Politics and the Environment

  • David SwitzerEmail author
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-31816-5_2449-1


Negative Externality Environmental Justice Common Pool Resource Collective Action Problem Coase Theorem 
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Environmental politics concerns the development of political institutions to solve problems of negative externalities related to the use of natural resources, which occur when costs from some activity or decision are imposed on parties outside the activity or decision.


Environmental politics can most simply be defined as the politics of externalities. All environmental conflicts between humans, or even between humans and nonhumans, can be thought of as being produced by the existence of negative externalities. Sometimes called “spillover effects,” negative externalities occur when costs resulting from some activity or decision are imposed on parties outside of the activity or decision.

Two kinds of negative externalities can result in environmental problems. First, simple spillovers may occur when one party’s decision about the use of a natural resource immediately and negatively affects another party. An environmental example of this would be a factory dumping hazardous waste into a neighboring lot as a byproduct of production, and the members of the homes around the lot becoming sick because of their exposure to the waste. The owners of the homes surrounding the factory would not be involved in the decisions that led to the dumping of the hazardous waste, and would not benefit from production, but they would bear some of the costs. This can apply to nonhuman parties as well. When humans chop down trees, pollute water, or construct dams, they impose costs onto the nonhuman nature affected by these decisions. Any animals that are affected would bear the costs of the human decisions to change the natural environment.

A second problem that can result in negative externalities is the problem of common pool resources. These problems occur when many parties share a single resource in common, and those using it do not absorb all the costs of their activities. Any one party’s use of the resource imposes costs on the other owners of the resource. This is because whenever any one individual makes use of the resource, he or she is preventing someone else’s use. Efficient use of common pool resources can be difficult due to collective action problems involved in managing them. Collective action problems occur when individuals acting in their own self-interest results in an inefficient collective outcome for all. The individually optimal outcome leads to a suboptimal outcome for the collective. In this way, management of common pool resources closely resembles the classic scenario of the “prisoner’s dilemma,” where two men accused of a crime would collectively benefit from cooperating with each other but individually benefit from turning each other in. In this situation, the only equilibrium solution occurs when the prisoners turn on each other, even though it is the worst possible collective outcome.

The same logic that leads to a lack of cooperation in the prisoner’s dilemma applies at a larger scale with common pool resources. Rational self-interest leads to collective inefficiency. The classic case of a collective action problem in the use of a common pool resource is farmers grazing their cows on a field held in common. Each individual farmer has an incentive to overgraze the field, despite this leading to lower profits for everyone and the potential destruction of the field. It is the common pool resource problem that most think of when they think of environmental issues. Environmental politics involves examining how humans design (or fail to design) political institutions, both formal and informal, to deal with negative externalities that result from common pool resource problems and simple spillovers.

Solving the Problem of Externalities

Perhaps the most striking illustration of the collective action problems that occur in the management of common pool resources was made by Garrett Hardin in his 1968 article “The Tragedy of the Commons,” one of the most influential works of social science ever published. As he reflects on commons problems like the ones discussed above, Hardin argues that humans as a whole face a problem that mirrors that of the farmers and their cows. All humans share in a common resource in the earth itself and face a collective action problem in managing that collective resource. Each individual desires consumption of that resource and reproduction of their genes, and yet, Hardin argues this will collectively lead to overpopulation and a terrible outcome for all.

Almost all social scientists are familiar with Hardin’s illustration of the tragedy of the commons, but his explanation of the problem is only the first part of his argument. It is the less discussed, and more controversial, second part of his essay that concerns environmental politics as such. Hardin argues that the only solution to the collective tragedy that would result from continued common use of the earth is “mutual coercion.” It is only through centralized government force that humankind will be able to stop its insidious march towards overpopulation and overexploitation of resources. Indeed, Hardin argues that the “freedom to breed is intolerable” and that the only way to prevent overpopulation is vigorous government regulation and enforcement of reproduction. He makes similar arguments about common ownership of land, air, and water. In this way, Hardin introduced the fundamental issue of environmental politics to generations of social scientists. When faced with problems of environmental externalities, what kinds of political institutions can be designed to solve them? When individual self-interest will result in suboptimal collective outcomes, what political solutions can lead to optimal collective outcomes?

