You are currently viewing a new version of our website. To view the old version click .
MDPIMDPI
Search all articles
Urban Science
Download PDF
  • Article
  • Open Access

15 March 2022

Toward Achieving Local Sustainable Development: Market-Based Instruments (MBIs) for Localizing UN Sustainable Development Goals

,
and
1
School of Environment, Enterprise and Development (SEED), University of Waterloo, Waterloo, ON N2L 3G1, Canada
2
Smart Prosperity Institute, Ottawa, ON K1N 6N5, Canada
*
Author to whom correspondence should be addressed.
Urban Sci.2022, 6(1), 24;https://doi.org/10.3390/urbansci6010024
This article belongs to the Special Issue Feature Papers in Urban Science
Version Notes
Order Reprints

Abstract

In recent years, sustainable community development has gained traction for addressing local environmental, social, and economic issues. Cities worldwide are committed to implementing sustainable community plans (SCPs) in their efforts to achieve sustainable development, and more recently, to localize the United Nations’ Sustainable Development Goals (SDGs). Although there are over 1000 plans in Canada, a gap exists between creating these plans and implementing them. Integrating market-based instruments (MBIs) with traditional policy tools would help to diversify revenue generation and thus mitigate these constraints. This paper presents a new and comprehensive categorization of MBIs that aligns the locally applicable ones with the environmental aims of both SCPs and SDGs. The categorization framework has been tested through focus groups with key municipal staff from two Canadian communities. The new categorization framework aligned over 50 locally applicable MBIs with 8 different environmental topics and 12 SDGs. The paper presents a useful tool for implementing SCPs and SDGs and contributes to the understanding of MBIs for enabling local progress in sustainable development.

1. Introduction

The Brundtland Report—Our Common Future, published in 1987, provided the first official definition of sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” [1]. This definition, which was created by the World Commission on Environment and Development (WCED), is frequently used when discussing environmental and sustainability issues. [2]. Since then, interest in sustainability has motivated progress in local sustainable development to address challenges within the three pillars (environment, social and economy) [3,4,5]. As part of the United Nations 2030 Agenda, 17 Sustainable Development Goals (SDGs) were proposed in 2015, and various actors (from countries to municipalities) are tasked with meeting these goals [6]. Although all member states of the United Nations agreed to adopt the SDGs, national to local implementation and progress toward these goals varies significantly as many involved in the process are faced with policy challenges in implementing these goals [7,8].
At the local level, sustainable development focuses on the abilities of municipalities and communities to “initiate and generate their own solutions to their common economic problems and thereby build long-term community capacity and foster the integration of economic, social and environmental objectives” [9]. Hence, communities have developed sustainable community plans (SCPs) to address complex sustainability challenges at the local scale [10,11,12] and also in recent years as a means of attaining the United Nations’ proposed sustainable development goals (SDGs) [13].
Although interest in sustainable community planning remains high, many associated complications are impeding the implementation of these plans [14,15]. At the local level, over 50 barriers were identified to achieving sustainable development, including lack of education and understanding, political resistance, lack of political leadership, difficulty in shifting values and behaviour, and lack of current and accessible data on sustainable development [12]. These barriers translate into a planning–implementation gap for many communities in Canada [12].
This paper aims to identify the potential of market-based instruments (MBIs) as a complementary and innovative approach to the implementation of SCPs by illuminating the MBIs that are applicable at the local level. MBIs are defined as regulations that stimulate behaviour changes to meet desired goals and outcomes through market signals and approaches [16]. While the use of MBIs is widely discussed, research exploring the practice of using MBIs as a way to implement SCPs is rare. Even though MBIs can add significant efficiency to the implementation of SCPs and SDGs, not all MBIs are applicable to cities. Thus, using MBIs for SCP implementation is likely to succeed if local contexts and capacities are considered. As a component of this objective, this paper presents a suite of existing and emerging MBIs under municipal jurisdiction in Ontario, Canada with an innovative method of categorising MBIs that enhance the alignment of pricing and other market mechanisms with environmental objectives to better inform municipal decision making. While municipal jurisdictions vary by region and country, much of this paper’s findings should have relevance for local governments worldwide.

2. Sustainable Community Planning and Market-Based Instruments

2.1. Sustainable Community Plans (SCPs) and the Plan–Implementation Gap

Approximately 6500 local communities in 113 countries have an SCP or a related equivalent, and the numbers continue to grow as over 10,000 communities are committed to achieving local sustainability [17,18]. Paragraph 89 of the UN’s 2030 Agenda for Sustainable Development also emphasizes the role of local and regional municipalities in SDG integration and the importance of localizing the goals in the 2030 Agenda [19]. To achieve the SDG goals highlighted in the 2030 Agenda, municipalities have reconsidered aligning SCPs to further their implementation of the SDG goals at the local level [13].
SCPs usually contain a broad range of sustainable goals and targets, which can be grouped into topics. They are also referred to as integrated community sustainability plans (ICSPs), local action plans for sustainable development, local agenda 21s, or similar names [13,20,21]. They may also be part of a municipal official/master plan [22]. Many topics covered in the SCPs are an integration of the three pillars of sustainability—economic, environmental, and social [9]. The top 10 topics found in the SCPs for Canadian Municipalities are presented in Table 1 [23].
Table 1. Top 10 topics covered in Canadian SCPs.
In Canadian communities, environmental topics take a high priority; in fact, nine out of the top ten most-covered topics in SCPs have an environmental focus. These generally include environmental goals related to air quality, climate change, ecological diversity, energy, food security, land use, transportation, waste and/or water [23]. These environmental topics are similar to those noted in SCPs worldwide and are also ranked among the top eight in priority with the exception of food security [13].
SCPs are generally developed through public consultation involving multiple stakeholders to ensure diverse representation [20]. They are crucial to sustainable community development, as each plan attempts to (1) identify the vision for their community; (2) integrate their goals with the three pillars of sustainable development; and (3) establish community targets for achieving local sustainability progress [11]. SCPs also support the implementation of sustainable development by setting timespans for reaching goals and targets, ranging from short-term to long-term (from one to five years to over twenty-five years) [11].
While some municipalities and communities have adopted SCPs, not all of them succeed in achieving sustainability goals [12,24]. As a result, communities are becoming increasingly aware of the gap between developing and implementing SCPs and are attempting to address the gridlock between the planning and implementation stages of SCPs [12]. Most Canadian communities are still using antiquated strategies that prioritize growth [25]. These outdated strategies and regulations impede implementation and thus require changes in their implementation process and strategies [12]. In addition, many of the traditional mechanisms are expensive to implement, especially monitoring and control techniques [9]. Williamson argues that implementation processes need greater individual flexibility and more flexible economic valuation processes [26]. In short, innovative approaches to complement traditional strategies and regulations are needed as a mixture of various types of policy instruments is necessary to promote collective action at the local level [27].
The concept of smart cities is a related emergent perspective for local sustainable transformation and sustainable community development [28,29]. This approach focuses on the application of new technologies and the integration of a technological lens with existing local infrastructure to support sustainable urban transformation [28,30,31]. Smart cities create livable and sustainable urban centers through participatory governance and innovative technologies [32,33]. Compared with the concept of sustainable cities, smart cities have greater emphasis on the economic and social dimensions of sustainability over the environmental pillar of sustainable development [34].
Whether a municipality adopts a technological lens or continues to implement traditional regulations in pursuit of becoming a sustainable community, market-based mechanisms can be a complementary approach. The use of market ‘signaling’ in environmental policy to achieve incentive effects and maintain strong environmental performance is the current trend for market-based approaches [12,35]. This innovative approach allows local governments to achieve their environmental goals and generate financial co-benefits both through powerful price signals and other types of indirect market signals [12,36].

