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Choosing Environmental Policy:
Comparing Instruments and Outcomes in the United States and Europe                

Thursday, June 17, 2004
RFF Forum

RFF hosts a special event surrounding the release of Choosing Environmental Policy, a new RFF Press book that focuses on six different environmental problems that were managed differently on opposite shores of the Atlantic, mostly during the 1990s.

Edited by RFF senior fellows Winston Harrington and Richard Morgenstern and university fellow Thomas Sterner, the book also looks at the two distinct approaches to environmental policy: direct regulation – sometimes called “command and control” policies – and regulation by economic, or market-based, incentives.

The cases in Choosing Environmental Policy allow the sharpest, most direct comparisons of direct regulation and incentive-based strategies, based on actual experiences in different countries.

This book was funded in part by generous grants from The Smith Richardson Foundation and the U.S. Environmental Protection Agency.



Link to RFF Press Book Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe

Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe

Video of this RFF Forum and commentary by RFF Journalist-in-Residence John Anderson on the speakers' and panelists' remarks follow below.

To view the videos, you need RealPlayer. Get a free RealPlayer at

Introduction: Paul Portney | Link to Video
President and Senior Fellow
Resources for the Future

Link to video of Paul Portney

Speaker I: Dick Morgenstern | Link to Video of Dick Morgenstern
Senior Fellow
Resources for the Future

Link to video of Dick Morgenstern

Speaker II: Winston Harrington | Link to Video of Winston Harrington 
Senior Fellow
Resources for the Future

Link to video of Winston Harrington

Introduction of Panel: Paul Portney | Link to Video of Paul Portney
President and Senior Fellow
Resources for the Future

Link to video of Paul Portney

Panelist I: John Graham | Link to Video of John Graham 
Administrator, OMB
Office of Information & Regulatory Affairs

Link to video of John Graham

Panelist II: Josephine Cooper | Link to Video of Josephine Cooper 
Group Vice President of Government and Industry Affairs
Toyota Motor Sales USA

Link to video of Josephine Cooper

Panelist III: Joseph Goffman | Link to Video of Joseph Goffman 
Senior Attorney
Environmental Defense

Link to video of Joseph Goffman

Panelist IV: Miranda Schreurs | Link to Video of Miranda Schreurs 
Associate Professor of Government
University of Maryland

Link to video of Miranda Schreurs

Panelist V: Albert McGartland | Link to Video of Albert McGartland 
National Center for Environmental Economics

Link to video of Albert McGartland

Question & Answer Session | Link to Video of Q

Link to video of Q

Incentives Versus Regulation: What Does the Record Show?

by RFF Journalist-in-Residence
John Anderson

Environmental policy will need to continue using both market-based economic incentives and direct regulation, a panel of administrators and scholars agreed June 17 at Resources for the Future.

The panel discussed a forthcoming RFF Press book, "Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe," edited by RFF fellows Winston Harrington, Richard D. Morgenstern and Thomas Sterner.

Policy makers in the United States frequently argue that economic incentives are more effective, while Europeans usually prefer direct regulation by the government. But the book's case studies of actual performance, Miranda Schreurs of the University of Maryland concluded, show that neither alternative is clearly superior across the board.

John Graham, of the federal Office of Management and Budget, said that actual practice reflects a lot of hybrids and mixes between the two alternatives. He warned against the assumption that economic incentives are widely accepted in American politics, citing Congress's recent refusal even to give serious consideration to trading in the program that imposes fuel economy standards on the automobile industry.

The main finding of the book, commented Josephine Cooper of Toyota, is that governments have made real progress with both instruments. Practice differs from one country to another, she said, because "the cultures are different."

The book's purpose is to focus on "real world results" in an area of policy that has been left largely to theoretical modeling, explained Morgenstern.

He observed that, in general, economic incentives have resulted in greater reductions of emissions than they were originally designed to produce, while direct regulation has resulted in less. One reason, Harrington noted, is that under a system of tradeable permits a violator's competitors have a direct incentive to insist on compliance.

Panelists raised several questions for further research.

Albert McGartland of the Environmental Protection Agency said that it would be worth knowing the relative effectiveness of the various kinds of incentives and regulations in encouraging technological development to combat pollution.

Joseph Goffman of Environmental Defense suggested a broader look at the shift in American policy to economic incentives. It was partly a reaction, he said, to a crisis on confidence in the late 1980s regarding air quality and the difficulties of achieving further progress. There was also a demand, he said, for programs that left more decisions to the private sector.

Schreurs asked how the American and European experience, reflected in the book, might apply to developing countries. And, she continued, does it matter what kind of pollution is the target --- air pollution, for example, or water pollution? Further research, she said, might also look at voluntary agreements between government and industry, a type of instrument that has sometimes proved useful.

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