Rehabilitating Neoliberalism? Market Instruments and the Sustainability Transition

To proponents, market-based policy instruments offer elegant solutions to sustainability crises –substituting political decision-making with the technical deployment of expertise, optimizing the efficiency of public resource allocation, mobilizing private finance and innovation, and acting on the root causes of social and environmental externalities. All the while avoiding the inflexibility and non-responsiveness of command-and-control regulation.

Such instruments have long been the cornerstone of global governance frameworks such as the Kyoto Protocol. But the failure of market instruments, and the neoliberal logics that inform them, to resolve or to evade what seems an increasingly fractured and polarized environmental politics is telling. On the one hand, this failure confirms sociological critiques. From the destructive potential of speculative capitalism to the mundanity of social practice, there is more going on in the exploitation of people and ecosystems than ‘the production of externalities’. On the other, it does not follow that market instruments have no potential role in supporting meaningful reform.

This paper offers an analysis of the conditions under which a variety of market instruments may support lasting and transformative change in the management of (in this case) agricultural landscapes. It argues that all environmental policy (whether market-based or not) makes assumptions about the distribution of benefits that arise from sustainable resource management, about the rights and responsibilities that inhere in access to natural resources, and about policy-efficacy.

Conditions that support effective outcomes across a variety of market instruments include clarity and acceptability of property rights, clarity of resource access-related duties, institutional capacity, temporal security and flexibility, two-way accountability, stability and consistency in state policy, and regulatory legitimacy. Contrary, therefore, to the neoliberal promise of de-politicized policy, market instruments to support the sustainability transition demands explicit recognition of their social embeddedness.