Page 73 - Economia Azul - versão: inglês

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ECONOMIC AND FINANCIAL INSTRUMENTS

APPLIED TO THE BLUE ECONOMY

Mariana Graciosa Pereira

Luan Santos

1. Introduction

The performance of economic activities failures such as externalities and property
has a close relationship with the environ- rights poorly defined or distributed. When
ment in which they are included, and their markets fail, different instruments can be
execution can generate long-term effects applied to solve the problem and increase
on the environment, which can be irrevers- the efficiency of the economy. When mar-
ible and harm not only the economic ac- ket failures generate environmental degra-
tivity itself, but also the society as a whole. dation or depletion of natural resources, so-
The production process demands natural ciety depends on public policies to guaran-
resources resources and generates wastes tee the protection of the environment. The
that can cause degradation to the envi- strategies to be adopted must be directed
ronment. The consumption of produced to the market failures that need to be cor-
goods and services also generates residues rected. Public policies and instruments for
that can cause degradation to the environ- correcting market failures generally include
ment. The general state of the environment command-and-control policies and mar-
in which the economic system is part can, ket-based policies (economic instruments).
in turn, impact both the production process Both strategies aim to change the be-
and the well-being of consumers (SANTOS, havior of people (families) and companies
2014; MUELLER, 2007). (firms), and the former focuses on the es-
The effects caused by economic activ- tablishment of legal instruments and su-
ities on the environment (either through pervision. Policies based on economic (or
the consumption of goods and services, market) instruments, however, provide
or through the generation of waste and economic incentives or penalties aimed
pollution) are sometimes not accounted in at inducing polluting agents to a cer-
the production costs and result in market tain behavior, internalizing the costs they

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Economic and Financial Instruments