Final answer:
An environmental policy must be efficient, enforceable, and reduce pollution, but not necessarily provide improvement incentives. Market-oriented environmental policy tools offer flexibility and can reduce pollution cost-effectively, despite concerns of being too lenient. To be effective, an environmental policy must do all of the following, EXCEPT provide incentives for improvement in the environment.
Step-by-step explanation:
The effectiveness of market-oriented environmental policy tools like pollution charges, marketable permits, and better-defined property rights is often debated. These market-oriented tools can offer cost-effective ways to reduce pollution compared to traditional command-and-control regulations which can have loopholes and lack incentive for exceeding standards.
The key advantage of market-oriented policies lies in their flexibility and ability to incentivize businesses to find the most cost-efficient methods to lower pollution levels. In contrast, command-and-control regulations typically set rigid limits and methods for pollution control, which can result in higher costs and less motivation to exceed the standards. Thus, while some argue that these market-oriented approaches may risk being too lenient if not properly managed, they also hold the potential to achieve desired reductions in pollution more economically.