2.2. Market-Based Instruments (MBIs) for Implementing SCPs

Piqou recognized the potential and advantages of market-based instruments, policies, and mechanisms [37]. MBIs are fiscal tools that encourage positive behaviours by utilising market mechanisms, such as price, financial incentives and other direct or indirect economic variables [16]. They can also be categorized using many different approaches. Previous studies often identified MBIs using the following two general categorizations of MBIs:
  • By types of MBIs: Price-based, rights-based, and friction reduction instruments [12,21,38,39].
  • By functions of MBIs: Systems for pollution charges and deposit refund, tradable permits, reduction in market barriers, and elimination of government subsidies [40]; and pollution charges, tradable permits, market friction reduction systems, and government subsidy [16].
Studies have classified MBIs using three broad types: (1) price-based, (2) rights-based, and (3) friction reduction instruments [12,22,38,39]. Price-based instruments follow approaches where the price of goods and services are adjusted to include the hidden environmental and social costs. In this case, the government is responsible for setting the prices of such products or services, while the quantity produced varies depending on market response [41]. For example, congestion pricing is a price-based instrument [42]. Rights-based instruments are tools for controlling the quantity or quality of goods and services (commonly issued by governments or other regulating bodies). In response to any limitation, the prices of these goods and services reflect market responses [26,28]. A tradable mobility permit is a common rights-based instrument [43]. Friction reduction instruments reduce market functions such as monopoly, externalities, and information failures to motivate behavioural change [29,30]. They also remain relevant as means for implementing SCPs [29]. Eco-labeling is an example of a friction-reduction instrument [44].
Categorizations of MBIs also extend beyond determining the types of MBIs. Studies have also categorized MBIs by the general function of the instruments. Hockenstein et al. used a four-category model, separating pricing and non-pricing instruments and used the following classifications: charges, permits, deposit-refund systems, market barrier reductions, and government subsidies [40]. Stavins further simplified and revised the original five main groups of market mechanisms, ending with four: pollution charge systems (price-based instruments), tradable permits (rights-based instruments), market friction-reduction mechanisms (friction reduction instruments), and government subsidies (price-based instruments) [16]. Similarities in classification also exist between Hendrickson et al. [12] and Stavins [16]. However, Stavins’ framework has categories for government subsidies as well as the deposit refund system category with pollution charge systems [16]. Most of the identified MBIs and the categorization frameworks have an environmental focus and demonstrate potential cost saving and revenue generation [12,45].
These methods of MBI classification clearly show that each identified category encompasses an extremely diverse array of possible MBIs, creating confusion, as some of the instruments in the same group have very few shared characteristics in terms of strengths, weaknesses, and scope of application [46]. Moreover, the environmental relevance and other non-economic characteristics of MBIs are rarely distinguished through these common MBI classifications.
Achieving sustainable development typically requires the identification of sustainability goals and some means to reach them [12]. However, it was not until recent years that community policymakers started to make connections between MBIs and sustainable community development [47]. Communities have created SCPs to identify their sustainability goals and targets (SCP). Market-based approaches and polices have been adopted as means of implementing environmental sustainability goals and advancing local sustainable development efforts [48]. Interest in this approach is due to the planning–implementation gap and the economic considerations that come with long-term community development [9,12]. For transportation, MBIs such as congestion fees, fuel taxes, and tradable mobility permits provide abatement incentives for emission reduction, increased travel-time savings for community residents, and reduced vehicle travel and ownership [42,43,49,50]. Pay-as-you-throw systems for waste management [51,52] and water pricing schemes [52] are commonly used to effectively manage resources and minimize waste [36,53]. Payments for environmental services (PES) and biodiversity environmental funds are among other commonly identified MBIs for the protection of ecological diversity and sustainable land use [35,46]. Additionally, MBIs have also been utilized as a policy instrument to manage other environmental issues such as climate-related flood risks and droughts [54,55], and air pollution in cities [56]. More recently, the adoption of carbon pricing schemes, along with other local-level MBIs, have been used as means of achieving decarbonization on both the national and local scale [57,58]. Despite the vast amount of scholarship on specific uses and effects of MBIs on environmental sustainability goals, there is a need for broader classification of all options for local environmental planning and sustainable progress.
When compared with traditional policy approaches, MBIs are flexible, accountable, and transparent [12,16]. Moreover, they allow for environmental burdens to be proportionately shared and improve the alignment of environmental and financial resources with sustainability goals and targets [38]. User fees, for example, are paid only by individuals using the goods or services and are also reinvested to further benefit the users [42]. Adopting MBIs for SCP implementation diversifies the local revenue stream and benefits communities that pursue sustainable development but which are facing barriers such as financial stress and budget constraints [25,59,60]. Additionally, the revenue generation from an MBI approach also motivates communities to improve their asset and natural capital management [9,47]. For example, environmental taxes create a double dividend effect by discouraging negative environmental impacts and simultaneously promoting social welfare [61]. Although the main function of MBIs is incentive generation through their linkage with markets, social and equity issues are also important considerations in the design of MBIs. Only if they are properly designed, MBIs are able to reflect shifts in policies and improve market efficiencies [12].
The market approach to sustainable development compliments conventional approaches in sustainable community planning by reducing some of the weaknesses of traditional approaches and their ‘command-and-control’ regulations. Often, these earlier approaches fail to consider and align economic signals with sustainability goals [12,16]. Communities are encouraged to better manage their assets by the financial incentives or disincentives associated with using MBIs while also generating new revenue. Compared to MBIs, ‘command-and-control’ regulations are rigid, pricey, and spread environmental costs uniformly to all [12,16]. Other identified weaknesses of the conventional means of SCP implementation are unduly high expenses and costs for the community, lack of motivation for those who strive to do more than simply comply to required standards, and sometimes dismaying changes in policies and governance [9,16,40]. Although market-based instruments (MBIs) have gained prominence as means of SCP implementation, there is unquestionably a need to clarify the alignment between MBIs and environmental goals in SCPs and SDGs. A new and comprehensive categorization will be useful in distinguishing all the MBIs relevant to local sustainable development and improving knowledge of the scope of their application to cities.
In summary, MBIs can help with the implementation of the various environmental objectives outlined in the SCPs. However, they are not intended to replace the ‘command-and-control method’ of SCP implementation, but rather provide a complementary approach. The following table summarizes some of the characteristics of traditional versus fiscal policy tools (Table 2).
Table 2. Summary of Traditional versus Fiscal Policy Tools.
Most MBIs and their categorization frameworks demonstrate potential cost saving and revenue generation, and some even have an environmental focus [12,37,39,40,45]. Thus, these market instruments can be useful in the implementation of SCPs [12,39].

