REVENUE-NEUTRAL INCENTIVES FOR EFFICIENCY AND ENVIRONMENTAL QUALITY

Recently, interest has grown in using monetary incentives as an efficient way to promote energy efficiency and environmental quality. This paper describes issues raised in designing revenue-neutral incentive policies to achieve these goals. Such policies involve charging fees in proportion to undesirable characteristics and giving rebates in proportion to desirable characteristics. The fees pay for the rebates and for any administrative costs of the program. Copyright 1990 Western Economic Association International.