Fiscal Incentives to Advance Sound Management of Chemicals and Sustainable Chemistry - Review Paper for the Global Chemicals Outlook II

Fiscal incentives are governmental policies that change the relative price of a given activity or input, either encouraging or discouraging its use. They can be created through the removal of existing price distortions that generate perverse incentives for overuse, or through the implementation of new market-based instruments such as taxes, charges, deposit-refund systems, subsidies and tradable permits. This paper discusses the use of market-based instruments within the broader array of policy instruments for chemical management and analyses factors that facilitate or impede their deployment in different institutional contexts. We also discuss the main challenges in using market-based instruments in the particular context of chemicals, and outline key policy options.