Environmental regulation in a federal system: Framing environmental policy in the European Union

Book abstract:

'Green issues without rose-coloured spectacles' might have been an alternative subtitle for this work which examines the balance between the costs and benefits of centralised and decentralised environmental policies.

Organised over nine chapters, including a very helpful introduction, the book can be divided into two parts. The first part examines how a political system, the EU, has affected the allocation of environmental regulatory authority and the part played by the principle of subsidiarity. It extends over chapters two, three and four. Chapter two examines the provisions in the treaties that allow Member States to maintain and enact their own national environmental measures. Subsidiarity is addressed in chapter three, which presents a theoretical and empirical analysis of its effects on European Community legislation. Chapter four relates the principle of subsidiarity to the public finance literature and illustrates that subsidiarity is not a question of either centralised or decentralised decision-making but involves a mixture of powers at different levels.

The second part scrutinises the basic economic reasoning in determining allocation of the environments regulatory powers discussed in Part one and goes on to explore the extent to which environmental regulations affect economic activity and whether governments engage in inter jurisdictional competition. Chapter five examines the proposition that central governments should let local governments control local externalities. The influence of environmental regulations on international trade and capital movements is addressed in chapter six, which provides an overview of both theoretical and empirical studies examining the question. Issues such as the environmental flight of capital and ecological dumping arising from imperfect competition are explored in chapter seven. The basic reasoning that International Environment Agreements (IEAs) are undermined by free-riding is challenged in chapter eight which illustrates that co-operation does take place and presents two factors that may enhance the chance of forming IEAs. The Conclusion provides a summary evaluation of the studies contained in earlier chapters and begs the question 'How can environmental regulatory authority be allocated most efficiently among federal and state governments?' The jury is still out on that one but it is suggested that economics alone will not provide the answer but rather a combination of law, economics and political science.

The book will interest scholars, students, economists, political scientists and policy makers engaged in environmental or EU studies.

Tim Jeppesen, PhD, is Project Manager at Kommunernes Revision, Denmark