Chapter 4

Summary of Policy Clusters


The demonstration projects, described in chapter 3, based their findings on studies of conditions in particular industrial sectors. The policy clusters discussed in this chapter took a more theoretical and analytical view of issues that might be common across all industrial sectors. Using this approach the Task Force sought to ensure that its final policy recommendations were both realistic, when applied to specific cases, and generally applicable.

The Task Force established four policy clusters: Information, Economics, Regulatory, and Money and Management. Option papers were solicited from experts in fields relevant to each of the four clusters.

Unlike the findings of the demonstration projects, the policy cluster papers were not the product of a balanced team of participants, nor were they indicative of Task Force consensus. Instead, the twenty-four papers were intended to provide the Task Force with provocative and diverse points of view. The ideas contained in the papers sparked discussion among Task Force members and enriched the nine policy recommendations of the Task Force.

Appendix C contains a summary of each paper and lists the authors and their organizations.


The idea of information as a field of study is uniquely modem. Yet information is embedded in the most basic of social and economic activities. In the marketplace, information is an integral component of price signals. It also influences consumer decisions unrelated to price. In a regulatory context, information allows for establishment of realistic and practical goals; and through information, progress toward those goals is measured. The Information Cluster delved into these specific ideas and commissioned a number of policy options papers for more indepth analysis.

The Information Cluster began with the thesis that information is a component of the price signal, and the price signal is important to behavior change. Improving the collection and dissemination of information about the total life-cycle costs of a product should, therefore, result in a more accurate price signal being sent to the market. To the extent that environmental and social costs begin to be more properly accounted for by this improved information flow, the development and diffusion of eco-efficient products, processes, and practices should be triggered.

Information plays a larger role in the marketplace, because consumer behavior is not solely based on price. Emotional, philosophical, or aesthetic factors also affect choice. Therefore, providing information to consumers about the environmental benefits or risks associated with the manufacture, use, or disposal of a product may encourage a shift toward more eco-efficient consumption.

Information also emerged as a key element in performance-based environmental management. Accurate and reliable information is a prerequisite for evaluating performance. In the same way that advanced satellite technology improved US. ability to be well informed about the weapons capabilities of the Soviet Union and thereby contributed to our nation's confidence in entering into arms agreements; improved information about environmental performance will strengthen the partnerships recommended under the new management regime. One member of the Task Force even borrowed from the language of arms control in noting that the next generation of environmental regulation would be based upon the principle of "Trust, but verify."

In addition to these ideas about the relationship between information and eco-efficiency the Information Cluster developed so many others that the improvement of information collection and dissemination became stand-alone Task Force Policy Recommendation 4: Information Collection and Dissemination. The theme of improved information--within manufacturing entities, between sources of supply and demand, and among regulators, the public, and business--is also threaded throughout most of the other eight recommendations.


The Economics Cluster surveyed the ways that market mechanisms can encourage the adoption of eco-efficiency. In some cases, the market itself produces environmental improvements, but in others the market fails to value natural and cultural resources. When such market failures occur, governmental involvement may be necessary to assist in regulating the cleanliness of the environment or the rate of resource consumption. The Economics Cluster evaluated the thesis that intentional use of market mechanisms can be an efficient and cost-effective way to protect the environment, enhance social well-being, and safeguard competitive advantage.

The Economics Cluster examined both macroeconomic instruments--such as emissions trading, user fees, and information programs--and macroeconomic instruments--such as subsidy reform and tax shifts. It commissioned a series of papers exploring the application of economic instruments to achieve environmental goals. These papers are summarized in Appendix C.

The Economics Cluster determined that each economic instrument has its particular advantages and disadvantages--it can be effective in dealing with some aspects of a problem and less so with other aspects. For example, because economic instruments may confer property rights and allow the market to allocate responsibilities, these policies may have effect of legitimizing rather than stigmatizing pollution.

