Governing the Environment

Governing the Environment

Salient Institutional Issues

New Horizons in Environmental Economics series

Edited by Albert Breton, Giorgio Brosio, Silvana Dalmazzone and Giovanna Garrone

Environmental policy, focusing on the control of pollution and on over-exploitation, easily overlooks the extensive range of interconnections between economic activities and natural systems. In this timely book, a number of specialists examine how crucial aspects of complex environmental problems and policy can be dealt with in decentralized governmental systems.

Chapter 6: Fashioning Entitlements: A Comparative Law and Economic Analysis of the Judicial Role in Environmental Centralization in the United States and Europe

Jason Scott Johnston and Michael G. Faure

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


Jason Scott Johnston and Michael G. Faure 1 INTRODUCTION This chapter describes the role of the judiciary in the centralization of environmental regulation in the US and in Europe. It analyzes the judicial role in environmental regulatory centralization – the steady shift of environmental regulatory authority to higher, more centralized levels of government – from an economic point of view. Our analysis is at times positive – attempting to explain the impact of courts on the incentives of private and public actors to pollute the natural environment – and at times normative – asking whether those incentives lead to efficient levels of pollution. We begin with early developments in the US. The reason we begin there is that this allows us to trace the evolution of the judicial role from a very activist period – when courts used the common law to fashion entitlements between polluters and victims – to later stages where regulatory centralization emerged at least in part because of the perceived failure of the old common law approach in an age of mass industrialization and frequent interstate pollution. An analysis of the role of the judiciary in creating effective incentives for environmental cost internalization begins with the common law of nuisance. Incarnated in ex post common law principles for balancing conflicting land uses and incorporated in local regulations, nuisance law was the dominant instrument for pollution control for most of US history. Nuisance law was also the main instrument for pollution control in many European legal systems. Case law and legal doctrine in many...

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