Feng, Hongli; Kling, Catherine L.; Kurkalova, Lyubov A.; Secchi, Silvia

Moving to Markets in Environmental Regulation: Lessons from Twenty Years of Experience, New York, (October 1 2007) (Originally published as CARD Working Paper #03-WP 345)

In this paper, we examine command-and-control (CAC) policies and market-based instruments (MBI) in the context of the Conservation Reserve Program (CRP). The CRP, an MBI in the form of subsidies, is by far the largest agro-environmental policy implemented to date. We compare the environmental performance of the CRP as implemented to a few counterfactual CAC polices using EPIC (Environmental Policy Integrated Climate), a bio-physical simulation model. In the context of multiple environmental indicators, no policy alternative emerges as a clear winner. The importance of the choice and design of CAC policies is emphasized. Keywords: command-and-control policy, Conservation Reserve Program, market-based instrument.

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