Understand the role of incentives for successful sustainability efforts. The tragedy of the commons makes it difficult to improve sustainability efforts by firms and individuals without some external...

Understand the role of incentives for successful sustainability efforts. The tragedy of the commons makes it difficult to improve sustainability efforts by firms and individuals without some external pressure. To decrease resource consumption and increase recycling and remanufacturing, a suitable approach is to tax the producer to encourage resource reduction and reward the recycler to increase the percentage recycled. A price on emissions is the most cost effective way of reducing emissions. Emissions can be priced through either a carbon tax or a hybrid cap-and-trade mechanism.