Green Bills--Carrots or Sticks?

Late last week Governor Schwarzenegger vetoed three California bills which would have mandated green building requirements for commercial and residential buildings over the next decade. I discussed the prospect of these bills here in the context of the overall need for regulation of green building--

The Governator did, however, approve a bill providing tax credits for sustainable low-income housing.

I am currently working with some political candidates in Philadelphia in considering the most efficacious road to encouraging green building. I have ended up in several "carrot-or-stick" conversations--in other words, is it better to have laws mandating green building practices like those that have been passed in Washington DC and Boston, or to provide incentives (financial and non-financial, like fast track permitting for green projects)?

Obviously, the two are not mutually exclusive, but there is a philosophical divide on the appropriate role for government in green building. Is sustainable development more like fire safety--something which costs builders money to install but benefits everyone to such an extent that government must mandate its installation--or like arts and culture which government encourages through spending and education, but does not mandate? I would argue that it needs to become more like fire safety--the impact of buildings on the planet is simply too great to leave to the vagaries of the marketplace. For the impact of buildings on global warming, see the UNEP study available here
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