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Environmental policy, government, and the market

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  • Cameron Hepburn

Abstract

Environmental policy is made in a context of both market failure and government failure. On the one hand, leaving environmental protection to the free market, relying on notions of corporate social responsibility and altruistic consumer and shareholder preferences, will not deliver optimal results. On the other hand, nationalizing the delivery of environmental protection is likely to fail because nation states rarely have the depth and quality of information required to instruct all the relevant agents to make appropriate decisions. Thus, as for many areas of policy, appropriate models of environmental intervention will lie between these two extremes. While it is impossible to specify general rules concerning the precise form of intervention, in part because the type of intervention depends upon value judgements, this paper sets out some of the considerations that are particular to environmental policy, and explores several principles for policy design, including information, coordination, and principal--agent problems, with a particular focus on the international context. Copyright 2010, Oxford University Press.

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  • Cameron Hepburn, 2010. "Environmental policy, government, and the market," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(2), pages 117-136, Summer.
    • Handle: RePEc:oup:oxford:v:26:y:2010:i:2:p:117-136
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    File URL: http://hdl.handle.net/10.1093/oxrep/grq016
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    17. Shafiu Ibrahim Abdullahi, 2019. "Financing Afforestation in the Organization of Islamic Cooperation Countries: What Role for Islamic Economics and Finance? تمويل استزراع الغابات في دول منظمة التعاون الإسلامي: ما دور الاقتصاد والتمويل," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 32(2), pages 161-177, January.
    18. Yves Steinebach, 2022. "Instrument choice, implementation structures, and the effectiveness of environmental policies: A cross‐national analysis," Regulation & Governance, John Wiley & Sons, vol. 16(1), pages 225-242, January.
    19. Burtraw, Dallas & Woerman, Matt, 2013. "Economic ideas for a complex climate policy regime," Energy Economics, Elsevier, vol. 40(S1), pages 24-31.
    20. Matt Andrews, 2014. "An Ends-Means Approach to Looking at Governance," CID Working Papers 281, Center for International Development at Harvard University.
    21. Martin, Paul V., 2018. "Managing the risks of ecosystem services markets," Ecosystem Services, Elsevier, vol. 29(PB), pages 404-410.
    22. Okereke, Chukwumerije & McDaniels, Devin, 2012. "To what extent are EU steel companies susceptible to competitive loss due to climate policy?," Energy Policy, Elsevier, vol. 46(C), pages 203-215.
    23. Andrews, Matt, 2014. "An Ends-Means Approach to Looking at Governance," Working Paper Series rwp14-022, Harvard University, John F. Kennedy School of Government.
    24. Yunhee Kim, 2015. "Environmental, Sustainable Behaviors and Innovation of Firms During the Financial Crisis," Business Strategy and the Environment, Wiley Blackwell, vol. 24(1), pages 58-72, January.
    25. Guta, Dawit & Jara, Jose & Adhikari, Narayan & Qiu, Chen & Gaur, Varun & Mirzabaev, Alisher, 2015. "Decentralized energy in Water-Energy-Food Security Nexus in Developing Countries: Case Studies on Successes and Failures," Discussion Papers 207713, University of Bonn, Center for Development Research (ZEF).

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