The Law and Economics of Environmental Federalism: Europe and the United States Compared

62 Pages Posted: 28 Feb 2008 Last revised: 3 May 2018

See all articles by Michael G. Faure

Michael G. Faure

University of Maastricht - Faculty of Law, Metro; Erasmus University Rotterdam (EUR) - Erasmus School of Law

Jason Scott Johnston

University of Virginia - School of Law; PERC - Property and Environment Research Center

Date Written: February 28, 2008

Abstract

This article describes the evolution and key features of the centralized environmental regulatory systems that emerged in the United States and Europe during the latter half of the twentieth century. It applies insights from the positive economic analysis of regulatory centralization in an attempt to explain a striking paradox found in both the European and American centralized environmental regulatory regimes: the fact that in both systems, centralized environmental regulation has been adopted not as a solution for transboundary pollution (interjursidictional externalities), but rather for pollution that is primarily local. The paper develops a positive account that explains the tendency of centralized environmental regulation to focus so paradoxically on localized pollution as due to inherent pressures for regional protectionism and redistribution within a (federalized) political system. Normatively, we provide an up-to-date survey of the theoretical and empirical work on the race-to-the-bottom story, and then apply normative economics to develop insight into the relative normative desirability of environmental regulatory centralization in the U.S. versus Europe. We believe that the relatively less centralized European system may have economic justification. On the other hand, the enlargement and increased economic integration of Europe raise some interesting questions, both normative questions regarding the desirability of centralized European environmental regulation, and positive questions regarding the future of European environmental law.

Keywords: law and economics, environmental federalism, regulatory centralization, comparative law and economics

JEL Classification: K32, D78, Q25

Suggested Citation

Faure, Michael G. and Johnston, Jason Scott, The Law and Economics of Environmental Federalism: Europe and the United States Compared (February 28, 2008). U of Penn, Inst for Law & Econ Research Paper No. 08-07. Available at SSRN: https://ssrn.com/abstract=1098493 or http://dx.doi.org/10.2139/ssrn.1098493

Michael G. Faure (Contact Author)

University of Maastricht - Faculty of Law, Metro ( email )

PO Box 616
Maastricht, 6200 MD
Netherlands
+31 - 43 - 388 30 60 (Phone)
+31 - 43 - 325 90 91 (Fax)

HOME PAGE: http://www.michaelfaure.be

Erasmus University Rotterdam (EUR) - Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

Jason Scott Johnston

University of Virginia - School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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