fety, but the costs of environmental cleanup and the necessary investments in capital equipment are large. Spence and Weitzman say that "any mistake about those . . . costs and the implied appropriate regulatory activity can cost the economy as a whole many millions of dollars" and that "any regulatory process that involves repeated adjustment to new information [is] costly, time-consuming, and perhaps infeasible" (206 and 209).
In the United States, national environmental regulatory agencies have set national pollution control standards, but have left much of the burden for implementing those standards to the states and localities involved. Increasingly, however, in the 1970s and 1980s, progressively stricter and tighter environmental standards were imposed in many areas. Considerable success was achieved in resolving the most critical and simplest pollution control objectives, such as the control of auto emissions. A point of diminishing returns and a reaction to the relative ineffectiveness and heavy-handedness of federal and state programs for controlling more complex types of pollution such as the cleanup of toxic substances at abandoned hazardous waste sites soon set in. The realization grew that new approaches were necessary to incentivize private industry to innovate and to make the necessary investments in pollution control equipment and abatement technologies. These trends were accelerated in an era of budget restraint and deficits by the rising annual costs of pollution control, which rose from $42 billion in 1977 to roughly $130 billion in 1994 and which are expected to reach over $200 billion after 2000 (Passell 289-290 and "Green Choices, Hard Choices" 11).
Much of the debate has centered around the pros and cons of substituting or complimenting effluent or emission standards and permits with pollution charges, taxes and subsidies. Ruff says that "in situations where pollution outputs can be measured more...