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An Organizing Framework of Economic Criteria to Help Determine The Effectiveness of Environmental Policy Instruments

Published by the American Society of Agricultural and Biological Engineers, St. Joseph, Michigan

Citation:  Pp. 193-203 in Total Maximum Daily Load (TMDL) Environmental Regulations: Proceedings of the March 11-13, 2002 Conference, (Fort Worth, Texas, USA)  701P0102.(doi:10.13031/2013.7557)
Authors:   B. M. Paul
Keywords:   Environmental policy, incentives, evaluative criteria, economics, incentive compatibility, non-point source pollution management

The purpose of this paper is to report on an ongoing study to develop the means to understand the applicability of using economic studies to address non-point pollution in the agri-food industry. Policy prescriptions aim to reduce environmental and resource conflicts caused by a deviation between the interests of private decision-makers and that of society. The economic problem lies in the apparent inability of existing economic knowledge to address the pollution problems. This is evidenced by the apparent use of policies and programs in a manner that causes unanticipated and undesirable consequences. Three reasons that may have contributed to this are (a) the inadequacy of existing economic models to represent reality (b) the disregard in most economic studies of the cost of change at the institutional and policy level and/or (c) the inability of decision makers to utilize economic studies due to their being presented in a manner that is incomprehensible to non-economists. The first part of this paper identifies and describes the various instruments available. Thereafter, the various economic criteria to evaluate the different instruments are noted and a critical review identifies some of the key pitfalls in the economic knowledge. The paper goes on to describe an organizational framework with which to understand the different factors and perspectives that influence the economic problem. The paper presented here forms the background for evaluating Ontarios use of economic instruments and for developing the means to correct some of the possible deficiencies.

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