While Hardin’s solution of coercive regulation, also known as command and control regulation, is one possible institutional solution, it is certainly not the only one. The problem of externalities can also be defined as market failures. These occur when market incentives lead to inefficient outcomes. While Hardin’s solution to market failures is command and control regulation, market-based policy solutions have also been proposed. While command and control regulation can be costly and inefficient, many economists argue that market-based solutions allow for the maximization of net benefits when efficiency is the goal, and even when quantifiable benefit is not the goal, market-based solutions may allow for the minimization of costs. For much of the twentieth century, the most common market-based solution was Pigouvian taxation. Pigouvian taxation involves estimating the cost of the negative externality and imposing a tax equivalent to that cost. It is important to note that the tax is always on the pollution (or externality) and not on the activity that produced it. In the case of a power plant, the tax would be on the units of CO2 (or other emissions) produced and not on the amount of energy produced. The idea of the Pigouvian tax is that either polluters will pay for their negative externalities, thus fully addressing the costs of their activity, or they will figure out a way to prevent the externality from occurring.

In 1960, the efficiency of Pigouvian taxes was challenged in a seminal paper by Ronald Coase, “The Problem of Social Cost.” Coase is widely cited in policy debates but also widely misunderstood. The Coase theorem, which was developed out of the paper, suggests that any initial allocation of property rights will result in an efficient allocation of resources, if transaction costs are zero. Essentially, Coase argued that thinking of polluters and victims is incorrect when it comes to considerations of efficiency. Rather, he suggested that externalities are the result of joint behavior. Pollution can only lead to negative externalities if there is another party available to bear the costs (this ignores the possibility of the environment itself bearing the costs of externalities). He suggested that absent transaction costs (costs, such as uncertain information, imperfect communication, or costly enforcement, which hinder negotiated solutions), all that is necessary for an efficient result is to allocate rights to parties and let the market work itself out through negotiation, regardless of whether the polluter is given the right to pollute, or the party bearing the costs of pollution is given the right to not suffer the externality. He showed that in certain circumstances, Pigouvian taxes would actually lead to less efficient solutions.

Many have misinterpreted Coase to mean that government involvement in pollution is unnecessary and that the free market will figure out the best ways to solve pollution issues. On the contrary, since transaction costs are never equal to zero, the government has a robust role to play in reducing them. Additionally, it is the government’s responsibility to assign property rights in the first place. The 1990 Clean Air Act Amendments, which created the world’s first large-scale pollutant cap and trade system, regulating sulfur dioxide and nitrous oxide produced by coal fire power plants, is an example of an explicitly Coasean solution to an externality problem. Rather than use command and control regulation, or Pigouvian taxation, the act allocated rights to a certain amount of pollution through the cap on emissions and then let a market decide how that pollution was allocated among the power plants. Allocating the rights and reducing transaction costs by implementing the market directly involved the government in the process of mitigating externalities. Despite often being misunderstood, Coase provided a new way of thinking about the problem of negative externalities. Rather than Pigouvian taxes or Hardin style command and control regulation, the Coase theorem suggests that the solution to problems of externalities may actually be to assign rights and then to reduce transaction costs, resulting in a more efficient allocation of resources.

While the Coase theorem is certainly a strong alternative to the Hardin solution of mutual coercion through regulation, perhaps the greatest challenge to Hardin’s central thesis is the work of Elinor Ostrom. The 2009 Nobel Laureate in Economics, and the first woman to receive the award, Ostrom’s work questioned Hardin’s idea that command and control governmental regulation would solve the problems in the use of common pool resources. She argued that since perfect information about resources is not always available to central government authorities, and since monitoring and enforcement can be expensive and difficult, it may not be possible for a centralized government to effectively regulate. Additionally, Ostrom recognized that markets are not a universal solution to common pool resource problems. Some common pool resources, like water and fisheries, are difficult to assign rights to. While it is possible to assign rights to particular kinds of use, the resource systems remain held in common.

Additionally, Ostrom recognized the fundamental issue of institutions meant to govern common pool resources is that their creation is subject to collective action problems as well. It is costly to create an institution, yet one does not need to be involved in its creation to benefit from its existence. Thus, while all collectively benefit from the existence of institutions that effectively govern common pool resources, there is little incentive for individuals to create them.

Ostrom argued that views like Hardin’s put little faith in human capacity for self-organization, and she recognized that groups may be capable of solving the tragedy of the commons through collective self-governance. Under certain circumstances, individuals may be able to design institutions to govern their own use of common pool resources and use those resources in sustainable ways. Ostrom’s goals were to figure out the characteristics of the sustainable self-governing institutions that help overcome collective action problems in the management of common pool resources, and to figure out under what conditions groups are able to overcome second-order collective action problems to create those institutions. In her 1990 book, Governing the Commons, Ostrom developed a series of design principles for sustainable institutions, including clearly defined boundaries, the presence of collective choice arrangements, graduated sanctions when rules are violated, and recognition of a right to self-organize by central governments, among a number of others. With regard to the development of the institutions themselves, she found that where resources were predictable and spatially limited, and appropriators had a common understanding of the resource and a sufficient level of trust within the community, institutions could be created. Ultimately, Ostrom argued that under certain circumstances, common ownership of resources need not end in tyranny or centralized coercive regulation. Rather, individuals are sometimes capable of creating institutions to govern themselves. The solution to externalities can involve self-governance.

