They are also inflexible. Those subject to regulations may have no choice in how they reach these environmental and social goals. Logistics pose an additional problem. Pollution, for instance, is caused by a large number of individuals making it difficult to enforce standards. With the realization that regulation is not as effective and efficient as it could be, the focus has swung towards the use of economic instruments.
Economic instruments are policy measures which explicitly affect private cost and benefits.
The motivation used is that rational decision makers will base their decisions on a comparison of various options. Their rational choice will be the option which has the least cost for the number of benefits received. Economic instruments seek to make environmentally more appropriate behaviour more rewarding to the decision maker. Since it is not always so easy to compensate every individual affected by pollution, the polluting parties should have to pay the state who will then decide how to allocate and distribute the resulting funds. The most common theoretical instrument used under this regime is the Pigouvian tax.