Sustainable Development, Economic Growth and Environmental Regulation

Mathis, Klaus

doi:10.1007/978-3-319-50932-7_1

Klaus Mathis⁴

Part of the book series: Economic Analysis of Law in European Legal Scholarship ((EALELS,volume 4))

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Abstract

This essay starts by discussing the reciprocal relationship between economic growth and environmental protection. In particular, it examines whether economic growth damages the environment or whether it is more or less the prerequisite for environmental protection. Subsequently the most important instruments of environmental policy are presented and assessed from an economic perspective.

[I]f you wish to change, help people to understand that the economic costs of action are far less than those of inaction.Brundtland 2010, p. xxiii

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Notes

1.
French 2010, p. 54.
2.
Kysar 2010, p. 128.
3.
Binswanger H.C. 1995, p. 371.
4.
For a more in-depth analysis of the issue of sustainable development and intergenerational justice see Mathis 2017.
5.
Kuznets 1955, pp. 3 et seqq. In his book “Capital in the Twenty-First Century”, the French economist Thomas Piketty has revisited and refined the idea of the Kuznets curve. Piketty 2014, pp. 25 et seqq.
6.
Kuznets 1955, pp. 6 et seqq.
7.
Dinda 1967, p. 435; de Bruyn and Heintz 1990, p. 667.
8.
Dinda 1967, p. 435; de Bruyn and Heintz 1990, pp. 667 et seq.
9.
Neumayer 2003, p. 78.
10.
Dinda 1967, p. 435.
11.
Neumayer 2003, p. 77; de Bruyn and Heintz 1990, p. 666.
12.
Neumayer 2003, p. 77.
13.
Neumayer 2003, pp. 77 et seq.; de Bruyn and Heintz 1990, pp. 666 et seq.
14.
Singh and Shishodia 1996, p. 48.
15.
Singh and Shishodia 1996, p. 48.
16.
Luks 2005, p. 49.
17.
Ott K. and Döring 2004, pp. 129 et seq.
18.
Dinda 1967, p. 436.
19.
Dinda 1967, p. 437.
20.
Luks 2005, p. 49.
21.
Wachter 2014, p. 52.
22.
Ott K. and Döring 2004, pp. 130 et seq.
23.
Neumayer 2003, p. 81.
24.
Neumayer 2003, p. 80.
25.
Neumayer 2003, p. 81.
26.
Neumayer 2003, p. 84.
27.
Neumayer 2003, p. 84.
28.
Neumayer 2003, p. 84.
29.
Arrow et al. 1995, p. 520.
30.
Dinda 1967, p. 436; de Bruyn and Heintz 1990, pp. 668 et seq.
31.
Baker 2016, p. 41.
32.
Grossman 1995, p. 44.
33.
Grossman 1995, p. 43.
34.
Grossman 1995, p. 43.
35.
Dinda 1967, p. 437.
36.
Wachter 2014, p. 52.
37.
Singh and Shishodia 1996, p. 49.
38.
Wachter 2014, p. 52.
39.
Grossman 1995, p. 41.
40.
De Bruyn and Heintz 1990, p. 671, who therefore reject the environmental Kuznets curve as an empirically unsubstantiated hypothesis.
41.
Arrow et al. 1995, p. 520.
42.
Grossman 1995, p. 30.
43.
Neumayer 2003, p. 81.
44.
Perman et al. 2003, S. 39.
45.
De Bruyn and Heintz 1990, p. 658.
46.
Arrow et al. 1995, p. 520.
47.
Grossman 1995, p. 43.
48.
Wachter 2014, p. 52.
49.
Neumayer 2003, pp. 84 et seq.
50.
Grossman 1995, p. 44.
51.
Pearce 2003, p. 67.
52.
Holdren and Ehrlich 1974, p. 288.
53.
Jacobs M. 2013, p. 200.
54.
Jacobs M. 2013, p. 200.
55.
Alcott 2012, p. 109.
56.
Alcott 2012, p. 109.
57.
Alcott 2012, p. 109.
58.
Alcott 2012, p. 109.
59.
Alcott 2012, p. 109.
60.
Alcott 2012, p. 109.
61.
Alcott 2012, pp. 109 et seq.
62.
Neumayer 2003, pp. 79 et seq.
63.
Neumayer 2003, p. 82.
64.
Jacobs M. 2013, p. 197.
65.
Jacobs M. 2013, p. 197.
66.
Jacobs M. 2013, p. 199.
67.
Jacobs M. 2013, p. 199.
68.
Jacobs M. 2013, pp. 199 et seq.
