10 3 ENVIRONIMENTAL POLICIESH DEALING WITH EXTERNALITIES 1. Regulation government can remedy an externality by making certain behaviors either required or forbidden a politically, scientifically or economically optimal level of activity10.3 ENVIRONMENTAL POLICIES: DEALING WITH EXTERNALITIES 1. Regulation ▪ government can remedy an externality by making certain behaviors either required or forbidden. ▪ a politically, scientifically or economically optimal level of activity