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Chapter 5:


Mary Jasmin O. Delena

Fritzie Gay C. Dela Cruz

Lesly Cinco
– Governments ofthree
have applied Governments
major strategies in
resource management. They are:
1. the regulatory or “command and control” approach
2. the economic incentives approach
3. the property rights systems approach
The regulatory approach or “command and control” approach is
direct regulation while the economic incentives approach and the
property rights systems approach are indirect forms of regulation.
Regulatory or “Command and
Control” Approach

– Governments take a direct approach by setting environmental

standards or targets that will achieve the kinds of solutions to
environmental problems. This approach is also called the
“command and control” approach.
– The environmental standards are set and enforced by legislation.
Penalties for violators or those not honoring the standards are also
imposed through legislation. This action is based on the principle
that “polluters must pay”.
– Two kinds of standards are common- health standard and
technology-based standards.
– Health standards are based on scientists’ calculations of
how much quantity of a hazardous substance is
considered harmful to humans.
– Technology-based standards are determined by the kind
of device that is used to control pollution.
Economic Incentives Approach
– The regulatory approach is not always the best response of a state
because it is expensive and flexible and it requires the weighing of
costs of compliance against the benefits that are derived. It does
not allow businesses to develop their unique methods of solving
the perceived problem, with the focus mostly on cleaning up the
pollution after the damage has occurred.
– Incentives for reducing wastes may produce better results. In the
advanced countries, regulation of polluting substance or activities
is often well-monitored because their governments have enough
resources to implement laws. Consequently, some governments
feel that regulation alone is not enough.
Economic Incentive
Instruments (ELLs)
– Is another form of ensuring compliance by citizens and corporations. When
regulations alone could not accomplish the modification of the behavior of polluters
can be economic incentives can be used.
– Economic incentive instruments consist of a variety of charges, taxes, deposit-
refund, information programs, subsidies and tradable permits. Sometimes these are
also called market-based instruments because it is the business condition and not
the government that determines the costs.
– There are six examples of EIIs
Charges or Fines
– When businesses are not able to comply with pollution standards, a system of
imposing charges or fines takes over.
– Businesses suffer the extra costs when they emit excessive polluting substances.
This creates an incentive for them to improve their behavior.
– There are others like charges for the discharge of polluting wastes into the air, water
and soil and the generation of noise. Some variations include a charge for the use of
polluting substances, for the production of polluting substances and for doing
business related to polluting materials. A product charge results in a direct
alteration of prices.
– Republic Act 9003 Ecological Solid Waste Management Act of 2000
“Green” Taxes
– Taxes are a regular obligation imposed by governments to businesses. A business that emits
pollutants can be charged tax rates that are computed according to the amount of damage
that waste materials from the business caused to the environment.
– Taxes are considered to be more effective than quantities-based standards because a business
can feel the incentive to reduce its emissions even lower than the standard.
– When this happens, the business’s savings on tax payments can go to research for more
pollution-abatement technologies. Where a polluting material contains associated pollutants
that are not covered by the pollution standard, the incentive to reduce the primary polluting
material can also result to lesser emissions of associated pollutants.
Deposit-Refund Schemes
– Governments may impose an additional charge, called a surcharge, on
the price of a product that a factory produces. When the used product is
returned for recycling, the government refunds the surcharge.
– Deposit-refund schemes were quite successful in Sweden. When a
factory uses a potentially polluting product, it pays the government a
sum of money, in this case called a deposit.
– After the product is used and pollution is avoided, the product is
returned to an authorized collection point and the factory gets refund of
the deposit.
Information Programs
– The government or other groups like non governmental organizations can conduct
information programs about certain practices that may influence the consumers to change
their behavior. Substances that contain harmful elements like radon or lead are tested or
pesticide products are labeled as a means to inform the public. The results may make
consumers prefer one product over another.
– Some legislation pieces, like the Emergency Planning and Community Right-to-Know Act in the
US, require manufacturers to inform the public when they use airborne toxic chemicals in
amounts greater than acceptable standards. Their report is routinely released to the public in
a Taxes Release Inventory by a government regulatory agency like the Environmental
Protection Agency (EPA).
Tradable Emission Permits
– Governments, on some occasions, issue permits to businesses that
allow them to emit specific pollutants up to a certain limit. When
one company produces pollutants in less amount than permitted,
it may “sell” or trade its permit to other companies that exceed
their limits.
– Governments can grant subsidies, soft loans or by changes in
accounting procedures give further incentives to businesses to adopt
environmentally-clean technologies. An example of the last is when
the cost of capital is handled to result in benefits to the business like
shortening the depreciation period. Another is when a business is
allowed consumer rebates when they purchase devices that control
Property Rights Approach
– “Tragedy of the common” was coined in 1968 by Garret Hardin a professor of
Biology at the University of California.
– The common, in this case the pasture, is degraded because each herdsman
pursues only his personal interest since he is free to do so.
– Society suffers consequences. The air we breathe, the water we drink, and the
high seas away from territorial boundaries of states can also be classified as
– The complete lack of government and social controls is detrimental to the
environment. Since agricultural lands are often tied down to a proper right
system in most democratic countries, the threat of legal sanctions and the
disapproval of other members of society are weak even if bad things happen to
the land.
– The land owner under the property rights system is legally free to determine
the right mix of capital and labor to produce his goods.
– Examples of how governments solve environmental problem using the property
rights system.
1. A government may confer land titles to individuals when a kind of resource is
being inefficiently used in the area that is open to public
2. The government can and does resort to state ownership in order to conserve
the resource if it better able to monitor the use of resources.
3. Communal management is another option, a group of persons share in the
ownership. This idea is to put a limit to an individual’s abuse of resources
when his rights are shared by others.
Corporate Management

