Shortly after the D.C. bottle initiative went down to defeat last year {Nov. 5}, Robert M. Dunn Jr., in an article on this page, pictured it as flawed because it was local rather than national in scope and because it mandated recycling by retailers. The next time around, he said, Congress should impose a national tax on new cans, bottles and other recyclable products whose collection or disposal "imposes sizable {expenses} on society," leaving it up to that tax to encourage environmentally sound behavior by retailers and consumers.

Dunn's was another in a series of proposals that may make sense as abstract economics but must be soberly evaluated for their effects on environmental protection in the real world.

His scheme acknowledges that this country is not writing on a clean slate when it comes to controlling pollution. In many environmental areas, we already have detailed regulatory regimes that Congress, industry and the public are not prepared to discard. For many pollutants, pure "market-based" approaches are inadequate because the location of the reductions is crucial: it's not enough to reduce waste in Westchester County if significant problems remain in the Bronx.

Instead, Dunn's approach would create incentives for recycling as a supplement to existing waste management programs. But even this approach raises practical questions: for example, under Dunn's national tax, what would happen to the many local deposit programs for bottles or similar wastes -- programs often enacted at considerable risk to state officials and now working well? Such taxes offer no assurance that desired levels of removal will be achieved. And they would likely be uniform, far exceeding costs of disposal in Wyoming but too small to change behavior in New York.

Dunn's proposal nevertheless underscores a central theme in attempts to deal with today's pollution problems: the need for incentives to supplement traditional regulation. We are facing a new generation of pollution that normal regulatory tools are often poorly suited to address. The task is no longer the relatively simple one of requiring standard engineering fixes for visible emissions or discharges from large, uncontrolled steel mills or electric plants. The millions of diverse households, farms, small businesses and individual activities that cause much of today's air and surface-water pollution, ground-water contamination and garbage accumulation defy such standardized responses.

New global problems such as stratospheric ozone depletion are caused by hundreds of products and processes used throughout the world. Even where regional problems such as acid rain are caused by emissions from a manageable number of large sources, those sources are for the most part already well controlled and difficult to control further, often pitting one region's interests against another's.

The battle against pollution will continue to be a long campaign of many small steps, with few magic bullets. But one of the keys must be use of incentives to reach remaining pollution sources that are too dispersed, diverse or difficult to control by traditional rules or enforcement alone.

One example of such an approach is the Environmental Protection Agency's "bubble" policies, which Alan Blinder discussed in an article on this page {Aug. 18}. These policies allow emitters of pollution to treat their stacks and vents as if they were enclosed by an imaginary bubble. They can then control pollution less where the cost of doing so is high in exchange for controlling it more where costs are low, so long as equal or less pollution emerges from the bubble as a whole.

By encouraging regulated firms to substitute inexpensive extra reductions of a given pollutant for expensive required reductions, bubbles can convert "nonproductive" pollution control costs into sound investments. Beginning with its 1979 bubble policy for existing sources of air pollution -- a step estimated to have saved the economy hundreds of millions of dollars from only 75 approved bubbles -- EPA has refined this approach to allow more efficient control of new sources of air pollution, as well as more efficient compliance with other regulations.

The General Accounting Office has found that such "emissions trades" can reduce compliance costs by 40 to 90 percent for individual firms -- without adverse environmental effects. A recent report from the Conservation Foundation urged their continued use. Bills pending in Congress would use statewide bubbles to cut the annual cost of proposed acid-rain controls by as much as $3 billion (more than 50 percent). And EPA's widely hailed tenfold reduction of lead in gasoline relied on a nationwide bubble approach that allowed trading of extra lead reductions among different refiners, reducing compliance costs by an estimated $100 million through last year.

Bubbles are not a panacea. Like any innovation, they can invite attempts to evade rather than accelerate compliance, though new safeguards sharply reduce the chance of that. Like user fees or technical assistance, bubbles have been oversold in the past. But they do start with existing environmental requirements, which continue to be set as before. They can create continuous incentives for polluters deliberately to surpass those requirements, instead of doing only the minimum needed to comply. Where the precise location of emissions does not matter and we are writing on a clean slate -- as with ozone depletion -- bubbles can provide the experience that makes broader incentive approaches workable.

They confirm an emerging consensus that while pollution may not be a commodity like Oreos or VCRs, in one important sense pollution control is: the cheaper and easier we make it to buy, the more we're likely to get.

Michael Levin directs the Environmental Protection Agency's regulatory innovations staff. Barry Elman and Tapio Kuusinen are staff project managers. These views are their own.