Internalisation of externalities Sample Clauses

Internalisation of externalities. As we have seen, failure to achieve such internalisation is a major defect with direct regulation, meaning that regulators try to “second-guess” the costs of pollution, and that the burden is placed on government agencies to enforce environmental policy, despite having insufficient resources to do so. By internalising externalities, thus remedying market failure at the micro level - “bringing the environment into the boardroom”65 - the idea is that use of economic instruments not only increases the effectiveness of environmental protection policy, but also achieves a more “just” outcome as, consistently with the polluter pays principle, those actors which cause environmental damage are the ones charged with paying the price for it (rather than the burden of remedying the damage falling on society as a whole).