Editing Perverse incentive (section)

===Environmental and wildlife protection===

* The United States [[Endangered Species Act of 1973]] imposes development restrictions on landowners who find [[endangered species]] on their property.<ref name=":122">Langpap, Christian, and JunJie Wu. 2017. "Thresholds, Perverse Incentives, and Preemptive Conservation of Endangered Species" ''Journal of the Association of Environmental and Resource Economists'' 4(S1):S227–S259. {{doi|10.1086/692070}}.</ref> While this policy has some positive effects for wildlife, it also encourages preemptive [[habitat destruction]] ([[Swamp draining|draining swamps]] or cutting down trees that might host valuable species) by landowners who fear losing the lucrative development-friendliness of their land because of the presence of an endangered species.<ref>Stephen Dubner and Steven Levitt, [https://www.nytimes.com/2008/01/20/magazine/20wwln-freak-t.html?pagewanted=2&_r=1&sq=unintended%20consequences&st=cse&scp=1 ''Unintended Consequences''], New York Times Magazine, 20 January 2008</ref> In some cases, endangered species may even be [[Shooting, shoveling, and shutting up|deliberately killed]] to avoid discovery.<ref name=":122" />
* In 2005 the UN [[Intergovernmental Panel on Climate Change]] began an incentive scheme to cut down on greenhouse gases. Companies disposing of polluting gases were rewarded with [[carbon credits]], which could eventually get converted into cash. The program set prices according to how serious the damage the pollutant could do to the environment was and attributed one of the highest bounties for destroying [[HFC-23]], a byproduct of a common refrigerant, [[HCFC-22]]. As a result, companies began to produce more of this refrigerant in order to destroy more of the byproduct waste gas, and collect millions of dollars in credits.<ref>{{Cite web |title=The Cobra Effect |url=http://freakonomics.com/2012/10/11/the-cobra-effect-full-transcript/ |url-status=dead |archive-url=https://web.archive.org/web/20121018225311/http://freakonomics.com/2012/10/11/the-cobra-effect-full-transcript/ |archive-date=2012-10-18 |website=Freakonomics}}</ref> This increased production also caused the price of the refrigerant to decrease significantly, motivating refrigeration companies to continue using it, despite the adverse environmental effects.<ref>{{cite news |last1=Rosenthal |first1=Elisabeth |last2=Lehren |first2=Andrew W. |date=2012-08-08 |title=Incentive to Slow Climate Change Drives Output of Harmful Gases |url=https://www.nytimes.com/2012/08/09/world/asia/incentive-to-slow-climate-change-drives-output-of-harmful-gases.html |access-date=2015-07-02 |newspaper=The New York Times |issn=0362-4331}}</ref><ref>{{cite web |last=Gupta |first=Anika |title=Carbon credit scam slur on Indian firms |url=http://www.hindustantimes.com/newdelhi/carbon-credit-scam-slur-on-indian-firms/article1-599382.aspx |url-status=dead |archive-url=https://web.archive.org/web/20150704055413/http://www.hindustantimes.com/newdelhi/carbon-credit-scam-slur-on-indian-firms/article1-599382.aspx |archive-date=4 July 2015 |access-date=2015-07-02 |website=Hindustan Times}}</ref> In 2013, credits for the destruction of HFC-23 were suspended in the [[European Union]].<ref>{{cite web |date=23 November 2016 |title=Commission adopts ban on the use of industrial gas credits |url=https://ec.europa.eu/clima/news/articles/news_2011060801_en |accessdate=3 November 2019 |website=Climate Action |publisher=[[European Commission]]}}</ref>
* In 2017, the [[Renewable Heat Incentive scandal|Renewable Heat Incentive]] paid businesses to replace coal with renewable heating, typically [[bioenergy]] in the form of [[Pellet fuel|wood pellets]]. However, the subsidy for the energy was greater than its cost, which allowed businesses to make a profit simply by burning as much fuel as possible and heating empty buildings. The political fall-out caused the [[Northern Ireland Executive]] to collapse in 2017. It was not re-convened until 2020.<ref>{{cite news |date=23 December 2016 |title=RHI scandal: RHI 'cash for ash' scandal to cost NI taxpayers £490m |url=https://www.bbc.com/news/uk-northern-ireland-38414486 |work=[[BBC News]]}}</ref><ref>{{cite news |date=16 January 2017 |title=Stormont crisis: Deadline passes for future of executive |url=https://www.bbc.co.uk/news/uk-northern-ireland-38630403 |work=BBC |publisher=BBC News}}</ref>