2.3. Canadian Municipal Jurisdiction and Power for Implementing MBIs

Despite both the environmental and economic advantages of MBIs, many communities rarely consider aligning their existing financial and tax-incentive structure to include broader sustainability goals [62]. Hence, local governments need to understand the extent of their legislative power in order to achieve sustainable community development and effectively use MBIs for the implementation of SCPs [25,63].
In Canada, the constitutional distribution of legislative powers is between two orders of government: the federal government and provincial governments, where provincial legislatures concern matters of a local nature [64,65]. Under the Canadian Constitution Act, Canadian municipal institutions are subject to exclusive provincial legislation [65]. The municipalities receive power from the provincial legislatures and are bound by provincial laws and regulations [65]. Thus, the province controls the extent of power of municipalities and delegates the roles and responsibilities of local governments [65]. Most of the municipalities in Canada, with the exception of a few chartered cities, are second along the continuum of local empowerment (from weakest the strongest) [66]. Canadian municipalities are further along the continuum when compared to cities that lack any independent existence but have much less autonomy and power compared to those with extensive legislative powers to act in local affairs or even their own constitutions [66]. In Ontario, Canada, municipalities are responsible for water and sewage, residential waste collection, transportation and housing, utilities, public health and safety, social and welfare services, recreation and community amenities, and planning and development [64,67].
Canadian municipalities generate their own revenue from taxes, user fees, sales of goods and services, and grants [67]. However, municipalities in Canada have limited power of taxation. Hence, they are can only impose property taxes and fees from permits and licenses [64]. As a result, new local revenue is raised mainly from the introduction or rate increase in user fees and other price charges [64]. It is critical to understand the distinction between user fees and taxes. First, taxes are compulsory, but user fees are paid only by the individuals using the goods or services [42]. Second, taxes serve a public purpose, as they raise money for the general budget, while revenue from user fees is intended to be reinvested into the goods or services to benefit the users [42]. Unlike taxes, the size of user fees is limited as the fees and charges cannot exceed the cost of supplying the goods or services [42].
Overall, many researchers have emphasized the importance of price signals and market-based mechanisms to modify behaviour while generating economic gains [12]. Thus, there is strong potential for the use of MBIs as means to stimulate sustainable community development. The focus of this paper is the development of a new and comprehensive categorization of MBIs that aligns MBIs under the municipal jurisdiction with the potential to achieve the environmental objectives in a SCP and the related SDG targets. The suite of MBIs under this new categorization serves as a useful inventory for local governments when looking for new approaches to implementing sustainability goals.

3. Research Design and Methods

A multi-phase research design was used to develop the categorization of MBIs for SCP implementation. The first phase concentrated on constructing the framework. The second phase consisted of two in-depth case studies for refining and assessing the usability of the new categorization in SCP implementation.

3.1. Phase One: Construction of the New MBI Categorization Framework

Phase one focused on identifying and categorising MBIs appropriate for use in a framework designed to support SCP implementation at the local level. A list of existing and emerging MBIs was created by searching both academic and grey literature. The objective of this step was to create a preliminary list of all possible MBIs, based on the following criteria:
  • Intended for the use of environmental topics and goals covered in the SCP (in Table 1);
  • Could be controlled by local governments, with a city, municipal, or regional focus; and
  • Applicable in the context of Ontario, Canada.
Once all the MBIs had been identified from the literature, they were separated into a range of environmental topics (i.e., transportation, water, waste, air, energy, land use, climate change, ecological diversity, and food security) covered in the SCPs, based on the function, intended use, and area of impact of the MBIs [23]. For example, stormwater charges, a user fee for stormwater management, is categorized under the water topic. If an MBI fitted more than one topic, it was repeated in each one. If there were sub-topics under each larger environmental topic, the MBIs were then categorized under the associated sub-topics. Finally, MBIs were classified based on their MBI type (i.e., price-based, rights-based, market friction reduction, and government subsidy reduction).
These topics are framed under environment due to their dependence on nature, and interaction and engagement with the surrounding natural environment. Though referred to as environmental topics, they are also interdependent on society and the economy as sustainability is based on the unison of the three pillars of sustainable development: environmental, social, and economic.

