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Cutting the Cost of Environmental Policy: Lessons from Business Response to CFC Regulation
Daniel J. Dudek, Alice M. LeBlanc and Kenneth Sewall
Vol. 19, No. 6/7, CFCs and Stratospheric Ozone (Oct., 1990), pp. 324-328
Stable URL: http://www.jstor.org/stable/4313727
Page Count: 5
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Implementation of the Montreal Protocol is underway. In the United States, the directive from the Environmental Protection Agency allows the CFC industry flexibility in the way quotas are met. Prices of CFCs have increased. Business response has been positive including work on the development of substitute chemicals, substitute products and recycling technologies. The paper examines the history of CFC regulation in the European Economic Community and the United States in order to derive lessons from business response to alternate types of policy and to apply these lessons to other environmental problems. Policies in the EEC and the US prior to the Montreal Protocol included a production cap in the EEC and a ban on aerosol use of CFCs in the US. These policies were ineffective in reducing total production over time. The production cap in the EEC was set at a level that failed to constrain use. The ban in the US, although successful in forcing the development of substitutes for aerosols and in achieving a short-term reduction, did not discourage CFC growth for other uses. The conclusion is that policies must constrain use through the price mechanism and that policies allowing maximum flexibility and providing industry with economic incentives to benefit from pollution reduction will achieve the least cost and most innovative solutions.
Ambio © 1990 Royal Swedish Academy of Sciences