Endogenous decentralization in federal environmental policies

Abstract

Under most federal environmental laws and some health and safety laws, states may apply for "primacy," that is, authority to implement and enforce federal law, through a process known as "authorization." Some observers fear that states use authorization to adopt more lax policies in a regulatory "race to the bottom." This paper presents a simple model of the interaction between the federal and state governments in such a scheme of partial decentralization. Our model suggests that the authorization option may not only increase social welfare but also allow more stringent environmental regulations than would otherwise be feasible. Our model also suggests that the federal government may choose its policies so that states that desire more strict regulation authorize, while other states remain under the federal program. We then test this hypothesis using data on federal regulation of water pollution and of hazardous waste, which are two of the most important environmental programs to allow authorization. We find that states that prefer more environmental protection authorize more quickly under both policies. This evidence suggests that states seek authorization to adopt more strict policies instead of more lax policies compared to federal policies.

Are Republicans Bad for the Environment?

“…Given this, scholars have observed two competing phenomena in state environmental programs: a "race-to-the-top" and a "race-to-the-bottom" (Chang, Sigman, and Traub 2014;Konisky 2007;Konisky and Woods 2010;Koski 2007;Potoski 2001;Woods 2006aWoods , 2006b. In terms of the former, some states are willing to exceed federal environmental standards to satisfy growing citizen demands for environmental quality.…”

Environmental Regulation and Green Productivity: Evidence of the Moderating Effect of Chinese Environmental Decentralization

“…Local authorities autonomously manage environmental affairs and often choose to relax environmental regulation for capital inflow, resulting in environmental degradation [20]. Others hold that local governments implement stringent environmental regulations as the degree of ED increases [21], which helps to reduce regional environmental pollution [22]. At present, in most studies of the environmental effects of ED [19], only a few considered the joint effects on the environment and economic growth [23].…”

Environmental Regulation and Green Productivity: Evidence of the Moderating Effect of Chinese Environmental Decentralization

“…In terms of environmental decentralization, some researchers have argued that decentralization can decrease the efficiency of environmental policies [18] and increase environmental pollution [19] because when local authorities manage environmental affairs, they often choose to loosen environmental regulation for capital inflow, resulting in environmental degradation [20]. Others hold that local governments implement environmental regulations in a more stringent manner as the degree of environmental decentralization increases [21], which helps to reduce regional environmental pollution [22]. In effect, it is suggested that fiscal decentralization as a moderating variable can indirectly affect the effects of environmental regulations on environmental quality or economic growth [10,11].…”