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On markets and the conditions of a profitable use of economic instruments for environmental policy in countries in transition to market

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  • Olivier Godard

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

Abstract

Economic instruments for environmental policies could reach their full potential of efficiency in economies in which all commodities are exchanged on competitive markets and agents are maximising operators, ready for catching any market opportunity and sensitive to price signals. This ideal cannot be held as a realistic picture neither of OECD countries nor economies in transition to market, even if market mechanisms have gained, to a different degree, a considerable influence on their economic life. As far as environmental issues are concerned, contexts of action are of mixed-economies type, with an important role given to public regulation and public or collective financial circuits for environmental programmes. Happily, well designed economic instruments can do quite well for improving the cost-effectiveness of such policy contexts without waiting a full development of a market economy. This gains may be derived directly (positive incentives to minimise abatement costs), or by opportunity (alleviating technological and administrative rigidities). They can also result from reforms and new institutional settings they make possible ('green tax reform', or setting up water communities) on top of their direct incentive dimension.

Suggested Citation

  • Olivier Godard, 1998. "On markets and the conditions of a profitable use of economic instruments for environmental policy in countries in transition to market," Post-Print halshs-00624095, HAL.
    • Handle: RePEc:hal:journl:halshs-00624095
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00624095v1
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    References listed on IDEAS

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    1. Olivier Godard & Christine Cros, 1998. "The economic design of a potential tradable permit system for SO2 emissions in the European Union," Post-Print hal-00622840, HAL.
    2. Olivier Godard & Olivier Beaumais, 1993. "Économie, croissance et environnement. De nouvelles stratégies pour de nouvelles relations," Revue Économique, Programme National Persée, vol. 44(1), pages 143-176.
    3. Paul Ekins, 1995. "Rethinking the costs related to global warming: A survey of the issues," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(3), pages 231-277, October.
    4. Dallas Burtraw, 1996. "The So2 Emissions Trading Program: Cost Savings Without Allowance Trades," Contemporary Economic Policy, Western Economic Association International, vol. 14(2), pages 79-94, April.
    5. Olivier Godard, 1997. "Social Decision-Making under Scientific Controversy, Expertise, and the Precautionary Principle," Post-Print halshs-00624027, HAL.
    6. Conrad, Klaus & Kohn, Robert E, 1996. "The US market for SO2 permits : Policy implications of the low price and trading volume," Energy Policy, Elsevier, vol. 24(12), pages 1051-1059, December.
    Full references (including those not matched with items on IDEAS)

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