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Barriers to the introduction of market-based instruments in climate policies: an integrated theoretical framework

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  • Pablo Río
  • Xavier Labandeira

Abstract

Many economists propose the superiority of market-based instruments, and an increasing use of such measures in OECD countries has taken place. However, there has been (and still is) some reluctance by policymakers to use market-based instruments in climate policy. This article provides a theoretical framework to help explain this paradox. This framework combines standard environmental economics reasoning with two economic approaches: the institutional path dependence and the public choice perspectives, complemented with some insights from political science studies. Ex post empirical research using the Spanish case illustrates the accuracy and policy relevance of our approach. Analyzing the barriers to market-based measures in climate policy may allow us to draw lessons to facilitate the implementation of these instruments in the future. Copyright Springer Japan 2009

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  • Pablo Río & Xavier Labandeira, 2009. "Barriers to the introduction of market-based instruments in climate policies: an integrated theoretical framework," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 10(1), pages 41-68, March.
    • Handle: RePEc:spr:envpol:v:10:y:2009:i:1:p:41-68
    DOI: 10.1007/BF03353978
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    Cited by:

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    6. Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
    7. del Río, Pablo, 2017. "Why does the combination of the European Union Emissions Trading Scheme and a renewable energy target makes economic sense?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 824-834.
    8. Dissanayake, Sumali & Mahadevan, Renuka & Asafu-Adjaye, John, 2020. "Evaluating the efficiency of carbon emissions policies in a large emitting developing country," Energy Policy, Elsevier, vol. 136(C).
    9. Popp, Thies R. & Feindt, Peter H. & Daedlow, Katrin, 2021. "Policy feedback and lock-in effects of new agricultural policy instruments: A qualitative comparative analysis of support for financial risk management tools in OECD countries," Land Use Policy, Elsevier, vol. 103(C).
    10. Geoffroy Dolphin & Michael G Pollitt & David M Newbery, 2020. "The political economy of carbon pricing: a panel analysis," Oxford Economic Papers, Oxford University Press, vol. 72(2), pages 472-500.
    11. Donato Masciandaro & Romano Vincenzo Tarsia, 2021. "Society, Politicians, Climate Change and Central Banks: An Index of Green Activism," BAFFI CAREFIN Working Papers 21167, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    12. Iglesias, Guillermo & del Río, Pablo & Dopico, Jesús Ángel, 2011. "Policy analysis of authorisation procedures for wind energy deployment in Spain," Energy Policy, Elsevier, vol. 39(7), pages 4067-4076, July.
    13. Burtraw, Dallas & Woerman, Matt, 2013. "Economic ideas for a complex climate policy regime," Energy Economics, Elsevier, vol. 40(S1), pages 24-31.
    14. Meier, Jan-Niklas & Lehmann, Paul, 2020. "Optimal federal co-regulation of renewable energy deployment," UFZ Discussion Papers 8/2020, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    15. Pablo Río & Miguel Tarancón & Cristina Peñasco, 2014. "The determinants of support levels for wind energy in the European Union. An econometric study," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 19(4), pages 391-410, April.
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    17. Pablo del Río González & Xavier Labandeira Villot, 2009. "Climate Change at Times of Economic Crisis," Economic Reports 05-09, FEDEA.
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    More about this item

    Keywords

    Climate policy; Public choice; Institutional path dependency; Spain;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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