3.2. Phase Two: Pilot Municipalities for Data Collection

The theoretical framework and the municipal implementation of the MBIs were of equal importance. Thus, two Canadian municipalities were chosen as pilot municipalities for data collection to enhance the accuracy and validity of the results [68]. The City of Kingston and the Region of Waterloo (which includes the cities of Kitchener, Waterloo, and Cambridge) were selected based on the following criteria:
  • Geographic boundary: within Ontario, Canada;
  • Sustainable community planning: have adopted some form of SCP (based on the records from the Canadian Sustainability Plan Inventory);
  • Size and scale: have a population of over 100,000 (based on information listed in the Census of Population by Statistics Canada) and similar in size;
  • Similar in their plan characteristics: display similarities between the two municipalities in terms of the age or the time horizon of the plans and are at least 2–3 years into the plan-implementation stage;
  • Commitment: display strong interest and willingness to participate in the research;
  • Variety in governance structure: one municipality represents a two-tier municipal structure (Region of Waterloo), while the other represents a single-tier municipality (City of Kingston). This ensures the framework will be relevant to both types.
Moreover, both municipalities demonstrate strong leadership in sustainable community development. They have carried out multiple sustainability initiatives and have received awards and recognitions for their sustainability efforts.
A half-day focus group was held with each municipality for data collection. The choice of focus group participants was made based on their role and influence on sustainability planning within the municipality. Participants needed to hold direct influence over sustainability planning and SCP implementation in their community and some of the roles included planners, managers, and other municipal staff. The invite was originally sent to sustainability managers, and they invited related colleagues to participate. The sustainability manager for each local government included lower and upper tier municipalities participating along with a community-wide sustainability director and other key municipal staff responsible for MBIs. Thus, they were experts in the implementation tools and strategies (including MBIs) used for their SCPs.
Overall, the aim of the focus group sessions was to analyse the suite of MBIs and the associated categorization with the participants and gather feedback for improving accuracy and usability. During the session, each MBI was discussed in detail. The participants were invited to provide oral and written feedback about the categorization of MBIs for SCP implementation. More specifically, responses were gathered to the following questions:
  • Are the sub-topics for the environmental topics appropriate? What are some other good sub-classifications?
  • Are the MBIs relevant to municipalities? Are any MBIs missing or beyond your municipal jurisdiction?
Through both focus group sessions, the Chatham House Rule was utilized. As outlined by the rule, participants were invited to freely use the information that originated from the discussion but were not allowed to reveal the identity of the commenter. This rule promotes an environment for open and secure discussion, while ensuring that commenters remained anonymous.

3.3. Finalizing the Categorization of MBIs for SCP Implementation

The list of MBIs from phase one outlined in Section 3.1 was modified and improved after the aforementioned focus group sessions. The final list of MBIs is presented in Tables 3–10 of the results section. The modified categorization improves the clarification of MBIs and presents the MBIs as policy instruments for implementing SCPs. Next, the MBIs were also aligned with associated environmental SDG targets. The final version contains over 50 MBIs across 8 different environmental topics, and it relates the MBIs with 12 environmentally related SDG goals.

4. Results

Specific MBIs can help with the implementation of different environmental objectives. The following table (Table 3) presents the details of the suite of MBIs for SCP implementation, and these MBIs are further divided based on the following types:
Table 3. Categorization of MBIs for Transportation and Related SDG Implementation.
■
Price-based MBIs and subsidies;
●
Rights-based MBIs;
♦
Market friction reduction MBIs.
Table 3 consists of four different columns cross-referencing different MBIs with common environmental topics and sub-topics in SCPs, as well as the SDG targets with an environmental focus and relevance on a local/regional level. The framework was designed to assess municipal market signals and identify the potential MBIs that could help improve the implementation of the SCPs and achieve SDGs through a local lens. Table 3, Table 4, Table 5, Table 6, Table 7, Table 8, Table 9 and Table 10 present the categorization of MBIs for SCP and SDG implementation for each of the environmental topics. The MBIs within each environmental topic that do not fall within specific sub-topics are grouped under other.
Table 4. Categorization of MBIs for Water and Related SDG Implementation.
Table 5. Categorization of MBIs for Waste and Related SDG Implementation.
Table 6. Categorization of MBIs for Air Quality and Energy, and Related SDG Implementation.
Table 7. Categorization of MBIs for Land Use and Related SDG Implementation.
Table 8. Categorization of MBIs for Climate Change and Related SDG Implementation.
Table 9. Categorization of MBIs for Food Security and Related SDG Implementation.
Table 10. Categorization of MBIs for Ecological Diversity and Related SDG Implementation.
Transportation plays an important role in the lives of urban commuters and is the top concern for communities. Table 3 showcases the set of MBIs for implementing the transportation goals and actions identified in a SCP, as well as SDGs related to transportation.
Water is ranked second in priority among Canadian municipalities. Table 4 presents the set of MBIs for achieving SDGs related to water and SCPs pertaining to water quality, consumption, source, etc.
Market-based instruments encourage both source reduction and waste diversion activity. Table 5 showcases the set of MBIs for implementing the solid waste goals and actions identified in a SCP, as well as the SDGs related to waste.
Table 6 showcases the set of MBIs for implementing energy goals identified in an SCP. These also have indirect effect on air quality. These two are combined in one table because municipal governments do not have an air quality department. SDG targets related to air quality and energy were also identified.
Table 7 presents MBIs pertaining to municipal land use, as well as land use related SDG targets.
Climate change related MBIs are highlighted in Table 8. MBIs for both mitigation and adaptation are presented.
Though food security is not among the priorities in SCPs worldwide, it remains an important topic for Canadian communities. Table 9 presents MBIs for food security related SCP goals and SDG targets.
Market-Based Instruments for community level biodiversity can be considered a relatively new and innovative concept. Hence, Table 10 presents MBIs pertaining to ecological diversity SCPs goals and SDGs targets.

