One of the challenges facing policy makers today is how to motivate individuals and organizations to implement new technologies that are needed to solve existing and emerging environmental and sustainability concerns. Which regulatory or market based strategies will achieve the result and which strategies will be ineffective or even harmful? Ultimately the goal is to achieve the greatest benefit to society at the lowest possible cost while avoiding unreasonable harm to any given stakeholder. This paper examines several factors including certain types of market failures that disrupt the application of conventional economic theories; how those factors impact on environmental sustainability programs and regulatory strategies for bringing economic motivations back into effective application. Specific factors considered include: 1) notional biases; 2) institutional momentum; 3) information asymmetry; 4) changing economic conditions; 5) split-economic incentives; and 6) externalities.
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