The Economics Cluster also learned that not only are efficiency gains important in the design of economic instruments, but so too are equity concerns. Preservation of economic and social equity--who pays for mitigation costs and the acceptability of risk and benefit distribution-- also had to be considered in the design and selection of economic policy options.


The Economics Cluster found that economic instruments can be powerful incentives and made the following recommendations for their use:

  • Change the standard of economic success by improving national income accounting.

  • Modify U.S. tax and spending policy.

  • Promote an environmentally sensitive international development policy, adopting sector strategies to align economic and environmental objectives with particular focus on the agriculture, transportation, and energy sectors.

  • Make greater use of economic incentives in environmental regulation.

  • Apply an industry-specific approach to environmental protection.

These and other fruits of the Economic Cluster's discussions appear in the Task Force goals and in its final recommendations, particularly Policy Recommendation 3: Market Incentives.


The Regulatory Cluster was a crucial breeding ground for the first two of the Task Force recommendations: performance-based environmental management system and extended product responsibility.

The Regulatory Cluster noted that although the current regulatory system has made great progress in reducing environmental pollution, it does not always operate in the most efficient and cost-effective manner. For example, the current system controls environmental pollution using a medium-specific approach, regulating cleanup of discharges into waterways separately from discharges into the air. This medium-specific approach orients decisionmakers to end-of-the pipe pollution control and clean up strategies, yet such solutions are often costly and are divorced from core business functions.

In addition, the current system tends to seek compliance by using sometimes complicated and rigid regulatory requirements. An alternative system would maximize environmental performance as a potential means for gaining competitive advantage. Such an approach could produce eco-efficient pollution prevention and resource conservation opportunities that may go unrecognized under the current regulatory framework.

These Regulatory Cluster findings were corroborated by those of the Demonstration Projects, every one of which cited some aspect of the current regulatory system as an inhibitor of eco-efficiency. For example, the Auto Team reported that, absent an alternative system of environmental regulation, eco-efficiency advancements in the automobile manufacturing sector will be "incremental." The Auto Team stressed that, "to realize the full innovative potential of the industry, which is currently directed at compliance, an alternative system of environmental regulation is needed."

The Regulatory Cluster developed options papers aimed at reforming and reorienting the current regulatory system to encourage the adoption of eco-efficiency improvements such as sustainable work practices. Its goal was to define the general parameters of an alternative to the current regulatory system that would provide both a cleaner environment and cheaper compliance costs and where consistent achievement of higher environmental standards would be balanced by a more flexible and holistic regulatory regime. To that end, Regulatory Cluster members drafted five options papers which have been summarized and included in Appendix C.

Many of the options that emerged from the Regulatory Cluster were merged with the work of the Auto Team's "Alternative Regulatory System." This combined proposal in turn provided much of the basis for Task Force Recommendation 1: Environmental Management System.


The Money and Management Cluster was established to study new models of financing and managing eco-efficient decisionmaking.

The Money and Management Cluster recognized that transition to an eco-efficient society will at times require larger societal intervention. In addition, it recognized that small businesses and communities suffer from a variety of capital access problems which hinder their investment in eco-efficiency improvements. As a result, one set of examined policies included those that structure alternative capital markets to provide capital for investment in eco-efficient improvements and those that facilitate entities' access to such capital.

The Money and Management Cluster also explored extended producer and consumer responsibility. Using post-consumer waste as the focal point, it explored options for shifting the cost for waste management from local governments to consumers and producers. The objective of this shift, according to its proponents, is to prompt the development of eco-efficient products and packages.

The ideas of the Money and Management Cluster translated into a number of the Task Force final recommendations, including Policy Recommendation 2: Extended Product Responsibility and Policy Recommendation 6: Facilitating Capital Access.

Eco-Efficiency Task Force Membership | Table of Contents

Eco-Efficiency Task Force Report

Executive Summary


Chapter 1

Chapter 2

Chapter 3

Chapter 4



Appendix A

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