5. Discussion

The paper presents a novel categorization framework that aligns MBIs with environmentally related topics that are commonly found in SCPs in Canada and worldwide. The various MBI categorization frameworks presented in previous studies have benefits and drawbacks [12,16,40]. However, these categories of MBIs are created without the intention of using them as means to achieve local sustainable development or toward localizing the environmentally related SDG targets. These categorizations have an economic focus and do not align the potential benefits with environmentally related outcomes. It became clear that these existing categorizations of MBIs and the topics in SCPs are vastly different, and there is a lack of consideration of the potential of these MBIs for local sustainable development. If MBIs are to be used for sustainability purposes, then perhaps they should be characterized in a new and different manner to capture the sustainability co-benefits, as offered in this paper.
This framework for categorizing MBIs extends the existing categorization of priced-based, rights-based, and friction reduction instruments by further separating each MBI by their environmental objectives and the intended environmental sustainability outcomes. Hence, each MBI is clearly linked with the associated environmental topics and subtopics in a SCP. In addition, SDG targets with relevance to local level progress and an environmental focus are also cross-identified with the corresponding SCP topics and MBIs in this framework, creating a lexicon for localizing SGDs and advancing local progress toward achieving sustainable development.
The research is designed to help with the implementation of local environmental sustainability goals and the list of MBIs identified is comprehensive. The compilation of MBIs with a local focus for sustainable development is the novel contribution, and this framework is revalidated through focus groups. There is a great deal of overlap between the MBIs identified in previous studies [12,16,39,40,45] and those obtained from the focus groups. In addition, many of the MBIs that were brought up during the focus groups have been individually discussed in other studies [42,44,49,50,51]. Reflected in Table 3, Table 4, Table 5, Table 6, Table 7, Table 8, Table 9 and Table 10, a variety of market friction reduction instruments were identified by the focus group to be applicable at the local level. Although many price-based instruments were found also applicable locally, they are mainly user fee/charges and subsidies due to the limitations in the local legislative power and authority [64]. This also contributes to the lack of implementable rights-based instruments from the local governments since the legislative powers of Canadian municipalities are on the weaker side of the continuum of local empowerment [66]. Hence, this study verifies the MBIs existing at the local level and identifies higher-level MBIs that are also applicable to the local level.
The new categorization of MBIs aligns with those topics found in specific SCPs to improve the usefulness for which it was designed. Of the 16 topics most commonly covered in the SCPs of Canadian communities, environmental topics are among the top 10 most frequently found in Canadian SCPs [13]. The changes between the topics found in SCPs and the new MBI categorization were very subtle. The results of the focus groups indicate that none of the topics were to be excluded from the final categorization framework. The changes only include combining air and energy topics. Canadian municipalities, with the exception of charter cities such as Toronto, only have have limited authorities over MBIs for air topics. Thus, most of the MBIs under the initial air section are not appropriate at the local level. From the focus group feedback, sub-topics were also developed for each topic in order to improve the usefulness of the new categorization. There were more modifications to the sub-topics, especially in the transportation section. Overall, the results yielded an acceptance of these topics and sub-topics for the new categorization of MBIs for SCP implementation.
It is important to note that there is an extremely diverse array of potential MBIs that could be used to accelerate sustainable community development [12,16,39,40,45]. However, the simple categories presented in the previous literature mainly focus on the economic dimension of MBIs and often lack direct alignment with the environmental objectives in the SCPs. The advantage of the new categorization is that this matrix framework creates direct links between MBIs (economic dimension) and the environmental objectives in the SCPs. Since the type of MBI is identified using three unique bullets, the user is able to pinpoint the appropriate MBIs (both pricing and non-pricing options) to implement certain environmental objectives in an SCP. Moreover, the framework allows the user to accurately locate and pinpoint the appropriate MBIs for implementing related SDG targets. Local governments often operate in silos, and they are often compartmentalized based on their responsibilities and have locational strategies [51]. Thus, the framework could stimulate an increase in inter-departmental users and the usability of market mechanisms for community sustainability.
All the participants from the focus groups also expressed acceptance of this categorization framework. Many participants thought that this framework would be beneficial for implementing SCPs. The findings from the focus groups reinforced the assertions for a new categorization framework that emphasizes sustainable community development. Hence, this new categorization fairly considered MBIs for SCP implementation, and the development of such tools has the potential to lead to changes in sustainability practice at the local scale. In addition to helping achieve local sustainable development, by doing so, municipalities also help implement the SDGs. We show how environmental sustainability goals in the SCPs align with environmental MBIs, and also specific SDG targets.
The relevance of this categorization framework of MBIs extends beyond Canada, as environmentally related topics are common among SCPs worldwide. Additionally, localizing the SDGs is a priority in Agenda 2030 and can be supported through the implementation of MBIs in communities worldwide. The MBIs presented in this paper have local relevance with the aim of furthering the implementation of environmentally related goals of the SCPs and SDG targets at the local level. The extent of usability and relevance of the MBIs will depend on the legislative law systems of the local government and the relationships of power with the state. The range of MBIs for implementation will be more restrictive for those communities that are fully dependent on the state compared to those with full autonomy and legislative power [66]. Nonetheless, the MBIs under this novel categorization will be applicable in other countries with the caveat that the legislative jurisdictions have to be considered for implementation.

6. Considerations for Policymakers and Future Research

Although MBIs have become prominent in sustainability, research in this area is often scattered. Most studies either focus on specific MBIs or lack a local focus. Thus, a larger collection of data on such instruments is needed in order to better inform decision-making for community sustainability and serve as a foundation for future research in this area. This paper helps bridge this gap in the literature as it focuses on the development of a new MBI categorization that considers the potential uses of MBIs for implementing SCP goals to influence better decision-making for sustainable development at the local level.
The new categorization of MBIs for SCP implementation builds on existing literature to improve our understanding of MBIs that are applicable at the local level and provides alternative implementation options for SCPs. This comprehensive categorization framework offers a significant platform for multidisciplinary research, as it allows researchers to understand the usefulness of MBIs from different perspectives. Furthermore, the suite of MBIs for local-level implementation provides researchers and practitioners, especially municipal decision-makers and influencers, with a list of MBIs that helps to achieve the environmental objectives in SCPs and localize the SDGs. Overall, the suite of MBIs under the new categorization increases awareness and knowledge of MBIs as a means to achieve community sustainability.
The paper provides the foundation for potential future interdisciplinary research in the area of MBIs and sustainability development. Future researchers in the environmental and sustainability fields could explore the effects of implementing SCPs through MBIs for cities with other geographic or population characteristics, such as analyzing the effect of MBIs for implementing SCPs and SDG targets in municipalities in both developed and developing countries. Additionally, future research is necessary to understand the long-term environmental, social, and economic outcomes of such an implementation approach. Another topic could be the relevance of MBIs to smart cities and an exploration of how MBIs can aid the smart urban transition. Moreover, this paper primarily focused on environmental topics as they are among the topic most highly prioritized topics in Canadian and world-wide SCPs; future research exploring the MBIs for more social topics, another important component of sustainable development, would also contribute positively to the market approach to local sustainable development.

