Market-based approaches or incentives provide continuous inducements, monetary and near-monetary, to encourage polluting entities to reduce releases of harmful pollutants. While traditional regulatory and voluntary approaches are valuable policy tools for some types of environmental problems, incentive based policies are becoming increasingly popular as tools for addressing a wide range of environmental issues, from acid rain to climate change. Regulations are often tailored in this manner so that similar regulated entities are treated equally. Regulations can be uniform or can vary according to size of the polluting entity, production processes, or similar factors. At times, EPA may completely ban or phase out the use or production of a particular product or pollutant, as it has done with chlorofluorocarbons (CFCs) and certain pesticides. Performance-based standards that are technology-based, for example, do not specify a particular technology, but rather consider what available and affordable technologies can achieve when establishing a limit on emissions. The second, a performance-based standard, also requires that polluters meet an emissions standard, but allows the polluters to choose any available method to meet that standard. The first, a technology or design standard, mandates specific control technologies or production processes that polluters must use to meet an emissions standard. Two basic types of traditional regulatory approaches exist. Based on report to a predecessor of EPA's National Center for Environmental Economics (NCEE). Resources for the Future - variety of incentives topics.
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