Waste Minimization
Product Life-cycle Analysis
Design for Disassembly
Green Marketing
Greening of Strategy
Greening of Communications
Waste Minimization
– Business have recognized increasingly that dumping of too much wastes
is an inefficient way to operate. It is a part of the corporate responsibility
of every business establishment to initiate measure to minimize waste.
It is also a social responsibility because any ill effects sustained from
progressive waste buildup from business establishments will result in
harm to society at the very least. Thus no business must make light of
step to reduce wastes.
– Four steps in waste minimization are:
1. Redesign product
2. Recycle
3. Incinerate wastes
4. Dispose of waste properly
Product Life-Cycle
– Before a good is produced, it passes through several steps in its life
cycle. The approach of some businesses is to reduce the
environmental impact in each of the steps and then look at the
total picture of the life cycle.
– Examples, the different stages of manufacturing, distribution,
used, the energy consumed, the waste produced, and the
emissions released in each of the stages.
– This approach is more sophisticated than waste minimization
because more people are involved in various stage.
Design for Disassembly
– In order to facilitate recycling, some companies have started to
redesign the product to make it easier for them to disassembled
once they reached the end of their usefulness.
– Some companies have tried redesigning their product such that
once they are taken apart, the component parts can be reused to
make other products.
Green Marketing
– Through the years, as business became sensitive to the demand
for environmentally- friendly products, voluntarily they came up
with biodegradable and recyclable products such as more fuel-
efficient cars and appliances.
– Recyclable parts or packaging may attract buyers more especially
those who have started to care for the problem of society like the
overflow of the garbage.
– “Green gold” is a market term for gold that was not minded
through environmentally- degrading methods.
Greening of Strategy
– Corporate strategic management traditionally did not include the natural environment.
This is because humans basically had a two faced approach to nature- that man stands
above nature and somehow remains apart from it.
– Environmental assessment is done in order for a business to be more aware of the issue
arising out of the natural environment.
– Strategies on how to responsibly extract the resource, how to find suppliers that engage
in responsible extraction practices, and how to dispose wastes are among issue that
have to be decided on by management.
– Companies now tend to include among their mission and goals some objectives are
related to environment.
Greening of Communications
– Once a company is thrust into a damaging environmental
controversy a head-on response form the company is crucial in
order to defuse public anger or distrust.
– Among the ways companies communicate the environmental
impacts of their operations to the public are the creation of citizen
action panels, community activities, emergency planning
networks, or accounting system.
– Other companies try the pro- active approach by publishing annual
environmental reports.
Other Approaches
– The concern for the environment of rich nations has
resulted in government to government assistance to less
developed nations.
– A community based forestry program for unplanned
communities in Quirino province was funded with the
money borrowed from the German government.