When Traditional Regulation Fails: Using Market-Based Instruments to Improve Environmental Management

Government regulation has long been the traditional mechanism employed to avoid environmental degradation. These Command and Control (CAC) policies tell companies what the environmental standards are and how to meet them. Consider popular environmental policy: emission standards, equipment specifications, disclosure requirements, etc.

Emerging Trends in Sustainable Development: An Ecosystem Service Approach

Ecosystem Services (ES) are the benefits nature provides to people. These can include essential services like access to clean drinking water and food production or other values like recreational opportunities and aesthetics. The natural resource sector also depends on the benefits nature provides to exist. Without healthy, functioning ecosystems, the forestry sector would not have a sustainable timber harvest and the agricultural sector would not have productive land to produce crops. While lumber, pulp and paper and the production of food all have a market value, there are a number of regulating and supporting services nature provides that are not associated with a market price. Nutrient cycling, pollination, and genetic diversity, are all examples of services that, if they were to disappear, would have detrimental impacts on these sectors; however current markets do not associate a cost with them.