Monitoring, Enforcement and the Choice of Environmental Policy Instruments

Abstract

Monitoring and enforcement can have significant impacts on the environmental and economic consequences of environmental laws. Theory and empirical evidence on monitoring and enforcement may provide evidence about which instruments are most likely to lead to high compliance and at what cost – impacting which instrument is most socially desirable. At the same time, monitoring and enforcement might influence the political debate about the feasibility of alternative policy instruments. Despite the small but growing literature on the impact of monitoring and enforcement, policy makers and researchers oftentimes ignore this important factor when considering and comparing alternative policy instruments. This paper reviews arguments for how, when, and why monitoring and enforcement may impact the choice of instruments in environmental policy.

Keywords: environmental regulation, monitoring and enforcement, compliance

JEL Classification: Q58, K32, K42