Investigating new approaches - A Guide to The National Market-Based Instruments Pilots Program
The National Action Plan on Salinity and Water Quality
June 2002
ISBN 0 7347 5264 4
PDF file
About this document
The National Action Plan for Salinity and Water Quality (NAP) has signalled a number of new approaches to addressing natural resource management and environmental problems across Australia.These approaches include the further development and practical application of market-based instruments (MBIs).
Governments allocate significant resources to environmental and natural resource management, traditionally through policy approaches such as direct ‘command and control’ regulation, education and suasion.
Rather than prescribing behaviour or technology use, MBIs use price signals to change behaviour to benefit the environment. They offer the potential to achieve environmental goals at a more affordable cost to the community - and with less disruption to resource users.
These MBIs include:
- creating new markets and removing existing barriers to market activities - e.g. ‘cap and trade’ mechanisms such as water trading;
- increasing information disclosure, e.g. auctions and eco-labelling; and
- fees, subsidies and taxes.
Some States and Territories (and Commonwealth bodies) currently are using or exploring MBIs to address a range of natural resource issues.These include:
- conserving biodiversity;
- reducing salinity;
- allocating water within environmental limits; and
- reducing in-stream nutrient levels.
However, apart from taxes and subsidies, in Australia we are still at an early stage in developing and using MBIs. Many schemes are still in the design phase or have only recently moved into implementation.
MBIs are not a quick fix: many require legislative underpinning and support.They also demand better information about the environment than has been available in the past.
There is still much to learn about MBIs and all governments are facing the same questions regarding their practical application.
Nevertheless, it is clear that MBIs have significant potential to achieve ‘more from less’, to drive innovation, place environmental considerations in the mainstream and give economic incentive for good natural resources management.
A key challenge is to discover more about their potential.
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