What is Market-Based Approach in environmental policy?
Market-Based Approach is an initiative in environmental managment to cost-effectively protect and improve the environment by allowing polluters to trade emission permits or reduction credits. The usual approach is for the environmental authority to set a limit (cap) on the total amount of pollutant discharged into the environment. That total amount will be transformed into permits and then allocates to individual polluters. These permits are allowed to trade on the market and polluters can meet the mandated limit by installing wastewater treatment practice or by purchasing permits. Usually in the practice of water quality trading, reduction credit is used instead of permit. A reduction credit represents a unit of pollution reduced below the allowed level.
