13.1.2 Criteria for policy choice

Four principal criteria for evaluating environmental policy instruments are reported in the literature; these are:

• Environmental effectiveness – the extent to which a policy meets its intended environmental objective or realizes positive environmental outcomes.
• Cost-effectiveness – the extent to which the policy can achieve its objectives at a minimum cost to society.
• Distributional considerations – the incidence or distributional consequences of a policy, which includes dimensions such as fairness and equity, although there are others.
• Institutional feasibility – the extent to which a policy instrument is likely to be viewed as legitimate, gain acceptance, adopted and implemented.

It has to be mentioned, however, that literature in the fields of economics and political science does not provide much guidance in terms of determing which evaluative criteria are the most appropriate for an analysis of environmental policy. However, many authors employ criteria similar to the ones listed above, and although other criteria may also be important in evaluating policies, the analysis presented in this chapter is limited to these four criteria. Criteria may be applied by governments in making ex ante choices among instruments and in ex post evaluation of the performance of instruments.