Author Contributions

Conceptualization, S.C., A.C. and Y.Z.; Formal analysis, Y.Z.; Funding acquisition, S.C. and A.C.; Methodology, Y.Z., A.C. and S.C.; Project administration, A.C.; Supervision, A.C. and S.C.; Validation, Y.Z., A.C. and Stephanie Cairns; Visualization, Y.Z.; Writing—original draft, Y.Z.; Writing—review & editing, Y.Z. and A.C. All authors have read and agreed to the published version of the manuscript.

Funding

This research was funded by Metcalf Foundation.

Institutional Review Board Statement

Not applicable.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors declare no conflict of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, or in the decision to publish the results.

References

  1. World Commission on Environment and Development. Our Common Future; Oxford University Press: Oxford, UK, 1987; ISBN 978-0-19-282080-8. [Google Scholar]
  2. Mebratu, D. Sustainability and Sustainable Development: Historical and Conceptual Review. Environ. Impact Assess. Rev. 1998, 18, 493–520. [Google Scholar] [CrossRef]
  3. Barber, J. The Sustainable Communities Movement. J. Environ. Dev. 1996, 5, 338–348. [Google Scholar] [CrossRef]
  4. Kitchen, T.; Whitney, D.; Littlewood, S. Local Authority/Academic Collaboration and Local Agenda 21 Policy Processes. J. Environ. Plan. Manag. 1997, 40, 645–660. [Google Scholar] [CrossRef]
  5. Corbiere-Nicollier, T.; Ferrari, Y.; Jemelin, C.; Jolliet, O. Assessing Sustainability: An Assessment Framework to Evaluate Agenda 21 Actions at the Local Level. Int. J. Sustain. Dev. World Ecol. 2003, 10, 225–337. [Google Scholar] [CrossRef]
  6. Pedercini, M.; Zuellich, G.; Dianati, K.; Arquitt, S. Toward Achieving Sustainable Development Goals in Ivory Coast: Simulating Pathways to Sustainable Development. Sustain. Dev. 2018, 26, 588–595. [Google Scholar] [CrossRef]
  7. Benedek, J.; Ivan, K.; Török, I.; Temerdek, A.; Holobâcă, I.H. Indicator-based Assessment of Local and Regional Progress Toward the Sustainable Development Goals (SDGs), An Integrated Approach from Romania. Sustain. Dev. 2021, 29, 860–875. [Google Scholar] [CrossRef]
  8. Xue, L.; Weng, L.; Yu, H. Addressing Policy Challenges in Implementing Sustainable Development Goals through an Adaptive Governance Approach: A View from Transitional China. Sustain. Dev. 2018, 26, 150–158. [Google Scholar] [CrossRef]
  9. Roseland, M. Sustainable Community Development: Integrating Environmental, Economic, and Social Objectives. Prog. Plan. 2000, 54, 73–132. [Google Scholar] [CrossRef]
  10. Berke, P.R.; Conroy, M.M. Are We Planning for Sustainable Development? An Evaluation of 30 Comprehensive Plans. J. Am. Plan. Assoc. 2000, 66, 21–33. [Google Scholar] [CrossRef]
  11. Clarke, A.; Erfan, A. Regional Sustainability Strategies: A Comparison of Eight Canadian Approaches. Plan Can. 2007, 47, 15–18. [Google Scholar]
  12. Hendrickson, D.J.; Lindberg, C.; Connelly, S.; Roseland, M. Pushing the Envelope: Market Mechanisms for Sustainable Community Development. J. Urban. 2011, 4, 153–173. [Google Scholar] [CrossRef]
  13. MacDonald, A.; Clarke, A.; Huang, L.; Roseland, M.; Seitanidi, M.M. Multi-Stakeholder Partnerships (SDG #17) as a Means of Achieving Sustainable Communities and Cities (SDG #11). In Handbook of Sustainability Science and Research; Leal, W., Ed.; Springer: Cham, Switzerland, 2018; pp. 193–209. ISBN 978-3-319-63007-6. [Google Scholar]
  14. Gahin, R.; Veleva, V.; Hart, M. Do Indicators Help Create Sustainable Communities? Local Environ. 2003, 8, 661–666. [Google Scholar] [CrossRef]
  15. Parkinson, S.; Roseland, M. Leaders of the Pack: An Analysis of the Canadian ‘Sustainable Communities’ 2000 Municipal Competition. Local Environ. 2002, 7, 411–429. [Google Scholar] [CrossRef]
  16. Stavins, R.N. Experience with Market-Based Environmental Policy Instruments. In Handbook of Environmental Economics: Environmental Degradation and Institutional Responses; Mäler, K., Vincent, J., Eds.; Elsevier: Amsterdam, The Netherlands, 2003; pp. 355–435. ISBN 0-444-50063-4. [Google Scholar]
  17. Alebon, K.; Klinsky, S. Local Governments’ Response to Agenda 21: Summary Report of Local Agenda 21 Survey with Regional Focus; International Council for Local Environmental Initiatives (ICLEI): Toronto, ON, Canada, 2002. [Google Scholar]
  18. Connelly, S. Local Agenda 21: International Council for Local Environmental Initiatives. In Encyclopedia of Quality of Life and Well-Being Research; Michalos, A., Ed.; Springer: Dordrecht, The Netherlands, 2014; pp. 3670–3673. ISBN 978-94-007-0753-5. [Google Scholar]
  19. United Nations Transforming Our World: The 2030 Agenda for Sustainable Development. Available online: https://sdgs.un.org/2030agenda (accessed on 11 February 2022).
  20. Ordonez-Ponce, E.; Clarke, A.; MacDonald, A. Business Contributions to the Sustainable Development Goals through Community Sustainability Partnerships. Sustain. Account. Manag. Policy J. 2021, 12, 1239–1267. [Google Scholar] [CrossRef]
  21. Parenteau, R. Local Action Plans for Sustainable Communities. Environ. Urban. 1994, 6, 183–199. [Google Scholar] [CrossRef] [Green Version]
