This section is designed to further one's understanding of what should be considered when choosing a policy tool, and how this decision-making process fits within the broader context of environmental policy development. The section outlines a process that can be followed to select an appropriate tool or, a combination of tools, to meet a defined set of policy objectives.
The policy development cycle illustrated in Figure 1 includes hyperlinks to detailed descriptions of each step within the policy development cycle. Each linked step offers insight on how to evaluate and select the right policy tool to strategically, effectively and efficiently develop a structure of tools that provide incentives and/or disincentives that are aimed at changing the activities of society towards meeting defined environmental goals.
Policy development cycle and choosing environmental tools
Define policy objectives
The first step in choosing a tool concerns the development of a clear environmental objective/policy goal for which an environmental tool(s) is required. Ideally, environmental policy goals should be established through systematic issue identification, risk assessment, prioritization, and strategic planning to characterize the need for appropriate environmental action to address a particular problem/activity. Further, the importance of other public policy and political both social and economic should be considered when defining environmental policy goals and objectives.
Examples of goals/objectives include improving environmental quality by reducing contaminant emissions, minimizing waste, promoting recycling, eliminating exposures to toxic substances, conserving water and energy, reducing land disturbance, and reducing greenhouse gases.
Once policy goals or objectives have been clearly established, the remaining steps will guide the choice of an appropriate tool or, as is most often the case, a combination of tools, to meet policy goals and objectives.
A note on stakeholder involvement:
Stakeholders (government, industry, non-governmental organizations and others) can all contribute to the resolution of an issue. Therefore, consider and include stakeholders when possible, in the policy development and decision making process. Stakeholder engagement is often the most critical factor to the success of an environmental policy initiative.
Some factors to consider when identifying and selecting stakeholders to include in policy development include: location, the nature of the environmental issue, jurisdictional and departmental responsibilities, and legal frameworks.
In some circumstances (such as a response to an urgent environmental risk) it may be appropriate to bypass the inclusion of stakeholders.
Determine the nature, context and risks of the environmental issue
Characterizing the environmental issue(s) before selecting an environmental tool helps to dictate which type of tool is most appropriate to achieve desired outcomes. One needs to assess the activity causing the issue, its severity and risks, social and environmental impacts, and location. This may include a formalized risk assessment to determine the probabilities and consequences of outcomes which will help determine the type of tool best suited to manage the activity/issue.
Questions to ask to determine the nature and context of the environmental issue include:
- What is causing the problem (a source, a sector, non-point sources) and are there barriers preventing the problem from being resolved?
- What is the life cycle of the activity causing the environmental issue?
- What is the risk probability and consequences of an adverse outcome or impact?
- How severe are the impacts?
- Who or what is being impacted?
- Are decisions and actions required immediately?
- Is the problem local, provincewide, national, or global?
By understanding the nature, context and risks associated with an activity and/or environmental issue, including the probability and consequences of an adverse outcome, the appropriate policy approach can be defined and the selection of the environmental tool(s) to achieve desired outcomes.
Determine the policy approach
The nature, context and risks of an environmental issue are often sufficient to determine the most appropriate approach to achieve the policy objectives and goals, and thus the specific environmental tool(s). Environmental tools can range significantly in their scope of incentives and consequences, flexibility, performance, and assurance. Environmental tools vary in characteristic with respect to environmental effectiveness, economic efficiency, fairness, administrative feasibility and political acceptance.
Depending the nature, context and risks of the environmental issue and the defined policy goals/objectives a policy approach can be determined. Approaches include:
- A directional approach, where progress towards an environmental objective is appropriate. For example, a directional approach may be appropriate when there is no immediate critical threat to the safety of the surrounding environment and human populations (for example: reductions in waste disposal to landfills, increased recycling of waste, improved conservation practices, etc.).
- An absolute target-based approach applied to each entity, where the nature of the activity or issue and its potential ramifications on the surrounding environment and human populations require a well-defined and predictable outcome (for example: the release of toxic substances into the environment).
