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A plethora of instruments exists that can make the market work for sustainable
development, including tradable permit schemes, removing market barriers
and environmentally damaging government subsidies, subsidizing the start-up
of environmentally sound businesses, creating markets for environmental
services, encouraging disclosure policies and recycling tax revenues.
In the right context, market instruments can often be more effective than
command-and-control measures. Furthermore, their flexibility encourages
private sector innovation in ways that binding policies do not. The market
is not very effective, however, in dealing with the long time horizons
and uncertainty that characterize some environmental problems.
| Suggestions for Action |
| Making the market work for sustainable development |
- Promote tailored policies that combine market instruments with
traditional command-and-control measures, such as internalizing
environmental costs, introducing environmental taxes and removing
perverse subsidies
- Build partnerships between government, industry and others to
shape the markets for environmental goods and services, using
tools such as legislation, incentives, market mechanisms and other
methods of influencing market and consumer behaviour
- Analyse and reform market imbalances and imperfections, including
decreasing the subsidies that allow prices to be held artificially
below the costs of production and use for resources such as as
fuel, pesticides, water and electricity
- Develop more and better incentives to capitalize on win-win'
situations, whereby both the economy and the environment benefit,
such as:
- increasing community benefits from environmental markets
(e.g. fair trade)
- introducing a public disclosure policy to reveal those most
responsible for pollution - such as the publicly available
pollutant release and transfer registries through which industries
report emissions to air, water and land
- Promote the growing catalytic, cooperative role of governments
(rather than the regulatory one) and encourage better national
coordination between international trade decisions and environmental
policy
- Bring 'green' goods and services to the market
- Take active measures to stimulate sustainable consumption and
production practices
- Provide incentives for eco-efficient (cleaner) production and
innovation
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