Edited by Ehtisham Ahmad and Giorgio Brosio
Chapter 18: Decentralization and the Environment
Silvana Dalmazzone1 Introduction The issue of how to allocate powers over environmental policies at different levels of government has received attention, so far, mainly within the framework of the literature on fiscal federalism. The grounds for arguing in favour of the decentralization of public sector responsibilities include the fact that most public goods are local, that their production does not exhibit important economies of scale, and that there is a possibility of tailoring the supply of public goods to citizen preferences that are heterogeneous across jurisdictions, and of avoiding the inefficiency of imposing a uniform national standard in the face of locally different marginal costs of provision. These grounds are applicable directly to the regulation of activities that affect the environment. However, there has been little interchange between these studies and the considerable body of literature dealing specifically with the interactions between economic activities and environmental resources. This chapter focuses largely on the issues relating to pollution control, the area with which most of the environmental federalism literature has been concerned. To some extent the considerations stemming from analyses of optimal jurisdiction over air and water quality are applicable also to issues pertaining more generally to natural resources, such as forest management, wildlife conservation, and the exploitation of oil, gas and fisheries. Wildlife populations with large territories that cross jurisdictional boundaries pose problems that are in some ways similar to transboundary pollution. The implications of an economic analysis of global pollution may have a bearing also for policies about endangered...
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