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United States Experience with Economic Incentives for Pollution Control

In recent years, economic instruments have achieved a prominent place among the tools used by governments to manage the environment. Once mainly an academic proposition, or a revenue-raising adjunct to traditional regulatory mechanisms, market-based economic incentives are now being used as the principal instrument of control on a number of environmental issues. Nowhere is this fact more evident than in the 1990 Clean Air Act Amendments, which created many programs that are underpinned by market-based mechanisms. The Clean Water Act Amendments of 1992, the Safe Drinking Water Act, and a host of state and local initiatives also contain important new incentive-based initiatives.

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