Application of Economic Instruments to the Environment by Jyoti Painuly, Indira Gandhi Institute for Development Research, Bombay, India Market-based approaches that use economic instruments to deal with environmental problems have generated considerable interest in recent times. Economic instruments have been applied in some form in several countries, but their application to address environmental problems has been limited and mostly confined to single developed countries. The possibility of applying economic instruments at the international level is now being explored by several experts. Although several issues need to be resolved , the approach offers considerable potential for addressing local and global environmental problems. In this approach standards are set on pollution levels and these are monitored.
Compliance is made mandatory through regulatory measures.
The standards can be on discharge limits for pollutants, concentration of pollutants, or a specific low polluting technology could be specified for a production process. In some cases an outright ban could be imposed on toxic pollutants. The command and control approach has been in existence for a long time, pollution control authorities are comfortable with the approach, and in fact several developed countries have been able to control pollution using this approach. However, regulation requirements have increased rapidly with expansion of economies and by 1980 several developed countries were incurring pollution control costs in the region of 1.25 to 1.65 per cent of their GNPs. Pollution charges of different kinds like emissions charges, product charges etc. were introduced.