In Part II of this book, we reviewed the current regulatory picture and discovered that after more than four decades of dedicated national efforts to control pollution and expenditures of hundreds of billions of dollars, our accomplishments are decidedly mixed. Outside of the success stories about air pollution, and with a few exceptions, regulation has essentially held the line against economic and population growth, yet it has failed to achieve its stated objective of substantially reducing many pollutant concentrations to “safe” levels.

We also identified three main obstacles to successful government action to control pollution. First, hampered by imperfect information and motivated by either material gain, peer approval, or ideological commitment, regulators may pursue policies that deviate from their legislative mandate whether that mandate is safety or efficiency. Second, the current command-and-control (CAC) regulatory structure often discourages cost-effective pollution control in the short run and innovation in new technology in the long run. Finally, the difficult yet vital job of monitoring and enforcing compliance with regulations is often underfunded.

Given this background, Part III explores the question “How can we do better?” Doing better is defined as achieving a specified pollution reduction target level at lower cost and with greater certainty.