69.
Jacobs M. 2013, p. 200.
70.
Jacobs M. 2013, p. 200.
71.
Jacobs M. 2013, p. 200.
72.
Jacobs M. 2013, pp. 201 et seq.
73.
Jacobs M. 2013, p. 202.
74.
Jacobs M. 2013, p. 209.
75.
Jacobs M. 2013, p. 210.
76.
Mathis and Anderhub 2009, p. 327.
77.
Porter and van der Linde 1995, p. 97.
78.
Porter and van der Linde 1995, pp. 97 et seq.
79.
Normally referred to as “first mover advantage” in the secondary literature.
80.
Porter and van der Linde 1995, pp. 104 et seq.
81.
Porter and van der Linde 1995, p. 105.
82.
Porter and van der Linde 1995, p. 110.
83.
Porter and van der Linde 1995, pp. 110 et seq.
84.
Meyer B. 2008, pp. 166 et seq.
85.
Porter and van der Linde 1995, p. 115.
86.
Taistra 2001, p. 245.
87.
Taistra 2001, p. 245.
88.
Taistra 2001, p. 242.
89.
Porter and van der Linde 1995, p. 114.
90.
Gerken and Renner 1996, p. 99.
91.
Gerken and Renner 1996, p. 101.
92.
Gerken and Renner 1996, p. 101.
93.
Gerken and Renner 1996, p. 101.
94.
Gerken and Renner 1996, p. 101.
95.
Hart 2012, p. 192.
96.
Beckerman and Pasek 2011, p. 1.
97.
Gerken and Renner 1996, p. 123.
98.
Endres and Holm-Müller 1991, pp. 19 et seq.
99.
Vgl. Jacobs M. 1999, p. 79.
100.
Endres and Holm-Müller 1991, p. 20.
101.
Endres and Holm-Müller 1991, p. 19.
102.
Endres and Holm-Müller 1991, p. 19.
103.
Kirchgässner 1994, p. 459.
104.
Jacobs M. 1999, p. 86.
105.
Endres 2013, pp. 128 et seq.; Feess and Seeliger 2013, pp. 46 et seqq. On other possible assessment criteria, especially practicability, system conformity, time-lag effects, social compatibility, international harmonisability, flexibility, reversibility, error tolerance, information requirements and financial side-effects, see Costanza et al. 2001, pp. 239 et seqq.; Perman et al. 2003, p. 203; Boie 2006, pp. 67 et seqq.
106.
Mathis 2009, p. 49.
107.
Mathis 2009, p. 49.
108.
Endres 2013, p. 146; Perman et al. 2003, p. 204; Wicke 1993, p. 205.
109.
Endres 2013, p. 128.
110.
Perman et al. 2003, p. 204; Feess and Seeliger 2013, p. 62. The concern here is to achieve a set target with minimal effort; it is thus implicitly a matter of efficiency in the sense implied by the minimum principle.
111.
On the whole topic, see Endres 2013, p. 148.
112.
Perman et al. 2003, p. 204; Feess and Seeliger 2013, p. 64.
113.
This consideration is justified by the fact that additional costs incurred by the state are passed on to private actors via the taxation process.
114.
Endres 2013, p. 129.
115.
Endres 2013, p. 144.
116.
De Sépibus 2003, p. 34.
117.
Endres 2013, p. 129.
118.
Jacobs R. 1997, p. 59; Endres 2013, p. 158.
119.
Binder 1999, p. 160.
120.
Endres 2013, p. 158; Feess and Seeliger 2013, p. 189.
121.
Tullok 2005, p. 32.
122.
Frey B.S. 1995, p. 344; Streit 2005, p. 395.
123.
Shughart II and William 1995, pp. 9 et seq.
124.
Weck-Hannemann 2008, p. 568.
125.
On the whole topic in more depth, see Mathis 2014, pp. 139 et seqq.
126.
Hansmeyer 1993, p. 76.
127.
Tullock 1965, p. 134.
128.
Tullock 1965, p. 135.
129.
Tullock 1965, p. 134.
130.
Cf. Fritsch 2011, p. 357.
131.
Thürmer 1984, pp. 97 et seq.
132.
Tullock 1992, pp. 165 et seqq.
133.
Downs 1967, p. 16.
134.
Downs 1967, p. 264.
135.
Downs 1967, pp. 17 et seq.
136.
Holzinger 1987, p. 53.
137.
Hansmeyer 1993, p. 76.
138.
Niskanen 1971, p. 36.
139.
Niskanen 1971, p. 42.
140.
Fritsch 2011, p. 358.
141.
Fritsch 2011, pp. 359 et seq.
142.
Roschmann 1999, pp. 37 et seq.
