Environmental Policy Performance Revisited: Designing Effective Policies for Green Markets

Studies of environmental policy performance tend to concentrate on the impact of particular policy institutions or of single policy instruments. However, environmental policies most often consist of a package of policy instruments. Further, these studies pay no or very little attention to policy instruments directed at the demand side of the market. Therefore this article develops a policy typology for government intervention aimed at creating green markets. The typology distinguishes between four types of policy based on the balance between the supply-side and demand-side policy instruments. On the basis of the typology, a hypothesis on their ability to expand green markets is generated and tested in a comparative analysis of the performance of organic food policies in Denmark, Sweden, the UK and the US, focusing on their impact on organic consumption. Our analysis demonstrates that cross-country variation in organic food consumption is explained by differences in the packages of policy instruments applied, controlling for numerous systemic and individual-level alternative explanations. The analysis suggests that for environmental and political reasons, governments should apply more demand-side instruments when introducing environmental policies.