Section 9: Policy Evaluation

Question 1

Explain the difference between a goal, policy, and action

Answer 1

A goal is what you aim to achieve (e.g. reduce GHG emissions by 80%)

A policy is a government law or action to achieve social goals (e.g. carbon tax)

Action is what consumers and producers do to achieve the goal

Question 2

What type of policy has low compulsoriness? What type of policy has high compulsoriness?

Answer 2

Voluntarism and subsidy policies are less compulsory

Taxes and command and control policies are more compulsory

Question 3

Name the 5 policy evaluation criteria used in REM321

Answer 3

1. Effectiveness: how well policy achieves the environmental goal
2. Efficiency: equimarginal principle 2, cost-effectiveness
3. Fairness/equity: distribution of benefits and costs
4. Simplicity: easy to implement, measure, and monitor
5. Acceptable: political support among citizens

Question 4

Evaluate voluntarism policies

Answer 4

Pros:
- Simple, political acceptable**
- Can set the stage for tougher policies
Cons:
- Ineffective**
- Inefficient**
- Can be tech-specific
- Can make is think we're doing something 

** Indicates an important point

Question 5

Evaluate command and control policies

Answer 5

Pros:
- Effective**
- Simple to administer**
Cons:
- Inefficient: violates equimarginal principle**
- Politically unpopular**
- Reduces incentive to innovate

Question 6

Evaluate cap and trade policies

Answer 6

Pros:
- Effective and efficient**
Cons:
- High administrative complexity**
- Can face political resistance**
- Equity issues**
- Transaction costs could be high
- Uncertainty in setting the cap

Question 7

Evaluate financial disincentive (tax) policies

Answer 7

Pros:
- Effective and efficient**
- Reduces income tax and increase environmental tax (double dividend)
- Fair and simple to implement**
Cons:
- Taxes unpopular**
- Doesn't stimulate much innovation
- Equity effects on low-income households

Question 8

Evaluate financial incentive (subsidy) policies

Answer 8

Pros:
- Politically acceptable**
- Somewhat effective
Cons:
- Can be inefficient**
- Government expenditures
- Vulnerable to free ridership
- Rebound effects

Question 9

Evaluate Market-oriented regulation policies

Answer 9

Pros:
- Politically acceptable**
- Effective**
- Cost-effective
Cons:
- Administratively complicated
- Can be opposed by industry

Question 10

Which policies can satisfy the equimarginal principle?

Answer 10

A tax or tradable permits (cap and trade)

Question 11

What policy has the lowest political acceptability?

Answer 11

Taxes

Question 12

True or false: command and control policies are effective and efficient

Answer 12

False, they are effective but inefficient

Question 13

What type of policy is the least compulsory?

Answer 13

Voluntarism

Question 14

What type of policy is vulnerable to free-ridership?

Answer 14

Subsidies