EPA has started to allow companies to take voluntary actions in partnership with the agency (U.S. Environmental Protection Agency, 1996). The agency has established compliance assistance centers to provide technical and other help to smaller companies that wish to comply with EPA requirements without provoking enforcement actions. Among the campaigns are several that provide support for and publicly recognize companies that reduce solid waste (Waste Wise), upgrade to more energy-efficient lighting (Green Lights), reduce release of certain high-priority chemicals (33/50), and introduce more energy-efficient products to the market (Energy Star).

Bans and taxes are nonregulatory, market-based tools that are used to reduce the environmental costs associated with materials. The ban on DDT is an example of a prohibition used to eliminate a harmful chemical. Taxes have also be used to phase out the use of chemicals. For example, when it became apparent that depletion of the ozone layer was linked to chlorofluorocarbons (CFCs), a graduated tax was levied on the substances and a target date was set for their phase-out. This sped the development and introduction of substitute chemicals and innovations that eliminated the need for CFCs in many applications.

Another more recent market-based innovation in the green game is the use of tradeable permits. Under this scheme, the environmental protection authority issues a limited number of permits allowing for the discharge of a specific amount of pollutants. The number of permits determines the quality of water or air. There is no guarantee that the initial number of permits is optimal, but the system ensures a given level of control by allowing permits to be traded. For example, in one current experiment, a manufacturer may increase sulfur dioxide emissions in locations where sulfur dioxide pollution is not a problem in exchange for reducing emissions in places where sulfur dioxide emissions do pose a problem. This leads to overall efficiency improvements. If a firm that has a permit is able to reduce pollution at less cost than are other firms, it can sell the right to pollute to a firm that is unable or unwilling to reduce its emissions. Under this scenario, the firm that sells the permits reduces its pollution level an still makes a profit from the sale of the permit.

In addition to regulation and market-based initiatives, environmental costs can be further internalized by efforts to encourage recycling or reuse. In the United States, the focus has been on recycling specific materials, such as paper, plastic, and certain metals, an requiring certain products to contain recycled material. In Japan, government policy and industry efforts have converged around the notion of a "recycle society" (Gotoh, this volume). In this society, well-designed technical and economic mechanisms would encourage industry and the public to seize every opportunity to recover, recycle, and reuse materials and energy to the maximum degree that is thermodynamically feasible and economically justified. To aid the creation of the recycle society, Japan has introduced recycling laws that cover a range of constituent materials and some finished products. They have also established an ecofactory research effort to develop technologies



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