The U. S. Experience with Economic Incentives for Protecting the Environment

The document examines the application of environmental taxes, fees, and charges across different sectors in the U.S., including water, air, solid waste, and hazardous waste management. It distinguishes between revenue-raising taxes and cost-offsetting fees, noting that while many instruments are designed to recover administrative costs, some—such as the federal tax on ozone-depleting chemicals and certain state-level hazardous waste taxes—have demonstrated significant incentive effects in reducing pollution. The report also details specific state-level experiments with variable-rate waste collection and wetland compensation fees.

• Environmental taxes and fees in the U.S. are categorized into pollution fees (based on pollutant quantity), user fees (for resource use), and product charges (on harmful products). While federal taxes are purely for revenue, charges and fees are intended to offset government costs.
• Water user fees are often inelastic in winter but elastic in summer for households, while industrial and agricultural users are generally more sensitive to price changes. Larger utilities are more likely to use increasing or decreasing rate schedules than smaller utilities.
• The primary goal of National Pollution Discharge Elimination System (NPDES) permit fees is revenue generation for permitting programs, and they often have limited incentive effects because they are modest compared to the multi-million dollar costs of effluent control at large facilities.
• The 1990 Clean Air Act Amendments require states to recover administrative costs through permit fees, with a minimum presumptive level of $25 per ton of emissions (adjusted for inflation to approximately $35 per ton).
• The federal tax on ozone-depleting chemicals (ODCs), introduced in 1990, is credited with significantly accelerating the substitution of CFCs and their recovery for reuse, contributing to a drop in ODC consumption from 318,000 metric tons in 1989 to 200,000 metric tons in 1990.
• Variable-rate 'pay-as-you-throw' solid waste programs have been implemented in over 4,100 communities across 42 states, generally leading to significant reductions in waste sent to landfills and increases in recycling.
• Taxes on hazardous waste disposal have been shown to significantly reduce landfilling. In New York, a twofold rise in these taxes in 1985 led to a significant decrease in the quantity of hazardous waste disposed of in the state.
• Congestion pricing on the SR-91 toll road in southern California, which uses time-of-day variable tolls ranging from $0.25 to $2.50, has reduced travel times for users and diminished congestion on the adjacent freeway.
• Wetland compensation fee systems, used in states including Florida, Maryland, and Louisiana, allow developers to pay fees in lieu of on-site mitigation, which can increase the viability of wetlands by clustering mitigation activities.
• Federal grazing fees on Bureau of Land Management and Forest Service lands are widely considered too low to reflect fair market value or compensate for environmental destruction, effectively acting as a subsidy.

APA

Centre for Environmental Rights (n.d.). The U. S. Experience with Economic Incentives for Protecting the Environment. https://cer.org.za/wp-content/uploads/2016/08/Annexure-4.pdf?x21779

Chicago

Centre for Environmental Rights. The U. S. Experience with Economic Incentives for Protecting the Environment. n.d. https://cer.org.za/wp-content/uploads/2016/08/Annexure-4.pdf?x21779.

Wikipedia

{{cite report |author=Centre for Environmental Rights |title=The U. S. Experience with Economic Incentives for Protecting the Environment |url=https://cer.org.za/wp-content/uploads/2016/08/Annexure-4.pdf?x21779 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centreforenvironmentalrightsndexperience, author = {{Centre for Environmental Rights}}, title = {{The U. S. Experience with Economic Incentives for Protecting the Environment}}, institution = {Centre for Environmental Rights}, url = {https://cer.org.za/wp-content/uploads/2016/08/Annexure-4.pdf?x21779}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }