Let Fifty Flowers Bloom: Transforming the States into Laboratories of Environmental Policy

Abstract

The fundamental problem with existing approaches to environmental regulation is that they are excessively centralized. As such, they exhibit most of the failings of Soviet-style command-and-control systems: excessive rigidity, inefficiency, diminishing marginal returns, poor prioritization, and so on. Given these problems, the most essential reforms of environmental policy are those that decentralize decision-making authority and responsibility. While state regulators are on the frontlines for the enforcement of much environmental regulation, key priority-setting and decision-making authority remains centralized in Washington, D.C. Genuine ecological experimentation, starting at the state and local level, is required to bring about the next generation of environmental reforms. This paper outlines one possible proposal to reform environmental policy by reopening the states as laboratories of environmental policy. Part II of this paper fleshes out the argument for decentralization, highlighting why vesting primary authority for most pollution control problems in the hands of state and local governments is preferable to maintaining control in Washington, D.C. Part III discusses some of the "reinvention" and decentralization efforts to date, and how they have failed to foster sufficient innovation to address current environmental needs. These failures suggest the need for more dramatic reform than has been considered to date. Part IV outlines a specific policy proposal: environmental forbearance. This proposal, modeled on the flexibility-enhancing provisions of the Communications Act, would provide states a means of getting legal authority to develop and implement new environmental policy ideas and set new environmental priorities. Part V discusses the dominant critiques of devolving regulatory authority to the states and how, if at all, these criticisms should impact the forbearance proposal.

Keywords: federalism, environment, devolution

JEL Classification: H7, K32, Q2