4.2 Strategies for Environmental Regulation

Environmental regulations are essential for balancing economic activities with the preservation of our natural environment. Governments employ various strategies to mitigate environmental damage and promote sustainability, including regulatory frameworks, taxes, and innovative market-based approaches like cap-and-trade systems.

These regulations play a crucial role in addressing negative externalities by setting limits on harmful emissions and incentivising more sustainable practices. Among these, cap-and-trade has emerged as a prominent method for controlling greenhouse gas emissions, offering a flexible and economically efficient means of achieving environmental goals.