<<Biblioteca Digital del Portal<<INTERAMER<<Serie Educativa<<Sustainable Development in Latin America: Financing and Policies Working in Synergy<<Application of Economic Instruments for Environment Management in Latin America: from Theoretical to Practical Constraints
Autor: Ramón López and Juan Carlos Jordán, Editors
Título: Sustainable Development in Latin America: Financing and Policies Working in Synergy
Instrument Analysis Phase
Once the policy analysis is prepared, regulators can move on to the phase of considering the selection of appropriate instruments.
Prior to the analysis of other country or regional experiences, a theoretical analysis must identify theoretical options. Economic instruments have efficiency conditions that regulators must be aware of and put in perspective against their own case. Although there are numerous studies recommending EI to many cases, they rarely bring about these conditions in a comprehensive way. Market power, damage and control marginal cost function, asymmetric information, and so on, are constraints on efficiency gains.
Regulators should review past experiences and identify the range of EIs appropriate to the policy aims. This review must consider each experience according to its relevance to the policy goals and instrumental objectives. Experiences in similar economic structures must be included, with adequate assessments of success and failure factors.
Institutional capacity for each instrument choice has to be fully assessed. Institutional analysis should take into account partnerships with other government and private organizations that the EI may affect or to which it may be of interest. Counting on possible budget reinforcements to enhance institutional capacity should also be avoided. Note that EI application may require a different expertise profile from that of the technical staff already in the institutions.
The introduction of a fiscal EI may face legal barriers, not only in the environmental legislation but also in the fiscal legislation itself. Harmonization of current environmental standards and sanctions should be analyzed in advance to avoid unexpected discrepancies. It is also important to avoid double taxation problems or constitutional impediments to new fiscal devices. Each EI candidate option must then be analyzed in this perspective.
Some fiscal devices already have a bad reputation in people’s minds because of negative past experiences or even because of lack of awareness. This is another field of analysis that cannot be neglected.