Prices are a consequence of the distribution of property rights that underlie market exchange. Theoretically, if the government were to define property rights in such a way that would allow for correct pricing of environmental resources, then their actual scarcity and cost would be reflected. Further environmental degradation resulting from economic activity should be halted. This suggests a role for governments in implementing environmental protection. In other words, they regulate activities that degrade the environment in accordance with some legislated or agreed standard.
Regulations can be difficult to enforce and costly to administer.
Rising costs and budget constraints have made regulation less attractive than economic instruments with their promise of efficiency and built-in compliance. Regulations offer no incentive for exploiters of the environment to attain standards higher than those imposed by the law either. 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.