- An absolute target-based approach applied collectively to entities/sectors where the nature and context of the threat is cumulative with less potential impact or concern for localized effects (for example: sector specific water use reduction targets)
- A combined approach where the threat is best dealt with through setting fixed minimum expectations and promoting relative and continuous progress with the use of incentives beyond the target over time (for example: the reduction of greenhouse gases)
When selecting policy tools it is essential to recognize that most issues require the application of a suite of policy tools to achieve optimal outcomes. An optimal mix of policy tools can be defined as the bundle of tools that work in collaboration to encourage the highest level of environmental protection and performance (outcomes), with minimal social and economic costs.
Choosing the right tool(s)
Determining the best combinations of tools for a situation requires careful planning, in particular, asking which tools:
- Are best suited to the type of policy objective and desired outcome;
- Are most effective in attaining the desired environmental outcomes;
- Address other issue specific interests, such as costs and equity for participants; and
- Can be reasonably implemented.
The best tools address environmental, economic and social interests. The Choosing the Right Tool(s): Evaluation Table provides a useful framework for determining the most suitable tool(s) to meet these interests and achieve the defined policy goal. It offers a means to assess the economic, technical, social and environmental merits of various tool options. This evaluation table can also be used to examine and generate constructive dialogue surrounding existing and potential applications of environmental tools. Further, it allows tool categories and specific tools, to be compared side-by-side so the strengths and weaknesses of each tool option can be evaluated.
- Choosing the Right Tool(s): Evaluation Table (PDF, 32 KB)
The Choosing the Right Tool(s): Evaluation Table can be used to assess each existing or proposed policy tool against a set of criteria. This evaluation table provides insight to the selection of the most suitable environmental policy tool to meet pre-established policy objectives. Typically assessments of a tool(s) are done by ranking each against a set of criteria using a numerical scale, or using a scale of high, medium and low. If deemed appropriate, the evaluation criteria can carry different weightings to reflect the priorities and desired outcomes of a particular initiative. The criteria within the Choosing the Right Tool(s): Evaluation Table have been adapted from various resources 1, to be reflective of the Alberta context. 2
The Choosing the Right Tool(s): Evaluation Table is set as an example comparing the five general categories of environmental tools. When using the evaluation table as an aid to select tools, it will be necessary replace the five general categories of tools, with specific environmental tools under consideration.
Develop, refine and implement the most suitable tool(s)
Consider how a particular tool will work to achieve the desired outcome. This requires that tools be specifically developed and adapted to fit the circumstances in which the tool will be operating. Furthermore, it is essential to develop an implementation plan that considers:
- The link between the environmental problem, governance and management processes;
- Results of stakeholder consultation processes and continued dialogue with those to whom the tool(s) is (are) to be applied;
- Risks, consequences and mitigation actions;
- Internal and external administrative capacity and resources;
- The plan (process) for implementing and approving environmental tool(s); and,
- The plan/process to evaluate the tool post-implementation.
Monitor, evaluate and modify the tool if necessary
Designing and implementing environmental tools requires consideration of how the tool will be monitored and evaluated in the future. Planning to monitor and evaluate a tool prior to its implementation helps ensure the desired results are achieved.
A mechanism to evaluate a tool post-implementation, for example developing milestones of achievement, allows for modifications to be made to address any unintended consequences or weaknesses.
Environmental tools and policy development
Environmental policy, in its broadest sense, has two key elements:
- A specific goal or outcome. Examples include improving environmental quality by reducing contaminant emissions, minimizing waste, promoting recycling, eliminating exposure to toxic substances, conserving water and energy, reducing land disturbance, and reducing greenhouse gases.
- The means or mechanisms the environmental tools - by which the desired outcome will be met (through regulation, economic incentives, negotiated agreement, etc.)
To advance these two key elements of environmental policy, there are six primary steps that can be followed, which in combination reflect what is known as the policy development cycle. As illustrated in Figure 1, the first three steps contribute to the development of the first element of environmental policy, defining the specific policy goal or outcome. The remaining three steps offer a strategy for selecting and monitoring the right tool (the means or mechanisms) to effectively reach the desired environmental goal or outcome.