Question

How can a market-based policy be used as a solution to the hazardous solid waste problem? Can you give an example of a market-based policy that has been used effectively either domestically or internationally?

Answer 1

Market-based policy instruments include price , taxation and other instruments to provide incentive to prducers to create lesser pollutants . Such economic variables if implemented carefully can eliminate negative externality to some extent . Hazardous solid wastes are also a kind of pollutant . Introduction of taxes , subsidies , emission trading , pollution permits etc can reduce such pollution of environment . As for example if tradable permits are introduced then the amount of overall hazardous wastes that in generated can be controlled . Taxation on goods that create pollution increases price of such goods , thus reducing consumption to the socially optimal point .

The European Union Emission Trading Scheme , Fuel Tax in UK in 1909 are all great examples of market based policy instruments .