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Much of the literature on regulatory instruments considers efficiency in terms of monetary costs. CAC has been labelled by many critics as ‘inefficient’ as a system that spends resources but generates little revenue.<ref name=sinclair>Gunningham, N., Sinclair, D. (2002) Leaders and Laggards: Next Generation Environmental Regulation. UK: Greenleaf Publishing Ltd.</ref> The cost of compliance is perceived to be high, which can result in costs that are higher than the sanctions for non-compliance. A summary of 10 studies demonstrated significant differences in cost between CAC and least cost alternatives.<ref name="tieten">Tietenberg,T. (1991) Economic Instruments for Environmental Regulation. "In: Helm, D., Pearce, D. (ed.) Economic Policy towards the Environment. Oxford: Oxford University Press."</ref>
Some have moved to defend certain aspects of a CAC approach, arguing against the commonly held belief that these regimes are inherently inefficient.<ref name="candg"/> Economics incentives are frequently referred to as a considerably more efficient approach to regulation. The most commonly used incentives in this method relate to tax. The administrative costs of tax collection can be understated. Advocates of incentives have been accused of making simplifying assumptions and not fully taking into account the costs of administrating tax systems<ref name="candg">Cole, D., Grossman, P. (2002) Toward a total-cost approach to environmental instrument choice. 20. pp. 223-241.</ref><ref name="ogus"/>
In some circumstances, CAC regulation can end up being a less costly option. Whilst economic instruments may act to reduce compliance costs, in certain cases their total costs may actually be higher, This may stem from the high level of monitoring that is required to make an incentivised method viable and successful.<ref name="candg"/>
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