This is a great comment, and really a key here.

If you have a nail (environmental problem) hit it with a hammer (environmental regulation or tort liability deregulation).

You can hit it with back end of a plastic screwdriver (regulate supply and demand), but you'll never do as good of a job (flush nail with no external damage) as you will using the right tools.

And, to stretch the metaphor, the handle of the screwdriver might shatter and and cause a bunch of new problems without ever hammering the nail.