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ECONOMIC INSTRUMENTS NOVEMBER 25, 2013

ECONOMIC INSTRUMENTS NOVEMBER 25, 2013. OVERVIEW . Pros and Cons of Economic Instruments Tax Incentives and Allowances Non-tax Instruments Other Economic Incentives. Economic Incentives. Market-based instruments used by policy makers to achieve environmental goals

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ECONOMIC INSTRUMENTS NOVEMBER 25, 2013

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  1. ECONOMIC INSTRUMENTS NOVEMBER 25, 2013

  2. OVERVIEW • Pros and Cons of Economic Instruments • Tax Incentives and Allowances • Non-tax Instruments • Other Economic Incentives

  3. Economic Incentives • Market-based instruments used by policy makers to achieve environmental goals • Stimulate an economic actor to adopt environmentally friendly behaviour or technology, or abandon environmentally harmful behaviour or technology • Leverage economic interest of individuals, corporations, organizations and communities to protect ecosystems, ecological services • Distinguished from command and control regulation

  4. Pros of Economic Incentives • Polluter Pays – “assigns polluters the responsibility for remedying contamination for which they are responsible and imposes on them the direct and immediate costs of pollution” Imperial SCC • More efficient and cheaper to allow market-based instrument to achieve desired level of environmental protection than regulations • Stimulates more efficient technologies • Competitiveness, lower regulatory costs

  5. Cons of Economic Incentives • Trust in government to manage economic instruments scheme • Unfair allocation of environmental burdens to minorities (environmental justice) • Should industry be authorized to buy rights to undertake activities that are inherently bad? • Economic analysis tools inadequate to task of assigning values to environment

  6. Tax Incentives and Allowances • Carbon Taxes • Accelerated depreciation of capital costs, sales tax rebates on pollution-control equipment • Subsidy reform in extractive industries: Green Budget Coalition 2014 federal budget recommendations • Ecological Gifts Program provides federal tax credits to land owners donating ecologically sensitive lands charities

  7. Non-tax Instruments • Deposit /Refund schemes for bottles • Water pricing, metering • Sale of emission rights for pollutants • Emission trading schemes • Protection of forests through carbon credit sales • Dedicated environmental funds

  8. Other Economic Incentives • Insurance mandated by law relating to environmental liability as economic instrument • Financial sureties for mine closure required for mine approval • Use of pollution, hurricane liability exclusion clauses by insurance companies

  9. Summary Question • Is the increased use of economic incentives a national emergency? (OECD)

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