Final answer:
Compensatory and complementary controls are insufficient on their own to reduce risk in environmental regulation. They miss incentives for exceeding limits, have limited flexibility, and can contain loopholes. Market-oriented environmental tools, on the other hand, provide flexibility and economic incentives to surpass regulatory standards.
Step-by-step explanation:
The student's question relates to the effectiveness of different types of controls in reducing risk to an acceptable level, within the context of environmental regulation. Compensatory (mitigative) controls and complementary controls are methods that organizations could potentially implement to adhere to environmental standards. However, as identified in the provided text, these controls alone are insufficient. Command-and-control regulations impose strict limits on emissions and mandate specific pollution-control technologies, but they have several drawbacks. They don't incentivize firms to exceed those limits, lack flexibility in pollution reduction methods, and can be undermined by loopholes.
Alternatively, market-oriented environmental tools could offer more flexible and economically efficient solutions. These include tools like pollution taxes or tradable pollution permits that provide economic incentives for reducing emissions beyond the regulatory requirements. Such market-based mechanisms can encourage innovation and cost-effective pollution control strategies, potentially addressing the shortcomings of conventional command-and-control regulations.