An Environmental Competition Statute
BEYOND ENVIRONMENTAL LAW, Alyson Flournoy & David Driesen, eds., Cambridge University Press, 2009
17 Pages Posted: 3 Apr 2009
Date Written: April 2, 2009
This chapter from a forthcoming Cambridge Press book, Beyond Environmental Law, proposes emulating free market dynamics with a new regulatory instrument, the Environmental Competition Statute. This statute would authorize any polluter making a pollution reduction to require a dirtier competitor to reimburse it for the full cost of making this improvement along with a preset profit margin. This creates an economic dynamic similar to that prevailing in very competitive markets. In such markets, those who innovate in effect take money from those who do not, by taking over a portion of their market share. This statute similarly allows environmental innovators to prosper at the expense of environmental laggards, thereby allowing environmental markets to function like other competitive markets.
This proposal has the potential to encourage contests to improve environmental quality comparable to the ongoing competition to realize other sorts of improvements. It aims to allow the capabilities of innovators free reign in improving environmental quality. It makes it possible for anybody reducing pollution to realize a profit from doing so. It systematically externalizes pollution control costs, just as polluters now externalize the costs of pollution. In short, an Environmental Competition Statute encourages competition to improve the environment.
This chapter discusses the problems with existing environmental law, including existing market mechanisms that this statute seeks to overcome. It provides a detailed description of a number of operation details. And it defends the idea against possible objections.
Keywords: market mechanisms, economic incentives, instrument choice, environmental econonomics, innovation
JEL Classification: K32, O38, Q38, Q48
Suggested Citation: Suggested Citation