  22. Clarke, A.; MacDonald, A. Partner Engagement for Community Sustainability: Supporting Sustainable Development Initiatives by Reducing Friction in the Local Economy; Sustainable Prosperity: Ottawa, ON, Canada, 2012; pp. 1–14. [Google Scholar]
  23. Clarke, A.; Huang, L.; Roseland, M.; Chen, H. Do Collaborative Planning Processes Lead to Better Outcomes? An Examination of Cross-Sector Social Partnerships for Community Sustainability. Presented at Administrative Science Association of Canada Conference Paper and Presentation. In Proceedings of the Administrative Sciences Association of Canada, Muskoka, ON, Canada, 9–12 May 2014. [Google Scholar]
  24. Sun, X.; Clarke, A.; MacDonald, A. Implementing Community Sustainability Plans through Partnerships: An Examination of the Relationship between Partnership Structural Features and Climate Change Mitigation Plan Outcomes. Sustainability 2020, 12, 6172. [Google Scholar] [CrossRef]
  25. Roseland, M. Toward Sustainable Communities: Solutions for Citizens and Their Governments, 4th ed.; New Society Publishers: Gabriola Island, BC, Canada, 2012; ISBN 978-1-55092-506-7. [Google Scholar]
  26. Williamson, I.P. Land Administration Best Practice Providing the Infrastructure for Land Policy Implementation. Land Use Policy 2001, 18, 297–307. [Google Scholar] [CrossRef] [Green Version]
  27. Villamayor-Tomas, S.; Thiel, A.; Amblard, L.; Zikos, D.; Blanco, E. Diagnosing the Role of the State for Local Collective Action: Types of Action Situations and Policy Instruments. Environ. Sci. Policy 2019, 97, 44–57. [Google Scholar] [CrossRef]
  28. Myeong, S.; Park, J.; Lee, M. Research Models and Methodologies on the Smart City: A Systematic Literature Review. Sustainability 2022, 14, 1687. [Google Scholar] [CrossRef]
  29. Silva, B.N.; Khan, M.; Han, K. Towards Sustainable Smart Cities: A Review of Trends, Architectures, Components, and Open Challenges in Smart Cities. Sustain. Cities Soc. 2018, 38, 697–713. [Google Scholar] [CrossRef]
  30. Quijano, A.; Hernández, J.L.; Nouaille, P.; Virtanen, M.; Sánchez-Sarachu, B.; Pardo-Bosch, F.; Knieilng, J. Towards Sustainable and Smart Cities: Replicable and KPI-Driven Evaluation Framework. Buildings 2022, 12, 233. [Google Scholar] [CrossRef]
  31. Irvine, K.N.; Suwanarit, A.; Likitswat, F.; Srilertchaipanij, H.; Ingegno, M.; Kaewlai, P.; Boonkam, P.; Tontisirin, N.; Sahavacharin, A.; Wongwatcharapaiboon, J.; et al. Smart City Thailand: Visioning and Design to Enhance Sustainability, Resiliency, and Community Wellbeing. Urban Sci. 2022, 6, 7. [Google Scholar] [CrossRef]
  32. Lim, S.B.; Yigitcanlar, T. Participatory Governance of Smart Cities: Insights from e-Participation of Putrajaya and Petaling Jaya, Malaysia. Smart Cities 2022, 5, 71–89. [Google Scholar] [CrossRef]
  33. Lim, S.B.; Malek, J.A.; Yussoff, M.F.Y.M.; Yigitcanlar, T. Understanding and Acceptance of Smart City Policies: Practitioners’ Perspectives on the Malaysian Smart City Framework. Sustainability 2021, 13, 9559. [Google Scholar] [CrossRef]
  34. Ahvenniemi, H.; Huovila, A.; Pinto-Seppä, I.; Airaksinen, M. What Are the Differences between Sustainable and Smart Cities? Cities 2017, 60, 234–245. [Google Scholar] [CrossRef]
  35. Boisvert, V.; Méral, P.; Froger, G. Market-Based Instruments for Ecosystem Services: Institutional Innovation or Renovation? Soc. Nat. Resour. 2013, 26, 1122–1136. [Google Scholar] [CrossRef]
  36. Zhou, Y.; Clarke, A.; Cairns, S. Building Sustainable Communities through Market Based Instruments. In Environmental Policy: An Economic Perspective; Walker, T., Goubran, S., Sprung-Much, N., Eds.; Wiley Blackwell: Hoboken, NJ, USA, 2020; pp. 233–247. [Google Scholar] [CrossRef]
  37. Piqou, A.C. The Economics of Welfare, 1st ed.; Routledge: New Yorks, NY, USA, 2017; ISBN 978-1-35130-436-8. [Google Scholar]
  38. Pirard, R.; Lapeyre, R. Classifying Market-Based Instruments for Ecosystem Services: A Guide to the Literature Jungle. Ecosyst. Serv. 2014, 9, 106–114. [Google Scholar] [CrossRef]
  39. Rademaekers, K.; van der Laan, J.; Smith, M.; van Breugel, C.; Pollitt, H. The Role of Market-Based Instruments in Achieving a Resource Efficient Economy; European Commission DG Environment: Rotterdam, The Netherlands, 2011; pp. 1–291. [Google Scholar]
  40. Hockenstein, J.B.; Stavins, R.N.; Whitehead, B.W. Crafting the Next Generation of Market-Based Environmental Tools. Environ. Sci. Policy Sustain. Dev. 1997, 39, 12–33. [Google Scholar] [CrossRef]
  41. Sargent, J.H. The Economics of Energy and the Environment: The Potential Role of Market-Based Instruments. Can. United States Law J. 2002, 28, 499–509. [Google Scholar]
  42. Althaus, C.; Tedds, L.M.; McAvoy, A. The Feasibility of Implementing a Congestion Charge on the Halifax Peninsula: Filling the “Missing Link” of Implementation. Can. Public Policy 2011, 37, 541–561. [Google Scholar] [CrossRef]
  43. Flachsland, C.; Brunner, S.; Edenhofer, O.; Creutzig, F. Climate Policies for Road Transport Revisited (II), Closing the Policy Gap with Cap-and-Trade. Energy Policy 2011, 39, 2100–2110. [Google Scholar] [CrossRef]
  44. Burnett, J. City Buildings-Eco-Labels and Shades of Green! Landsc. Urban Plan. 2007, 83, 29–38. [Google Scholar] [CrossRef]
