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Environmental policy is designed to reduce the negative impacts of economic activity on water, air, and other natural resources. It is difficult to identify and quantify the damage caused by pollution on human health or inflicted upon sensitive ecosystems, so determining the benefits and costs of remediation policies is often extremely difficult. Policy-makers respond to domestic political pressures by devising institutions and instruments to address pollution and environmental sustainability. Cost-benefit analysis (CBA) and cost-effective analysis provide frameworks for systematically identifying and evaluating abatement strategies that avoid potential inefficiencies or inequities.
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