Environmentalism as a Social Movement

Crucial to the development of institutions governing the negative externality of pollution was the development of environmentalism as a social movement. Something resembling what we today would call environmentalism sprung into existence around the middle of the nineteenth century, with individuals like Henry David Thoreau and George Perkins March discussing the natural world in their writings. The turn of the twentieth century saw the emergence of the conservation movement, with the founding of the Sierra Club in 1892 and the Audobon Society in 1905, and Teddy Roosevelt implementing conservation as national policy for the first time. As a part of the New Deal Policies passed during FDR’s presidency, the Civilian Conservation Corp, the Fish and Wildlife Services, and the Tennessee Valley Authority were created. It was not until the 1960s, however, that environmental issues became a major concern for Americans nationwide. Rachel Carson’s 1962 publication of Silent Spring, which brought to popular attention the negative effects of pesticides, specifically DDT, on the environment, is often credited with being a founding moment for the environmental movement in the United States. The 1965 documentary “Troubled Waters,” produced by the US Senate Subcommittee on Public Works, and the Cuyahoga River catching on fire in 1969, only added to the growing demands by the citizens for action on pollution.

As the 1960s came to an end, and the 1970s began, the growth of the environmental movement was something that the United States government could no longer ignore. Congress responded to citizen demands for pollution controls with the passage of a series of major environmental laws: The National Environmental Policy Act (NEPA) in 1969, the Clean Air Act (CAA) in 1970, the Clean Water Act (CWA) in 1972, and the Safe Drinking Water Act (SDWA) in 1974, among others. The Environmental Protection Agency was created by an executive order in 1970 to implement these laws. Environmental issues associated with the negative externalities of pollution existed long before the 1960s. Indeed, the Cuyahoga River had caught fire many times before 1969. However, it was only once the public became engaged with environmental issues, once the social movement of environmentalism sprang into action, that meaningful political steps were taken to mitigate pollution.

Since public support for environmental action has been instrumental in spurring government action on pollution, scholars from numerous disciplines have paid a great deal of attention to how public opinion about the environment has changed over time and how individuals form their opinions about the environment.

One of the most consistent findings of the literature on environmental public opinion is the “White Male Effect.” In many studies of public opinion, across numerous environmental issues, white men have been found to be far less concerned about the risks posed by environmental degradation and pollution than females and minorities. This finding also has been consistently found with respect to policy preferences. White men have been found to be far less willing to support policies that protect the environment from pollution, especially when it means potentially sacrificing economic development. Even more persistent than the effect of gender and race is the effect of political ideology and partisanship on environmental public opinion. Even in cross-national studies, it has consistently been found that individuals with left leaning political ideologies and party affiliations favor are far more likely to have concern about pollution, global warming, and other environmental issues, while right leaning individuals tend to be less concerned.

Implementation of Environmental Law and Environmental Federalism

As mentioned, the growth of the environmental movement throughout the 1960s led to the passage of a number of environmental laws by the US government meant to deal with the problems of negative externalities caused by pollution. The implementation of these laws has been the subject of scholarly inquiry. Once laws and institutions have been established to help curtail the costs of negative externalities, how effectively those laws are implemented is a crucial issue.

In the United States, the EPA is the bureaucratic agency responsible for the implementation of most of the major pieces of environmental legislation passed during the 1960s and 1970s. While the classic idea of bureaucracy is that laws passed during political processes are implemented free of politics by a bureaucratic agency filled with technocrats and professionals unaffected by electoral and political pressures, the literature has found that this is not always the case. The implementation of environmental policy by EPA has often been found to be subject to the political desires of elected officials. Through the use of appointments, budgetary controls, and new laws, the president and congress exert political control of the EPA and other bureaucracies. The extent of this control is up for debate, but it is clear that the EPA is not a purely technocratic and independent bureaucracy.

The EPA, however, is not solely responsible for the implementation of environmental law. One major element of the implementation environmental of environmental law is federalism. Federalism describes a system in which sovereignty and governance is shared between a central government and geographic units within it. In the United States, federalism concerns the relationship between the government in Washington D.C. and the 50 states. Most of the major environmental laws governing pollution in the US fall under a cooperative federalism framework in which the EPA (at the federal level) shares responsibility for implementation with the state governments. The EPA sets standards at the national level, and the state governments are able to create plans to implement those standards and potentially create even more stringent pollution controls. In most cases, it is the state governments that are responsible for monitoring pollution and enforcing punishments when violations are discovered.

