The relationship between CAC and environmental policy is considered in this article, an area that demonstrates the application of this type of regulation.
[4] In the case of environmental policy and regulation, the CAC approach strongly relies on the use of standards to ensure the improvements in the quality of the environment.
[6] Whilst many view CAC negatively, direct regulatory control is still used in many countries' environmental policy.
[7] Enforcement of CAC often involves the use of uniform sanctions, this can result in small businesses feeling the burdens of regulation more severely than companies of a larger size.
Possible benefits of this approach may include cheaper administration costs and a reduction in the risk of regulatory capture.
Inspection and enforcement may also be essential to prevent evasion of liability, again resembling CAC and possibly removing the posited benefits in terms of cost.
[12] Empirical data suggests that CAC regulations, especially government subsidies in agriculture,[13] often fuel environmental damage, deforestation and overfishing in particular.
[14][15] Some have moved to defend certain aspects of a CAC approach, arguing against the commonly held belief that these regimes are inherently inefficient.
Advocates of incentives have been accused of making simplifying assumptions and not fully taking into account the costs of administrating tax systems.
[18] Evans[19] draws on the following example: “it is relatively easy to regulate the emissions from 10 large coal burning power stations in a single country, but far less easy to monitor the emissions caused by millions of motorists or the effluent discharges from tens of thousands of farms across the world.” In Environmental Policy, CAC is characterised by 3 different types of standards, the use of the standards is determined by various factors, including the nature of the environmental problem and the administrative capacities of the governing body:[17] It has been suggested that if compliance reaches appropriate levels, there may be a good degree of certainty of environmental results.
[9] It has been argued that the use of the CAC approach to solve environmental problems can result in unexpected consequences if the application is conducted uncritically.
This term was coined by Lindblom[21] and describes the small and often unplanned changes that have occurred in the field of environmental regulation.
The aim of the agreement was to limit the release of Chlorofluorocarbons into the atmosphere and subsequently halt the depletion of Ozone (O3) in the stratosphere.
However, the aim of the Montreal Protocol has been to eliminate the source of CFC emissions, as a result the only really feasible way for a state to achieve this would be through a ban on substances related to Ozone depletion.
[19] The traditional model of command and control typically involved areas of environmental concern being dealt with by national governments.
Mitigating climate change requires action of a much more proactive nature than traditional CAC models are able to deliver.
Without a strong international enforcement body it is unlikely that CAC will be an effective tool for dealing with most transboundary environmental issues, climate change included.
However, it is likely that many governments will persist with CAC because of the political benefits and the fact that it is not always as inflexible and inefficient as many economists would suggest.