Environmental Federalism: A Panacea or Pandora's Box for Developing Countries?

29 Pages Posted: 20 Apr 2016

See all articles by Per G. Fredriksson

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics; Institute for Corruption Studies

Muthukumara Mani

World Bank

Jim Wollscheid

Texas A&M University - Kingsville

Date Written: February 1, 2006

Abstract

This paper provides new empirical evidence to the debate on the optimal locus of power over environmental policymaking in developing countries. The authors develop a simple lobby group model with mobile capital. The model predicts that a decentralized institutional structure leads to weaker environmental policy due to more intensive lobbying by capital owners and workers. They test this prediction using novel cross-sectional developing country data. The results are consistent with the prediction of the model, in particular for air pollution policies. The authors also find that the effect of decentralization declines with a greater degree of trade openness. They believe this is the first developing country evidence on the environmental policy effects of federalism.

Keywords: Environmental Economics & Policies, Economic Theory & Research, Banks & Banking Reform, Environmental Governance, Green Issues

Suggested Citation

Fredriksson, Per G. and Mani, Muthukumara and Wollscheid, Jim, Environmental Federalism: A Panacea or Pandora's Box for Developing Countries? (February 1, 2006). World Bank Policy Research Working Paper No. 3847, Available at SSRN: https://ssrn.com/abstract=922973

Per G. Fredriksson

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

Muthukumara Mani (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Jim Wollscheid

Texas A&M University - Kingsville ( email )

CBA #212
700 Unversity Blvd.
Kingsville, TX 78363
United States

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