Richard D. Morgenstern
Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe

The two distinct approaches to environmental policy include direct regulation – sometimes called ‘command and control’ policies ‘-- and regulation by economic or market-based incentives. This study compares the costs and outcomes of these approaches by examining real-world applications. Paired case studies from the US and Europe contrast direct regulation on one side of the Atlantic with an incentive-based policy on the other. For example, Germany’s direct regulation of SO2 emissions is compared with an incentive approach in the US. Direct regulation of water pollution via the US Clean Water Act is contrasted with Holland’s incentive-based fee system. Additional studies contrast solutions for eliminating leaded gasoline and reducing nitrogen oxide emissions, CFCs, and chlorinated solvents. Comparisons among the cases focus on efficiency, effectiveness, distributive aspects, administrative and monitoring costs and other aspects of the different approaches.