Command and control regulation is not the only way. A growing number of alternative policy instruments, which can be used with the purpose to obtain policy goals, are available to policy-makers. Alternative policy instruments include instruments such as performance based regulation, process regulation, waiver or variance provisions, co-regulation, self-regulation, contractual arrangements, voluntary commitments, tradable permits, taxes and subsidies, insurance schemes, information campaigns.
Guidelines on Alternatives to Prescriptive Regulation
Queensland Government, 2006?
Self-regulation and voluntary codes of practice have the advantage of involving stakeholders themselves in the process of regulation, and may be cheaper and more flexible to use than government enforced rules. There are many forms of self-regulation and the level of government intervention will vary, according to the risk posed by the activity being regulated.
Performance-based regulations specify objectives or "output standards", but leave the means of compliance to be determined by the regulated entity. Thus, regulated businesses are free to identify or develop new innovative processes for compliance that are more efficient and lower cost than would otherwise have been possible if compliance methods were prescribed. A big challenge is to make sure performance can be adequately specified or measured, and the approach may involve higher monitoring costs as compliance strategies can vary greatly.
Regulatory Policies in OECD Countries - From Interventionism to Regulatory Governance, Annex 2
These regulations require businesses to develop processes that ensure a systematic approach to controlling and minimizing production risks.
Co-regulation entails that the regulatory role is shared between government and industry.
There is a large range of economic instruments that governments can utilize to better align incentives with socially optimal outcomes. They operate by internalizing external costs or providing subsidies to account for external benefits. Economic instruments include taxes, charges, subsidies, tradable permits, user-pays pricing, vouchers etc. By raising or lowering the cost of engaging in a particular activity, governments can provide powerful incentives to undertake the desired behavior or to avoid the undesirable behavior.
Experience with Market-Based Environmental Policy Instruments
Robert N. Stavins, Discussion Paper 58. Resources for the Future, Washington, D.C., November 2001
Information campaigns and guidelines
Information and education campaigns address information asymmetries by upgrading the knowledge or skill levels within industry or amongst key stakeholder groups and empowering citizens and consumers to adopt actions or make informed choices that match their preferences and align their sensibility to risks or
One kind of information campaign is the promulgation of quasi-regulatory "guidelines" by a regulatory authority, setting out processes or providing interpretations to aid understanding of government objectives by business and citizens. Guidelines are helpful where there are many acceptable solutions to a regulatory problem because they do not limit the range of options for compliance.