Instrument Mixes for Environmental Policy: How Many Stones Should be Used to Kill a Bird?

How many instruments should be used to address a particular environmental problem? That is the question this article addresses. According to the “Tinbergen rule,” one instrument per target is needed. The existence of any non-environmental market failures affecting the environmental problem at hand will also require one additional instrument per market failure. However, detailed case studies reveal that it is no simple task to count neither the number of relevant targets, nor the number of instruments applied. While there are good reasons to apply several instruments in combination to address a given environmental problem (non-environmental market failures, “multi-aspect” character of many problems, cases where one instrument underpin the use of other instruments, the need to address non-environmental policy concerns, etc.), it is sometimes difficult to see that such arguments have been the main explanations for the instrument mixes in practical use. There are also cases where the environmental effectiveness or economic efficiency of an instrument mix is hampered by lacking instruments.