economic instruments

Economic instruments are tools used by governments to influence behaviors and decisions through financial means, rather than strict rules or laws. They include taxes, subsidies, or tradable permits that create financial incentives to encourage positive actions or discourage harmful ones. For example, taxing pollution motivates companies to reduce emissions, while subsidies for renewable energy support greener choices. These instruments aim to align economic interests with social or environmental goals, making sustainable practices more attractive and efficient without requiring direct regulation.