143.
Roschmann 1999, p. 38.
144.
Roschmann 1999, p. 38.
145.
On this, see Fritsch 2011, pp. 357 et seq.
146.
Gerken and Renner 1996, p. 77.
147.
Holzinger 1987, pp. 54 et seq.
148.
Holzinger, 1987, p. 55.
149.
Thürmer 1984, p. 97.
150.
Kirchgässner 1994, p. 473.
151.
Rogall 2004, p. 53.
152.
Kirchgässner 1994, p. 473.
153.
Kirchgässner 1994, pp. 457 et seq.
154.
On the cognitive distortions that play an important role in behavioural economics, and which critically call into question the traditional economic model of Homo oeconomicus; see e.g. Mathis and Diriwächter 2011, pp. 56 et seqq. and Mathis and Steffen 2015, pp. 36 et seqq.
155.
Thaler and Sunstein 2008, pp. 89 et seqq.
156.
Thaler and Sunstein 2008, pp. 4 et seqq.
157.
On nudging in healthcare, see Mathis 2016, pp. 91 et seqq.
158.
Thaler and Sunstein 2008, pp. 89 et seqq.
159.
Effectively they do not determine which electric current they actually use but which electricity they pay for – which does, however, have an influence on the composition of the overall electricity supply.
160.
Sunstein and Reisch 2014, p. 157.
161.
Sunstein and Reisch 2014, p. 157.
162.
See Mathis and Burri 2016, pp. 139 et seqq.
163.
Möslein 2011, p. 482.
164.
On the anchor effect, see Mathis and Diriwächter 2011, p. 61.
165.
Möslein 2010, p. 2864.
166.
Sunstein and Thaler 2003, p. 1175.
167.
Grunewald 2013, pp. 183 et seq.
168.
In more depth on this, see Mathis 2009, pp. 71 et seqq.
169.
Cf. Veljanovski 1982, p. 54. It should be mentioned that there are various interpretations of the Coase Theorem; on this, see Cooter 1998, pp. 457 et seq.
170.
Siemer 1999, p. 7.
171.
Stigler 1996, p. 113.
172.
Kirchgässner and Schneider 2003, p. 387.
173.
Kirchgässner and Schneider 2003, p. 387.
174.
Weck-Hannemann 2008, p. 574.
175.
Kirchgässner 1994, p. 474.
176.
Wicke 1993, p. 197.
177.
Frey B.S. 1992, p. 114.
178.
De Sépibus 2003, p. 35.
179.
Feess and Seeliger 2013, p. 57.
180.
Rogall 2004, p. 50.
181.
Rogall 2004, p. 50.
182.
Wicke 1993, pp. 197 et seqq.
183.
Endres 2013, p. 130.
184.
De Sépibus 2003, p. 42.
185.
Rogall 2004, p. 51.
186.
Wicke 1993, p. 201; Endres 2013, p. 130 and p. 170.
187.
Frey B.S. 1992, p. 114.
188.
Weck-Hannemann 2008, p. 571.
189.
Frey B.S. 1992, p. 112.
190.
Frey B.S. 1992, p. 112.
191.
Cf. Frey B.S. 1992, p. 119.
192.
Pigou 1932, pp. 183 et seqq.
193.
Cf. Schumann 1999, p. 38 and pp. 492 et seqq.
194.
Frey B.S. 1992, p. 116.
195.
Baumol and Oates 1971, p. 42.
196.
Feess and Seeliger 2013, p. 77; Endres 2013, p. 171.
197.
Frey B.S. 1992, p. 117.
198.
Feess and Seeliger 2013, p. 72.
199.
The existence of behavioural alternatives is thus an important precondition for the imposition of levies: avoidant reactions must be technically possible, legally permissible and practicable. De Sépibus 2003, p. 56.
200.
On the whole topic, see Endres 2013, p. 147.
201.
De Sépibus 2003, p. 54; Endres 2013, pp. 149 et seq.
202.
Binder 1999, p. 193.
203.
Weck-Hannemann 2008, p. 571.
204.
Gerken and Renner 1996, p. 84.
205.
Gerken and Renner 1996, p. 84.
206.
It must be borne in mind, however, that by no means all subsidies that occur in practice serve this purpose of internalising external effects.
207.
Which implies de facto that the property rights are allocated to the polluters. Frey B.S. 1992, p. 120. Furthermore, subsidies can also be granted in order to promote environmentally friendly behaviour.
