III. MEASURES AND POLICY INSTRUMENTS USED FOR INTEGRATION
B. Market-based instruments
Market-based instruments (MBIs) comprise a range of instruments used to provide economic incentives/disincentives to economic agents to change their behaviour in an environmentally desirable manner. The incentives are intended to encourage activities that lead to environmental quality, while the disincentives are aimed at discouraging activities deemed harmful to the environment. The use of MBIs shifts the strategy on environmental management from mitigation to prevention. It also gives the individual the choice to decide on how best to attain the environmental objectives by allowing the environmental costs to be reflected in the market prices. MBIs are considered effective inasmuch as they allow individuals as well as firms to voluntarily invest in shifting towards more efficient environmentally friendly means of production and/or waste reduction. Often, MBIs are implemented hand-in-hand with CAC measures, and CAC standards are used as targets.The government promotes the use of MBIs since that is deemed to be the least costly way of guiding firms and industries to reduce pollution. The use of MBIs has also been articulated in PSSD to stress the use of innovative solutions to environmental problems, and affirmed by Cabinet Resolution No. 37, dated 29 November 1989.
The following market-based instruments are currently being implemented in the Philippines: