Abstract
This paper analyses the optimal division of environmental policymaking functions among the different levels of government. Using fiscal federalism theory, we identify the most appropriate level of decentralization in each case. The paper focuses on water resources policies, with an application to Spanish regions during the 1996–2001 period. A simulation allows the implementation of more efficient policies in the context of water resources. The results of the empirical exercise show that a decentralized scenario is preferred under strong differences among preferences.
Similar content being viewed by others
References
Braden JB, Feinzaig E, Proost S (1997) Introduction. In: Braden JB, Proost S (eds) The economic theory of environmental policy in a federal system, new horizons in environmental economics. Edward Elgar Publisher, Cheltenham, UK, pp 1–13
Burtraw D, Portney PR (1991) Environmental policy in the United States. In: Helm D (ed) Economic policy towards the environment. Blackwell Publishers, Oxford, UK, pp 289–320
Chung JW (1994) Utility and production functions. Blackwell, Oxford, UK
Cumberland JH (1979) Interregional pollution spillovers and consistency of environmental policy. In: Siebert H, Walter I, Zimmerman K (eds) Regional environmental policy: the economic issues. New York University Press, New York, pp 255–281
Cumberland JH (1981) Efficiency and equity in interregional environmental management. Rev Reg Stud 2:1–9
Dinan T, Cropper M, Portney P (1999) Environmental federalism: welfare losses from Uniform National drinking water standards. In: Panagariya A, Portney P, Schwab R (eds) Environmental and public economics: essays in honor of Wallace E. Oates. Edward Elgar Publisher, Cheltenham, UK, pp 13–31
Fredriksson P (2000) The sitting of hazardous waste facilities in Federal Systems. Environ Resour Econ 15:75–87
Fredriksson P, Gaston N (2000) Environmental governance in Federal Systems: the effects of capital competition and lobby groups. Econ Inquiry 38:501–514
Fredriksson P, List JA, Millimet DL (2003) Corruption, environmental policy and FDI: theory and evidence from the United States. J Public Econ 87:1407–1430
Fredriksson P, Millimet DL (2002) Strategic interaction and the determination of environmental policy across U.S. States. J Urban Econ 51:101–122
Fomby TB, Lin L (2006) A change point analysis of the impact of environmental federalism on aggregate air quality in the United States: 1940–1998. Econ Inquiry 44(1):109–120
Glazer A (1999) Local regulation may be excessively stringent. Reg Sci Urban Econ 29:553–558
Greenstone M (2002) The impacts of environmental regulations on industrial activity: evidence from the 1970 and 1977 clean air act amendments and the census of manufactures. J Political Econ 110:1175–1219
Grossman GM, Krueger AB (1995) Economics growth and the environment. Q J Econ 110(2):353–377
Henderson JV (1996) Effects of air quality regulation. Am Econ Rev 86:789–813
Khanna M (2001) Non mandatory approaches to environmental protection. J Econ Surv 15(3):291–324
Kunce M, Shogren JF (2005) On interjurisdictional competition and environmental federalism. J Environ Econ Manag 50:212–224
Levinson A (1997) A note on environmental federalism: interpreting some contradictory results. J Environ Econ Manag 33(3):359–366
List JA, Gerking S (2000) Regulatory federalism and U.S. environmental policies. J Reg Sci 40:453–471
List JA, Mason C (2001) Optimal institutional arrangements for pollution control: evidence from a differential game with asymmetric players. J Environ Econ Manag 42(3):277–296
List JA, Millimet DL, Fredriksson PG, McHone WW (2003) Effects of environmental regulations on manufacturing plant births: evidence from a propensity score matching estimator. Rev Econ Stat 85(4):944–952
Lyon T, Maxwell J (2002) Voluntary approaches to environmental regulation: a survey. In: Frazini M, Nicita A (eds) Economic institutions and environmental policy. Ashgate Publishing, Aldershot and Hampshire, UK, pp 75–120
Markusen JR, Morey ER, Olewiler N (1993) Environmental policy when market structure and plant locations are endogenous. J Environ Econ Manag 24:69–86
Markusen JR, Morey ER, Olewiler N (1995) Competition in regional environmental policies when plant locations are endogenous. J Public Econ 56:55–77
Millimet DL (2003) Assessing the empirical impact of environmental federalism. J Reg Sci 43(4):711–733
Millimet DL, List JA (2003) A natural experiment on the “race to the bottom” hypothesis: testing for stochastic dominance in temporal pollution trends. Oxf Bull Econ Stat 65(4):395–420
Mueller DC, Oates WE (1996) The management of the Chesapeake Bay: alternative structures for decision-making. In: Oates WE (ed) The economics of environmental regulation. Edward Elgar Publisher, Cheltenham, UK, pp 332–344
Oates WE (2002) A reconsideration of environmental federalism. In: List JA, De Zeeuw A (eds) Recent advances in environmental economics. Edward Elgar Publisher, Cheltenham, UK, pp 1–32
Oates WE, Schwab RM (1988) Economic competition among jurisdictions: efficiency-enhancing or distortion-inducing. J Public Econ 35:333–354
Oates WE, Schwab RM (1991) The allocative and distributive implications of local fiscal competition. In: Kenyon D, Kincaid J (eds) Competition among states and local governments. Urban Institute, Washington, DC, pp 127–145
Oates WE, Schwab RM (1996) The theory of regulatory federalism: the case of environmental management. In: Oates WE (ed) The economics of environmental regulation. Edward Elgar Publisher, Cheltenham, UK, pp 319–331
Peltzman S, Tideman TN (1972) Local versus national pollution control: note. Am Econ Rev 62:959–963
Segerson K, Li N (1999) Voluntary approaches to environmental protection. In: Folmer H, Tietenberg T (eds) The international yearbook of environmental and resource economics 1999/2000. Edward Elgar Publisher, Cheltenham, UK, pp 273–306
Selden TM, Song D (1994) Environmental quality and development: is there a Kuznets curve for air pollution emissions? J Environ Econ Manag 27(2):147–162
Shapiro P (1996) Which level of government should be responsible for environmental regulation? the federalist versus calhoun. In: Braden JB, Folmer H, Ulen TS (eds) Environmental policy with political and economic integration. The European Union and the United States. Edward Elgar Publisher, Cheltenham, UK, pp 132–144
Shapiro P, Petchey J (1997) The welfare economics of environmental regulatory: two parables on state vs. federal control. In: Braden JB, Proost S (eds) The economic theory of environmental policy in a federal system, new horizons in environmental economics. Edward Elgar Publisher, Cheltenham, UK, pp 122–146
Ulph A (2000) Harmonization and optimal environmental policy in a federal system with asymmetric information. J Environ Econ Manag 39:224–241
Wellish D (1995) Locational choices of firms and decentralized environmental policy with various instruments. J Urban Econ 37:290–310
Wildasin D (1989) Interjurisdictional capital mobility: fiscal externality and corrective subsidy. J Urban Econ 25:192–212
Wilson J (1986) A theory of interregional tax competition. J Urban Econ 19:296–315
Zodrow GR, Mieszkowski P (1986) Pigou, tiebout, property taxation and the underprovision of local public goods. J Urban Econ 19:356–370
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Garcia-Valiñas, M.A. What level of decentralization is better in an environmental context? An application to water policies. Environ Resource Econ 38, 213–229 (2007). https://doi.org/10.1007/s10640-006-9071-6
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10640-006-9071-6