An Economic Approach to Environmental Agreements

Abstract

National and international environmental policies are moving towards’ softer’ regulation, especially in the form of (negotiated) environmental agreements. Supporters of this trend emphasize the positive effects on the economy and the environment, calling these agreements ‘efficient’, ‘innovative’ and ‘environmentally friendly’. The German Federal Government puts its faith in these positive effects, espousing environmental agreements in principle. However, by giving preference to these ‘soft’ instruments, the government may be tacitly relinquishing its responsibility for the environment. Negotiated agreements made by the business community -like the pledges to develop so-called three-litre cars, to take back old cars, or to reduce carbon dioxide emissions- are therefore controversial from an ecological and economic point of view.