This cooperative federalism framework did not develop out of careful policy design, but was rather the result of political negotiations. The laws would not have been able to pass without robust state involvement. This has had major implications for policy implementation. Scholars have long recognized that because strict enforcement of the environmental laws could potentially have damaging effects on state economies, the cooperative federalism framework could lead to state governments shirking their responsibilities in a “race to the bottom.” Because the pollution laws primarily target private firms, states that have greater enforcement of the laws would be less attractive than neighboring states, leading companies to target states that are less strict in enforcement. Indeed, this logic should seem quite familiar, as it is just another example of a collective action problem, except with states rather than individuals acting as parties. Each state acting in its own self-interest leads to a situation in which none of the states stringently enforce environmental laws and worse collective outcome for all. This idea of the “race to the bottom” also applies to the adoption of new policies at the state level covering environmental issues not regulated by federal law. Because it would risk economic development, states are unwilling to adopt policies that could damage businesses.

There is another side to this story, however. Rather than a “race to the bottom,” states may actually participate in a “race to the top,” where citizens are drawn to states that protect the environment and public health and avoid those that shirk their responsibilities. In this way, states may compete with their neighbors to limit pollution, rather than race to limit enforcement. This may also lead to states being sources of environmental policy innovation, seeking to get credit for moving past federal laws in protecting their environments. Indeed, it is the logic of the “race to the top” that leads to the idea of compensatory environmental federalism, where states create policies that address issues not covered by federal law. Neither “race to the bottom” nor “race to the top” fully captures the result of environmental federalism. What actually occurs is likely a mix, with some states competing to be leaders in the environmental field, while others compete to be as friendly to business as possible.

Environmental Justice

Beginning around the 1980s, scholarly and public attention began to shift towards the distribution of negative externalities from pollution. It became clear that pollution was not evenly distributed across the entire population, but rather focused in areas with poor and minority populations. This discovery led to scholarly investigation and activist involvement in Environmental Justice. Environmental Justice, or perhaps more accurately Environmental Injustice, focuses on how environmental risk is inequitably distributed across the population and how groups can overcome these issues.

The first empirical analysis to systematically address the unequal distribution of environmental risk was a 1987 study by the United Church of Christ’s commission on Racial Justice, which found that toxic waste sites were often located near poor and minority communities. Other early studies emphasized the placement of Treatment, Storage, and Disposal Facilities (TSDFs), supporting the original analysis in finding that they were disproportionately located near poor and minority communities. While much of the environmental justice literature considers siting decisions of this kind, a more recent focus of the literature is on the potentially inequitable implementation of the major pieces of environmental legislation. Some studies have found evidence that courts and state environmental agencies are less stringent in their enforcement of environmental regulations, and that government and firm compliance with the laws is less in poor and minority communities as well.

One of the enduring questions in the literature on environmental justice is whether environmental risk is distributed across racial/ethnic lines, or whether it is distributed across socioeconomic status. Some have argued that environmental inequities are really a case of environmental racism and that they are the result of intentional or unintentional biases against minority populations. Others have argued that any perceived racial biases are simply the result of minority populations generally living in poorer communities. More recently, however, scholars have begun to question whether the distinction between race/ethnicity and socioeconomic status is a useful one. Instead, some scholars have argued that it may be more useful to explore them together, and perhaps interactively. In this way, socioeconomic status may actually moderate the effect of race on environmental outcomes. The recent problems with drinking water in Flint, Michigan, a poor and majority black community, only ensure that issues of environmental justice will continue to be discussed in both the scholarly and activist communities.


As we move further into the twenty-first century, the importance of finding political solutions to externality problems will only continue to grow. Nothing illustrates this more than the growing challenge of climate change. Indeed, many consider the problem of climate change to be one of the greatest political challenges facing the world today. In many ways, the problem of climate change is reflective of the issue of negative externalities.

Climate change is fundamentally a problem of a common pool resource. All individuals and all nations share a common resource in the earth, and each country is incentivized to produce as much as possible in order to improve their economies. Through production, however, greenhouse gasses are produced that warm the globe and cause problems for all through rising sea levels, massive species extinctions, and higher levels of drought, among other problems. Because the costs of climate change are shared by all countries, no individual country benefits from reducing their emissions and potentially weakening their economies, leading to a situation in which the suboptimal outcome of climate change seems more likely. The ultimate political question of climate change is how to overcome the collective action problem wherein all countries are individually incentivized to continue emitting greenhouse gasses, but collectively would benefit if all reduced emissions.

As climate change illustrates, being able to understand how political institutions can solve the problem of negative externalities will only continue to grow in importance. In this way, the field of environmental politics will remain an important area of study for the foreseeable future.



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Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.Texas A&M UniversityCollege StationUSA