Environmental policy is any (course of) action deliberately taken (or not taken) to manage human activities with a view to prevent, reduce or mitigate harmful effects on nature and natural resources, and ensuring that man-made changes to the environment do not have harmful effects on humans.^[1]

Definition

It is useful to consider that environmental policy comprises two major terms: environment and policy. Environment primarily refers to the ecological (ecosystems) dimension, but can also take account of social (quality of life) dimension and an economic (resource management) dimension. ^[2] Policy can be defined as a "course of action or principle adopted or proposed by a government, party, business or individual" ^[3]. Thus, environmental policy focuses on problems arising from human impact on the environment, which retroacts onto human society by having a (negative) impact on human values such as good health or the 'clean and green' environment.

Environmental issues generally addressed by environmental policy include (but are not limited to) air and water pollution, waste management, ecosystem management, biodiversity protection, and the protection of natural resources, wildlife and endangered species.

Rationale

The rationale for governmental involvement in the environment is complex but could be divided into four key reasons: public/voter pressure, awareness of the need to halt biodiversity loss, maintenance of ecosystem services for the good of the public and market failure.

There are three types of market failure that justify government action: negative externalities, the free rider problem, and the tragedy of the commons. An example of a negative externality is a factory that pollutes the water of a river. The negative cost of such action is paid by society-at-large when they must clean the water before drinking it and is "external" to the costs of the factory. Air pollution is another common example of a negative externality. The free rider problem is when the individual cost of taking an action to protect the environment is greater than the individual benefit. For example, installing an anti-pollution device on a car may cost several hundred dollars and only reduce the air pollution by a little. The rational individual decision is to not buy the device and benefit from the actions of others. Such individual rationality however, can lead to collective irrationality. Finally, the tragedy of the commons is the problem that, because no one person owns the commons, each individual has an incentive to try to exploit common resources as much as possible. Without governmental involvement, the commons may become overused, producing a worse result for everyone. Examples of tragedies of the common are overfishing and overgrazing.^[4]

Environmental policy instruments

Environmental policy instruments are tools used by governments to implement their environmental policies. Governments may use a number of different types of instruments. For example, economic incentives and market-based instruments such as taxes and tax exemptions, tradable permits, and fees can be very effective to encourage compliance with environmental policy. ^[5]

Voluntary measures, such as bilateral agreements negotiated between the government and private firms and commitments made by firms independent of government pressure, are other instruments used in environmental policy. Another instrument is the implementation of greener public purchasing programmes. ^[6]

Often, several instruments are combined in an instrument mix formulated to address a certain environmental problem. Since environmental issues often have many different aspects, several policy instruments may be needed to adequately address each one. Furthermore, instrument mixes may allow firms greater flexibility in finding ways to comply with government policy while reducing the uncertainty in the cost of doing so. However, instrument mixes must be carefully formulated so that the individual measures within them do not undermine each other or create a rigid and cost-ineffective compliance framework. Also, overlapping instruments lead to unnecessary administrative costs, making implementation of environmental policies more costly than necessary^[7] In order to help governments realize their environmental policy goals, the OECD Environment Directorate studies and collects data on the efficiency of the environmental instruments governments use to achieve their goals as well as their consequences for other policies.^[8]

The current reliance on a market based framework is controversial, however, with many prominent environmentalists arguing that a more radical, overarching, approach is needed than a set of specific initiatives, to deal coherently with the scale of the climate change challenge. For an example of the problems, energy efficiency measures may actually increase energy consumption in the absence of a cap on fossil fuel use, as people might drive more efficient cars further and they might sell better. Thus, for example, Aubrey Meyer calls for a 'framework based market' of contraction and convergence examples of which are ideas such as the recent Cap and Share and 'Sky Trust' proposals.

See also

• Environmental science
• Environmental Principles and Policies
• Environmental policy of the United States
• Canadian Institute for Environmental Law and Policy

References

External links

• Green Policy Canadian organization focused on the collection, analysis and continuous improvement of companies green policies.
• Tellus Institute Nonprofit environmental policy research organization.
• Resources for the Future A nonprofit and nonpartisan organization that conducts independent research -- rooted primarily in economics and other social sciences -- on environmental, energy, and natural resource issues.
• http://www2.oecd.org/ecoinst/queries/index.htm EEA/OECD Environmental Policy and Natural Resource Management database.

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