B1.1 Instruments for Change


Policy is a way of setting objectives, acting as guideposts for decision making and steering us in the right direction. However, it does not provide all of the answers.

Environmental policy instruments are tools used by governments to implement their environmental policies. Governments may use a number of different types of instruments. For example, economic incentives and market-based instruments such as taxes and tax exemptions, tradable permits, and fees can be very effective to encourage compliance with environmental policy. Often, several instruments are combined in to address a certain environmental problem.

A Policy framework is required to avoid the problems that short-term and ad-hoc decisions cause. An appropriate framework should create coherence and consistency.

The potential consequences of action and inaction must be considered. To be effective, policy must be interpreted into detailed instructions.

Since environmental issues often have many different aspects, several policy instruments may be needed to adequately address each one. However, overlapping instruments may lead to increased administration, making the implementation of environmental policies more costly than necessary.

There are different ways in which Government can encourage companies to act. These include:

  • Financial Instruments
  • Legislative Instruments
  • Voluntary Measures
  • Information
  • Market Instruments