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Global Environmental Governance: Mechanism Design Lessons from Corporate Governance

Dino Falaschetti

U.S. House of Representatives

January 10, 2013

FSU College of Law, Law, Business & Economics Paper
PERC Research Paper No. 13-2

Why is productive environmental governance so hard, and what might be learned from how corporate governance mechanisms address related problems? The present article addresses these questions, both in principle and in application to global fisheries. It does so first by reviewing how efficient governance mechanisms also create distributional effects, and are thus susceptible to unproductive political gaming. It then argues that, because the propensity for such gaming increases with the diversity of distributional preferences, mechanisms that have productively governed fisheries at a local scale may be politically infeasible at a global scale. Finally, it concludes by arguing that (i) these small-scale mechanisms share common characteristics with monitoring as a form of governance in business associations, (ii) information requirements and distributional conflict for such mechanisms become untenable as business associations scale to the corporate form, and (iii) corporate governance may thus rely more heavily on a type of assurance contract that, given its relatively weak reliance on monitoring and potentially stronger resistance to distributional interests, might also find productive applications in global environmental governance.

Number of Pages in PDF File: 27

Keywords: Global fisheries, environmental governance, social choice, political risk, law and economics, environmental finance, assurance contracts

JEL Classification: D02, D23, D78, K20, K32, Q28

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Date posted: January 12, 2013  

Suggested Citation

Falaschetti, Dino, Global Environmental Governance: Mechanism Design Lessons from Corporate Governance (January 10, 2013). FSU College of Law, Law, Business & Economics Paper; PERC Research Paper No. 13-2. Available at SSRN: http://ssrn.com/abstract=2199573 or http://dx.doi.org/10.2139/ssrn.2199573

Contact Information

Dino Falaschetti (Contact Author)
U.S. House of Representatives ( email )
Committee on Financial Services
2129 Rayburn House Office Building
Washington, DC District of Columbia 20515
United States
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