Environmental Regulation in a Federal System

Environmental Regulation in a Federal System

Framing Environmental Policy in the European Union

New Horizons in Environmental Economics series

Tim Jeppesen

In this important book Tim Jeppesen investigates environmental regulation in a federal system and addresses the underlying question of whether regulation should be decided centrally, by EU institutions, or de-centrally, by individual member states. Whilst simple economic reasoning presumes that transboundary externalities require central solutions and local externalities need local solutions, the author finds that the real answer is much more complicated.

Chapter 4: Centralized or Decentralized European Environmental Policy?

Tim Jeppesen

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental governance and regulation


1. INTRODUCTION The creation of the internal market in the Community at the beginning of the 1990s has affected the national choice of environmental policy instruments. Product standards covering mobile emission sources, such as cosmetics containing CFCs, or commercial products containing polluting substances, will be environmentally ineffective due to the principle of mutual recognition. To the extent that this principle applies in the Community, the result is that products which fail to meet the standards set by one Member State cannot be prevented from being imported from other Member States, thereby undermining stricter national environmental standards. However, at the beginning of the 1990s the principle of subsidiarity entered the political agenda in the Community as an instrument of decentralization and a guarantee that the decisions were to be taken as close as possible to the citizen. Thus a balance has to be found between, on the one hand, the economic advantages of further European integration and, on the other, the advantages of giving Member States the possibility of setting their own national standards. This chapter examines how this balance is found. The process involves a choice between a centralized and a decentralized system of environmental decision-making. Which level of government should be responsible for environmental regulation in the Community? Should environmental standards and other regulatory instruments be decided by the Community, resulting in uniform measures to be satisfied in all Member States, or should they be decided by the Member States themselves? The economic literature on this...

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