Economic instruments to incentivise substitution of chemicals of concern – a review

Economic instruments such as taxes and fees have been extensively used in other environmental domains but have so far been relatively sparsely applied to chemicals. However, there is an increased interest in the potential of economic instruments to incentivise substitution of chemicals of concern. This interest is motivated by the ambition to speed up the substitution of substances of concern and to reduce the toxic load from broader groups of chemicals as well as the need to strengthen fiscal revenues and cover costs for chemical management. This study aims to give an overview of economic instruments used in chemicals management and in other environmental domains that governments could consider to incentivise substitution of chemicals of concern. The study reviews lessons learned from the use of five types of economic instruments: taxes, fees, subsidies, tradable permits, and deposit-refund systems, as well as “hybrid instruments” that combine elements of different instrument groups.