How Well Are Authorities Suited to Prevent Damage to the Environment?

Abstract

Environment protection in Austria is still carried out mainly by public authorities. This article focuses on preventive measures. It takes up the approval of new or rebuilt plants according to the Trade Act as an illustration for a considerable number of similar procedures. Although there is an ongoing discussion of the advantages and disadvantages of those procedures, no attempt has been made yet to examine their contents from a strictly economic perspective. Therefore, the article extracts the economic consequences from the wording of the law and examines whether they can give rise to efficient environment protection, taking into consideration the goals and constraints of all the participants in the negotiations. It is found that in principle the procedure allows for efficient solutions, despite the disadvantages, which are frequently observed in the course of its application. Moreover, it is argued that some features of the procedure, such as the selection of an appropriate techn ology on behalf of an applicant as well as negotiations with the potential pollutees have not yet been interpreted correctly. An assessment against more market-orientated measures, which are favored nowadays, ought to take into consideration that they generally cannot be implemented without support from the government.