Criteria for Evaluating
Environmental Policies
Field, chapter 9
Policy Criteria

In evaluating the effectiveness and
appropriateness of a policy for addressing a
given problem in environmental pollution
control, it is important to have clearly in mind
a set of policy evaluation criteria.
2
List





Their ability to achieve efficient and costeffective reductions in pollution.
Their fairness.
The incentives they offer to people to search
for better solutions.
Their enforceability.
The extent to which they agree with certain
moral precepts.
3
EFFICIENCY


An efficient policy is where marginal
abatement costs and marginal damages are
equal.
One way of thinking about environmental
policies is along a continuum from centralized
to decentralized.

A centralized policy requires that some control
administrative agency be responsible for
determining what is to be done.
4
Measurement

To achieve efficiency in a centralized policy,
the regulatory agency in charge must have
knowledge of the relevant marginal
abatement cost and marginal damage
functions, then take steps to move the
situation to the point where they are equal.

It is often the case that environmental damages
cannot be measured accurately.
5
Cost Effectiveness

Measurement issues makes it useful to
employ cost-effectiveness as a primary
policy criterion.

A policy is cost-effective if it produces the
maximum environmental improvement possible
for the resources being expended or, equivalently,
it achieves a given amount of environmental
improvement at the least possible cost.

For a policy to be efficient it must be cost-effective, but
not necessarily vice versa.
6
Less Abatement than Desired


If programs are not cost-effective,
administrators will tend to set less restrictive
targets in terms of desired amounts of
emission reductions.
The real problem with having costs higher
than they need to be is that society will be
inclined to set its objectives too low in terms
of the amount of emission reduction sought.
7
8
FAIRNESS

Equity is, first and foremost, a matter of
morality and the concerns about how the
benefits and costs of environmental
improvements ought to be distributed among
members of society.

It has to be recognized that there is no agreement
on how much weight should be put on the two
objectives: efficiency and distribution.
9
10
Environmental Justice

The concern is that racial minorities and lowincome people are disproportionately
exposed to environmental contaminants, both
those outside the home such as air and water
pollution and those within the home and
workplace such as lead.

It’s possible that low-income households locate
close to hazardous waste sites because property
values are lower.
11
INCENTIVES FOR LONG-RUN
IMPROVEMENTS

It is firms and consumers whose decisions
actually determine the range and extent of
environmental impacts.


The incentives facing these private parties
determine how and where these impacts will be
reduced.
Do environmental policies provide strong
incentives for individuals and groups to find new,
innovative ways of reducing their impacts on the
environment?
12
Incentives for R&D

Shifting downward the marginal abatement
cost function makes it cheaper to secure
reductions in emissions, because this will
justify higher levels of environmental quality.
13
ENFORCEABILITY

There perhaps is a natural tendency among
people to think that enacting a law
automatically leads to the rectification of the
problem to which it is addressed.



Among the environmental community this
tendency is depressingly strong.
Enforcement requires energy and resources.
There will always be people whose interests lie in
not having environmental policies enforced.
14
Compliance

The GAO once surveyed a large number of
major wastewater dischargers in the country.


They found that a substantial fraction (more than onethird) of the sources were not in compliance.
RFF surveyed state enforcement agencies to
determine common practices and costs
associated with enforcing pollution-control
regulations.

A widespread practice is for agencies to require selfreporting of emissions by firms.
15
16
Enforcement

There are two main steps in enforcement:


Monitoring refers to measuring the performance
in comparison to whatever requirements are set
out in the relevant law.
Sanctioning refers to the task of bringing to
justice those whom monitoring has shown to be in
violation of the law.

Authorities often seek to achieve voluntary compliance
encouraging violators to remedy the situation w/o
penalty.
17
Paradox

One might think that the greater the
sanctions—higher fines, long jail terms for
violators, and so on—the more the law would
deter violators.


But the higher the penalties, the more reluctant
courts may be to apply them.
The threat to close down violators, or even to levy
stiff financial penalties, can in turn threaten the
economic livelihoods of large numbers of people.
18
MORAL CONSIDERATIONS

The innate feelings that people have about
what is right and wrong affect the way they
look at different environmental policies.

Take, for example, the question of choosing
between effluent taxes and effluent subsidies.


Subsidies may be more effective.
Some people regard polluting behavior as
essentially immoral.

Those who cause a problem ought to bear the major
burden of alleviating it.
19
GOVERNMENT FAILURE


Government failure means that it cannot simply be
assumed that each and every attempt at public
environmental policy will make the situation better.
Government failure refers to systematic tendencies
and incentives within legislatures and regulating
agencies that work against the attainment of
efficient and equitable public policy.


Outcomes in the political process may not resemble
informed, rational public policy that advances the welfare of
society.
The process could make the situation worse in some
circumstances. (See Anderson, Political Environmentalism)
20
SUMMARY





Efficiency and cost-effectiveness
Equity
Incentives for long-run innovations
Enforceability
Agreement with moral precepts



Several traditional decentralized approaches, (ch 10)
The use of standards, a centralized approach that has
been the most frequently used historically (ch 11)
Incentive-based policies (chs 12-13)
21