Market‐Oriented Regulation of Environmental Problems in the Netherlands

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Abstract
Two functioning regulatory tax programs in The Netherlands indicate certain conditions under which such frequently‐advocated but infrequently‐adopted regulatory strategies can be successfully implemented. A flat fee on oxygen‐demanding substances in industrial effluents, introduced in 1970, has been very successful, stimulating a 90% reduction in pollution and a search for cost‐effective abatement measures. However, a recently‐enacted law aimed at agricultural pollution, using a combination of direct controls and taxes on polluting inputs, has led to resistance and is not likely to be very successful. Based on these programs, regulatory taxes seem more likely to be politically and technically feasible when (a) emissions can be monitored economically; (b) the relation between emissions and environmental harm is relatively uniform and predictable; (c) implementing agencies have the technical competence and strong political and economic incentives to monitor and tax strictly; (d) the regulatory taxes apply uniformly to all sources of pollution; (e) economic efficiency is strongly valued in environmental policymaking.

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