.
The idea of rights-based measures is that if people have
a right to the use or pollution of natural resources, they
will consider the longer term and manage those resources sustainably.
The idea is also to create markets so that 'the power of the
market can be harnessed' to environmental goals, and individuals
or firms can then use their superior knowledge of their own
activities to choose the best way of meeting environmental
standards.
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