Generally, a non-profit organization or government agency sets standards for a product to meet environmentally sustainable goals. This is a site-specific issue with several potential environmental and programmatic variables. The Environmental Quality Incentives Program (EQIP) is a voluntary conservation program that promotes agricultural production and environmental quality as compatible national goals. Program evaluators have developed several statistical methods, however, to research success rates.The selection of the most appropriate market-based incentive or hybrid regulatory approach depends on a wide variety of factors, including:Market-based or hybrid instruments aim to address two main types of market failure. Point sources, which emit at identifiable and specific locations, are much easier to identify and control than diffuse and often numerous non-point sources, and therefore are often amenable to the use of a wide variety of market instruments. The first is the failure of firms or consumers to integrate into their decision-making the impact of their production or consumption decisions on entities external to themselves.
Other examples include voluntary carbon trading schemes, such as the Chicago Climate Exchange; and nutrients trading programs (between water polluting firms and agricultural producers) that aim to reduce excessive loading of fertilizer and pesticides into water bodies.Fees, charges, and taxes are widely used incentives which generally place a per unit monetary charge (or fee or tax) on pollution emissions or waste to reduce the overall quantity. Subsidies have been used for a wide variety of purposes, including: brownfield development after a hazardous substance contamination; agricultural grants for erosion control; low-interest loans for small farmers; grants for land conservation; and loans and grants for recycling industrial, commercial and residential products.
As a result, market-based approaches create an incentive for the private sector to incorporate pollution abatement into production or consumption decisions and to innovate in such a way as to continually search for the least costly method of abatement. At times, EPA may completely ban or phase out the use or production of a particular product or pollutant, as it has done with chlorofluorocarbons (CFCs) and certain pesticides. The main disadvantage associated with economic incentives is that they can be inappropriate for dealing with environmental issues that pose equity concerns. Information disclosure or labeling are often suggested when this occurs because policy makers believe that private and public sector decision-makers will act to address an environmental problem once information has been disseminated.The use of a particular market-oriented approach is often directly associated with the nature of the environmental problem. EQIP Overview. With market incentives, firms will reduce their emissions as long as it is financially valuable for them to do so, and this generally happens at a point where marginal abatement costs are equated across all regulated firms. Payments are made on completed practices or activities identified in an EQIP contract that meet NRCS standards. These improvements can also increase farm profitability and resilience to weather events. The second type of market failure is the inability of firms or consumers to make optimal decisions due to lack of information on investment options, available abatement technologies, or associated risks. Under such a system, emissions from point sources might be taxed while non-point source controls are subsidized.Flow pollutants tend to dissipate quickly, while stock pollutants persist in the environment and tend to accumulate over time. Acid Rain Program, a cap-and-trade system that cost-effectively reduced sulfur dioxide emissions from electric utilities. A portion of North Carolina’s EQIP allocation has historically been reserved for special natural resources projects within the state including wildlife habitat enhancement.
Examples include pollution taxes, water user fees, wastewater discharge fees, and solid waste disposal fees.Subsidies are forms of financial government support for activities believed to be environmentally friendly. Others have been developed to improve environmental quality in areas that policymakers expect may be regulated in the future but are currently not regulated, such as greenhouse gas emissions and non-point source water pollution. The second, a performance-based standard, also requires that polluters meet an emissions standard, but allows the polluters to choose any available method to meet that standard.