Incentives For The Future

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Economic incentives are instruments that use financial means to motivate polluters to reduce the health and environmental risks posed by their facilities, processes, or products. These incentives provide monetary and near-monetary awards for polluting less and impose costs of various types for polluting more, thus supplying motivation for polluters to change their behavior. The report distinguishes seven basic types of incentives: Pollution charges, fees, and taxes; deposit-refund systems; trading programs; subsidies for pollution control, liability approaches; information disclosure; voluntary programs.
Economic incentives offer several advantages that make them attractive environmental management tools. First, economic incentives, in some circumstances, can be structured to achieve larger reductions in pollution than would result from traditional regulations. Second, economic incentives often can control pollution at lower costs than can traditional regulations. Third, the use of economic incentives, in contrast to that of traditional regulations, can more easily control pollution generated by a multitude of small and dispersed sources. Fourth, economic incentives can stimulate technological improvements and innovations in pollution control in situations where traditional regulatory mechanisms may not.
Progressive companies are shifting rapidly from an approach of compliance to one of proactive environmental management. The revolution in thinking has gone through three stages: 1) the widespread business practice in the 1960s and 1970s of coping with environmental crises as they occurred and of attempting to control the resulting damage; 2) the reactive mode in the 1980s of struggling to comply with rapidly changing government environmental regulations and minimizing the costs of compliance; 3) the proactive environmental management strategy in the 1990s, through which corporations began to anticipate the environmental impacts of their operations, take measures to reduce waste and pollution in advance of regulation, and find positive ways of taking advantage of business opportunities through total quality environmental management.(4) For many firms, environmental values are now becoming an integral part of their corporate cultures and management processes. In a growing number of companies, environmental impacts are being audit...

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...id- to late-1980s executives in many larger corporations began to realize that waste reduction saved money. The forces described earlier began to push many firms into strategies that went beyond compliance.
In the late 1980s proactive environmental management and the total- quality-management movement began to converge. TQM initiatives gave firms unexpected insights into how to make environmental management cost-effective and market-driven. By the beginning of the 1990s, waste minimization programs had been adopted by a diverse group of U.S.- based MNCs, among them Allied Signal, General Dynamics, Dow Chemical, Chevron, Boeing, AT&T, Amoco, General Electric, IBM, Polaroid, and Xerox.(15) Many successful businesses were voluntarily performing internal environmental compliance audits to identify and correct their environmental liabilities, demonstrate good-faith effort, and reduce government pressures. More importantly, the voluntary audits forced businesses to evaluate operating systems, identify the actual cost of controls, and develop environmental performance strategies to eliminate liabilities altogether.

http://environ.uiuc.edu/epareport.htm

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