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The need to create incentives for EAF

EAF will be easier to implement if the rules and regulations applied under a so-called “control and command” form of management are supplemented, or even replaced, with more appropriate incentive measures. Incentives provide signals reflecting public objectives while leaving some room for individual and collective decision-making to respond to them.

Different kinds of incentives can be developed in isolation or in combination, as follows:

Incentives work indirectly through affecting those factors that lead to particular individual or collective choices. Examples of those factors are the desire to make a profit or the norms and values that individuals hold. Market or social forces can be very efficient means to force the global outcome of individual actions towards collectively set objectives.

Such instruments rely to some degree on control and command. Creating the conditions for an efficient market for property rights requires that these rights be legally set and effectively enforced. Similarly, creating a market-based incentive for environmentally-friendly production methods through ecolabelling requires that certification standards be established and enforced. Incentives and the control and command approach should be seen as complementary, having relative advantages or disadvantages depending on what they are supposed to achieve. Making better use of incentives, in conjunction with appropriate enforcement systems, could help to improve compliance and regulation.

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