Approaches to Environmental Policy

1. Command and Control - The government sets rules and threatens punishment for violations Commonly used in the US, with much success Complaints: Regulations restrict freedom Regulations cost companies profits

2. Tax breaks - For businesses and individuals who are environmentally friendly Ex: reducing emissions Ex: installing energy efficient products

3. Subsidy - Give away cash or resources to encourage an activity Controversy: US coal and oil companies get huge subsidies Lumber companies get subsidies to log national forests Mining companies get subsidies to mine on public lands

4. Green taxes - Imposed on companies that harm the environment Widely used in Europe Gives companies incentive to reduce pollution Tax money is used for the cleanup

5. Cap and Trade - Government determines the amount of pollution it will accept for a particular pollutant and issues permits to polluters for a fraction of that amount. Permits can be bought, sold and traded. Ex: I have 10 permits: use 5, sell 5, make $ Ex: I need 5, buy yours, can continue to pollute up to 10 permits and need not reduce my pollution

6. Local incentives - Ex: rebates on energy efficient appliances Ex: charging residents by how much garbage they put out, encouraging them to generate less waste