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Efficacy of Command-and-Control and Market-Based Environmental Regulation in Developing Countries

Author

Listed:
  • Allen Blackman

    (Inter-American Development Bank, Climate and Sustainable Development Sector, Washington, DC 20005, USA)

  • Zhengyan Li

    (Indiana University School of Public and Environmental Affairs, Bloomington, Indiana 47405, USA)

  • Antung A. Liu

    (Indiana University School of Public and Environmental Affairs, Bloomington, Indiana 47405, USA)

Abstract

Like their counterparts in industrialized countries, environmental regulators in developing countries rely principally on two types of instruments: command-and-control (CAC) policies, such as emissions and technology standards, and to a lesser extent, market-based instruments (MBIs), such as emissions fees and tradable permits. But these regulators often lack the capacity to implement, monitor, and enforce CAC and MBI policies. As a result, the efficacy of those policies is an empirical matter. We review emerging experimental and quasi-experimental evidence on CAC and MBI policies in developing countries, specifically, from 32 studies of CAC policies and 8 studies of MBIs. Although drawn from a small and decidedly nonrandom sample of countries and policy types, the evidence clearly indicates that CAC and MBI policies can have significant environmental benefits in developing countries. In addition to cataloging and reviewing this evidence, we discuss data and methodological challenges to augmenting it and suggest directions for future research.

Suggested Citation

  • Allen Blackman & Zhengyan Li & Antung A. Liu, 2018. "Efficacy of Command-and-Control and Market-Based Environmental Regulation in Developing Countries," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 381-404, October.
  • Handle: RePEc:anr:reseco:v:10:y:2018:p:381-404
    DOI: 10.1146/annurev-resource-100517-023144
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    More about this item

    Keywords

    command-and-control; market-based instruments; developing country;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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