208.
Baumol and Oates 1971, pp. 42 et seqq.
209.
Frey B.S. 1992, pp. 119 et seq.
210.
Boie 2006, pp. 156 et seq.
211.
The certificate solution was first proposed in 1968 by the Canadian economist John Harkness Dales for the reduction of water pollution. Jacobs R. 1997, p. 33.
212.
Diehr 2006, p. 27; Feess and Seeliger 2013, p. 119.
213.
Diehr 2006, p. 27 and p. 30.
214.
Diehr 2006, p. 27. On the risks of high transaction costs in a certificate system see Jacobs R. 1997, pp. 90 et seqq.
215.
Adolf 2008, p. 329.
216.
Wicke 1993, p. 241.
217.
Endres 2013, p. 133. In this context it must be borne in mind that controls of the quantities of emissions must be carried out.
218.
Jacobs R. 1997, p. 65.
219.
Jacobs R. 1997, p. 33. In contrast, environmental levies are referred to as price-based solutions. The quantity-based solution operates as the inverse of the price-based solutions: whereas quantity-based solutions specify the quantity of pollutants and an appropriate price is established, for price-based solutions a pollutant price is specified, and it is left to the companies to decide how much of the pollutant to demand (as a production factor). Feess and Seeliger 2013, p. 119; Frey B.S. 1992, p. 121; Endres 2013, p. 150.
220.
Frey B.S. 1992, p. 121; Diehr 2006, p. 40; Adolf 2008, p. 328.
221.
Diehr 2006, p. 36. On the income and welfare effects of the type of distribution, see also Perman et al. 2003, pp. 224 et seqq.
222.
Noll 1973, p. 137; Feess and Seeliger 2013, p. 120.
223.
On the various initial allocation procedures, see Diehr 2006, pp. 36 et seq.
224.
Diehr 2006, p. 38.
225.
Cansier 1998, p. 99.
226.
Boie 2006, p. 160.
227.
Diehr 2006, p. 39.
228.
Cansier 1998, p. 99.
229.
Boie 2006, p. 160.
230.
Diehr 2006, p. 37.
231.
Mühlbauer 2008, pp. 27 et seq.
232.
Feess and Seeliger 2013, p. 119.
233.
Endres 2013, p. 150; Jacobs R. 1997, p. 55.
234.
Jacobs R. 1997, p. 61.
235.
Jacobs R. 1997, p. 68; Endres 2013, p. 133.
236.
Frey B.S. 1992, p. 122.
237.
Jacobs R. 1997, p. 65.
238.
Binder 1999, pp. 192 et seq.
239.
Binder 1999, p. 194. Opponents of the certificate solution model argue to good psychological effect against its introduction by talking about “selling the environment”. Wicke 1993, p. 442.
240.
Feess and Seeliger 2013, p. 155.
241.
Mathis 2009, pp. 79 et seq.
242.
On the whole topic, see Feess and Seeliger 2013, p. 155; Mathis 2009, p. 80.
243.
Endres and Staiger 1995, p. 79.
244.
On the whole topic, see Jacobs R. 1997, p. 16.
245.
On the whole topic, see Feess and Seeliger 2013, p. 155.
246.
On this, see Mathis 2009, pp. 90 et seqq.
247.
Faure 2012, p. 6.
248.
Faure 2012, p. 6.
249.
On the whole topic, see Jacobs R. 1997, p. 17.
250.
Faure 2012, pp. 11 et seq.
251.
Frey B.S. 1992, p. 206.
252.
Weck-Hannemann 2008, p. 571.
253.
Schneider and Weck-Hannemann 2005, pp. 265 et seq.
254.
Schneider and Weck-Hannemann 2005, p. 266.

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Klaus Mathis

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Mathis, K. (2017). Sustainable Development, Economic Growth and Environmental Regulation. In: Mathis, K., Huber, B. (eds) Environmental Law and Economics. Economic Analysis of Law in European Legal Scholarship, vol 4. Springer, Cham. https://doi.org/10.1007/978-3-319-50932-7_1

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