  45. Newell, R.G.; Stavins, R.N. Cost Heterogeneity and the Potential Savings from Market-Based Policies. J. Regul. Econ. 2003, 23, 43–59. [Google Scholar] [CrossRef]
  46. Pirard, R. Market-Based Instruments for Biodiversity and Ecosystem Services: A Lexicon. Environ. Sscience Policy 2012, 19, 59–68. [Google Scholar] [CrossRef]
  47. Henderson, B.; Norris, K. Experiences with Market-Based Instruments for Environmental Management. Australas. J. Environ. Manag. 2008, 15, 113–120. [Google Scholar] [CrossRef]
  48. Cadman, T.; Eastwood, L.; Michaelis, F.L.C.; Maraseni, T.N.; Pittock, J.; Sarker, T. The Political Economy of Sustainable Development: Policy Instruments and Market Mechanisms; Edward Elgar Publishing: Cheltenham, UK, 2015; ISBN 978-1-78347-484-4. [Google Scholar]
  49. Kockelman, K.M.; Kalmanje, S. Credit-Based Congestion Pricing: A Policy Proposal and the Public’s Response. Transp. Res. Part A Policy Pract. 2005, 39, 671–690. [Google Scholar] [CrossRef]
  50. Mamun, M.S.; Michalaka, D.; Yin, Y.; Lawphongpanich, S. Comparison of Socioeconomic Impacts of Market-Based Instruments for Mobility Management. Int. J. Sustain. Transp. 2016, 10, 96–104. [Google Scholar] [CrossRef]
  51. Magrini, C.; D’Addato, F.; Bonoli, A. Municipal Solid Waste Prevention: A Review of Market-Based Instruments in Six European Union Countries. Waste Manag. Res. 2020, 38, 3–22. [Google Scholar] [CrossRef]
  52. Straton, A.T.; Heckbert, S.; Ward, J.R.; Smajgl, A. Effectiveness of a Market-Based Instrument for the Allocation of Water in a Tropical River Environment. Water Resour. 2009, 36, 743–751. [Google Scholar] [CrossRef]
  53. Cashman, A.; Moore, W. A Market-Based Proposal for Encouraging Water Use Efficiency in a Tourism-Based Economy. Int. J. Hosp. Manag. 2012, 31, 286–294. [Google Scholar] [CrossRef]
  54. Filatova, T. Market-Based Instruments for Flood Risk Management: A Review of Theory, Practice and Perspectives for Climate Adaptation Policy. Environ. Sci. Policy 2014, 37, 227–242. [Google Scholar] [CrossRef]
  55. Hurlbert, M.A.; Gupta, J. An Institutional Analysis Method for Identifying Policy Instruments Facilitating the Adaptive Governance of Drought. Environ. Sci. Policy 2019, 93, 221–231. [Google Scholar] [CrossRef]
  56. Coria, J.; Köhlin, G.; Xu, J. On the Use of Market-Based Instruments to Reduce Air Pollution in Asia. Sustainability 2019, 11, 4895. [Google Scholar] [CrossRef] [Green Version]
  57. Klenert, D.; Mattauch, L.; Combet, E.; Edenhofer, O.; Hepburn, C.; Rafaty, R.; Stern, N. Making Carbon Pricing Work for Citizens. Nat. Clim. Chang. 2018, 8, 669–677. [Google Scholar] [CrossRef]
  58. Linton, S.; Clarke, A.; Tozer, L. Strategies and Governance for Implementing Deep Decarbonization Plans at the Local Level. Sustainability 2021, 13, 154. [Google Scholar] [CrossRef]
  59. Jacobs, M. The Green Economy: Environment, Sustainable Development and the Politics of the Future; UBC Press: Vancouver, Canada, 1993. [Google Scholar]
  60. Thompson, D.; Bevan, A. The Smart Budget Kit: Environmental Pricing Reform for Municipalities; Sustainable Prosperity: Ottawa, Canada, 2010. [Google Scholar]
  61. Bosquet, B. Environmental Tax Reform: Does It Work? A Survey of the Empirical Evidence. Ecol. Econ. 2000, 34, 19–32. [Google Scholar] [CrossRef]
  62. Deslatte, A.; Stokan, E. Sustainability Synergies or Silos? The Opportunity Costs of Local Government Organizational Capabilities. Public Adm. Rev. 2020, 80, 1024–1034. [Google Scholar] [CrossRef]
  63. Osborne, D. Reinventing Government. Public Product. Manag. Rev. 1993, 16, 349–356. [Google Scholar] [CrossRef]
  64. Tindal, C.R.; Tindal, S.N.; Stewart, K.; Smith, P.J. Local Government in Canada, 9th ed.; Nelson Education: Scarborough, ON, Canada, 2017; ISBN 978-0-17-658297-5. [Google Scholar]
  65. Ministry of Justice Constitution Acts, 1867 to 1982. Available online: https://laws-lois.justice.gc.ca/PDF/CONST_TRD.pdf (accessed on 15 January 2022).
  66. Rodriguez, D.B.; Shoked, N. Comparative Local Government Law in Motion: How Different Local Government Law Regimes Affect Global Cities’ Bike Share Plans. Urban Law J. 2014, 42, 123–186. [Google Scholar]
  67. Association of Municipalities Ontario Municipal 101. Available online: https://www.amo.on.ca/YourAssociation/Municipal101 (accessed on 15 July 2021).
  68. Creswell, J.W.; Creswell, J.D. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, 5th ed.; SAGE Publications: Thousand Oaks, CA, USA, 2017; ISBN 978-1-50638-670-6. [Google Scholar]
  69. United Nations Department of Economic and Social Affairs The 17 Goals. Available online: https://sdgs.un.org/goals (accessed on 15 January 2022).
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Article Metrics

Citations

Article Access Statistics

Journal Statistics
Multiple requests from the same IP address are counted as one view.
Download PDF
Ecosystem Services Analysis and Design through Nature-Based Solutions in Urban Planning at a Neighbourhood Scale
Previous
Transformative Effects of Overtourism and COVID-19-Caused Reduction of Tourism on Residents—An Investigation of the Anti-Overtourism Movement on the Island of Mallorca
Next