Environmental Policy Performance Revisited: Designing Effective Policies for Green Markets

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Abstract

Studies of environmental policy performance tend to concentrate on the impact of particular policy institutions or of single policy instruments. However, environmental policies most often consist of a package of policy instruments. Further, these studies pay no or very little attention to policy instruments directed at the demand side of the market. Therefore this article develops a policy typology for government intervention aimed at creating green markets. The typology distinguishes between four types of policy based on the balance between the supply-side and demand-side policy instruments. On the basis of the typology, a hypothesis on their ability to expand green markets is generated and tested in a comparative analysis of the performance of organic food policies in Denmark, Sweden, the UK and the US, focusing on their impact on organic consumption. Our analysis demonstrates that cross-country variation in organic food consumption is explained by differences in the packages of policy instruments applied, controlling for numerous systemic and individual-level alternative explanations. The analysis suggests that for environmental and political reasons, governments should apply more demand-side instruments when introducing environmental policies.

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