International Review of Environmental and Resource Economics > Vol 3 > Issue 4

Goals and Principles of Environmental Policy

Tomasz Zylicz, University of Warsaw, Poland,
Suggested Citation
Tomasz Zylicz (2010), "Goals and Principles of Environmental Policy", International Review of Environmental and Resource Economics: Vol. 3: No. 4, pp 299-334.

Published: 28 May 2010
© 2010 T. Zylicz
Environmental Economics
EffectivenessEfficiencyEquityEnvironmental policyClimate policyPigouvian taxesCoase theoremEnvironmental Tax Reform

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In this article:
1 Theoretical Foundations of Environmental Policy
2 The Pigouvian Prescription
3 Popular Principles and 'Rules of Thumb'
4 Market Structure and Synergies
5 Environmental Tax Reform
6 Environmental Policy in the 21st Century


This paper looks at how contemporary environmental (including climate) policy problems are phrased in terms of effectiveness, efficiency, and equity. The latter three concepts have served as foci of theoretical discussions among economists who analyse these issues and identify criteria that determine relevant regulations and programmes adopted by governments. The paper starts with a discussion of Pigouvian taxation as model instrument used in order to solve policy problems. It analyses to what extent and under what circumstances alternative instruments — such as marketable pollution permits — can achieve environmental and climate goals while serving other purposes too. Coase theorem is used as a reference for discussing what government interventions are indeed indispensable to achieve both explicit and tacit policy goals. Popular principles and practically applied 'rules of thumb' — such as the Polluter Pays Principle — are then reviewed. The next part is devoted to examining market structures as they influence environmental outcomes of economic activities. This is followed by a discussion of Environmental Tax Reforms which seems to inspire much of the economic thinking about contemporary policies. An outlook for the 21st century concludes the paper.