This report examines several legal issues that should be addressed before establishing economic instruments for environmental protection. Economic instruments are tools created by law which either encourage improved environmental behavior or discourage environmentally damaging activities such as pollution. Many environmental organizations advocate improving Canada's existing environmental laws by using economic instruments such as deposit refund systems, subsidies and discharge fees in combination with traditional regulatory approaches.
Canadian environmental law currently consists largely of regulations and permits or licenses which prohibit industries from exceeding permissible levels of discharges. Breaches of these regulations are punished through fines and criminal law sanctions. This "command and control" approach to regulation has successfully reduced pollution from many sources, but cannot overcome obstacles to effective regulation in areas where enforcement is difficult.
This report looks at three economic instruments which are intended to improve environmental protection:
- discharge fees.
- deposit refund systems.
- tradeable permit systems.
Also, administrative penalties and ticketing are examined.
The legal issues examined include: which level of government has the constitutional ability to adopt these instruments; what provisions must be included in statutes that establish these instruments; potential administrative and constitutional law challenges to economic instruments laws and implementation and how to prevent them; and challenges to economic instruments based on international trade law.