ENVIRONMENTAL POLICY RESEARCH BRIEFS Number 2

A further series of policy briefings on different topics will follow in 1998 reflecting the ongoing work of the Network. This policy briefing is number two in the series, on emissions trading schemes. Three broad categories of environmental policy instrument have evolved over the past two decades: regulatory instruments, whereby public authorities mandate the environmental performance to be achieved, or the technologies to be used, by firms; economic instruments, whereby firms or consumers are given financial incentives to reduce environmental damage; voluntary approaches, whereby firms make commitments to improve their environmental performance beyond what the law strictly demands. These categories are not mutually exclusive, in that some policy instruments exhibit characteristics from more than one of the categories, but they provide a useful general classification. The Research Network on Market-Based Instruments for Sustainable Development is a Concerted Action involving thirteen European research institutes funded by the European Commission’s DGXII under its Environment and Climate RTD programme. The Network is largely concerned with economic instruments and voluntary approaches, which are here collectively referred to as ‘market-based instruments’. This initial series of policy briefings reflects the results of six workshops organised by the Network on the following topics