Vertical fiscal externalities and the environment

We show that imposition of a state-level environmental tax in a federation crowds out pre-existing federal taxes. We explain how this vertical fiscal externality can lead unilateral state-level environmental policy to generate a welfare gain in the implementing state, at the expense of other states, even absent any environmental benefits. Using a computable general equilibrium model of the Canadian federation, we show that vertical fiscal externalities can be the major determinant of the welfare change following environmental policy implementation by a state government. Our numerical simulations indicate that – as a consequence of vertical fiscal externalities – state governments can reduce greenhouse gas emissions by over 20 percent without any net cost to themselves.     

Fiscal incentives for Australian bushland

The clearing of over 80% of the native vegetation from Australian agricultural areas has contributed significantly to the degradation classification applied to more than half this land. Soil erosion, siltation, and salinity damage continue to increase yearly. This situation not only threatens the productivity of the farm sector but has contributed to the estimated loss of 78 species of native flora, endangerment of an additional 2206 species, and the loss of 20 species of Australia's marsupials.Private returns diverge from social returns because the action (or inaction) of farmers has an impact upon others, both now and in the future. There is justification, therefore, for the public sector to intervene on behalf of society in an attempt to influence private decision making for the social good. This article argues for increased incentives from the public sector in Australia to encourage the voluntary cooperation of farmers to improve the balance between development and conservation. In contrast to the essentially temporary nature of man-made measures such as flood-mitigating capital works, increasing the area set aside to native bushland offers scope for the permanent stewardship of the resource—land.     

The Supreme Court,the commerce clause,and natural resources

The Supreme Court's interpretation of the commerce clause controls the balance of power between state and federal governments in the United States. An understanding of the relationship between the different government levels is essential for resource managers concerned with resource and environmental issues. This study examines selected Supreme Court decisions between 1976 and 1988 to answer three questions raised by the commerce clause: (1) Is the regulated item an article of commerce? (2) Do state laws burden interstate commerce? (3) Is federal commerce regulation limited? The balance of power among the justices and the commerce clause theories affecting the federal role in resource management are also examined. Since ratification of the Constitution, the Supreme Court has continuously increased federal power, but states have power to act independently as long as contradictory federal laws do not exist and state law does not impermissively affect commerce. If Congress regulates an individual's use of resources, their power is unquestioned. Future Court decisions will not significantly reduce the federal role in resource management even if the Court's membership changes. Even the supporters of states' rights on the Court realize increased federal power is a necessary part of the country's evolution. The purpose of the commerce clause is to create a national economic unit with free location principles. The Court supports this purpose today and will in the future.     

Complementary safeguards for robust regional watershed governance in a federation: New York City and its municipal water supply

In federations such as the United States, governments at various levels are experimenting with new watershed governance arrangements to protect water quality for both ecosystem health and human consumption. Such arrangements may bring previously uncooperative governments together to credibly commit to resource protection under the auspices of new and intricate formal institutions. Given the risks of cooperation, theory indicates that a robust arrangement will contain means of holding governing actors accountable to each other. This paper examines a purportedly successful case, the New York City watershed governance arrangement, to identify how safeguards against intergovernmental opportunism promote lasting cooperation. Using the qualitative method of process tracing, this paper finds that the New York City watershed governance arrangement uses structural, judicial, and popular safeguards against opportunistic behaviors by governing actors that might threaten the resource or the arrangement. The results indicate that such safeguards are present and interact with other safeguards and rule institutions at the state and federal level to maintain compliance.     

Can David and Goliath Get Along? Federal Land in Local Places

It is often unclear what the role of a local jurisdiction is with regard to land use management on nearby federal properties. Yet federal lands clearly impact nearby local communities. The US Department of Energy (DOE), with over 100 sites across the United States with varying degrees of environmental contamination, may be in a very difficult position with regard to relationships with local government about land use. Yet few, if any, studies have examined DOE land use issues. This study asks: (1) In general, how do local planners feel about federal government relationships with them? (2) Do local planners feel differently about the DOE than they do about other federal agencies? (3) What reasons explain any differences observed in answer to the second question? To answer these questions, local planners were interviewed from communities adjacent to non-DOE federal properties, and their responses compared to those of planners located near DOE facilities in the same regions. Findings showed that compared to other federal agencies that own land in the same regions, the DOE is relatively poorer at actively involving local officials in land use decisions at its sites. Primary reasons are the historic legacy of a culture of secrecy, focus on mission, and especially the lack of experience, training, or mandates in local planning cooperation. Findings also suggest that this attitude is markedly stronger in areas west of the Rocky Mountains. Recommendations for improved federal–local communications include the development of a vision for local government involvement that is supported by top levels of management and filtered effectively to the site level.     

Climate change mitigation in Austria and Switzerland: The pitfalls of federalism in greening decentralized building policies

The present paper analyses and compares how federalism in Austria and Switzerland affected climate change mitigation in the fully decentralized building sectors of the two countries during the Kyoto Period (1990–2012). This is of interest because the environmental significance of federal political systems is still contested. We first review the literature on federalism in the context of environmental and climate policymaking, and we show that the effects of federal political systems can be positive or negative (depending on interactions between politics and problem characteristics). We then summarize the two qualitative country studies. By analysing who initiated and coordinated respective policies at what time and why, we show that respective policy changes neither emerged bottom-up nor diffused between provinces/cantons, although the latter are fully responsible for building policies. While most policy changes were triggered by federal and/or European Union interventions, the provinces/cantons usually delayed and/or watered down policy changes to smallest common denominator solutions. Based on these findings we conclude that the building sectors of the two countries became more efficient despite, not because of federalism. Against this background we recommend centralizing building policies, or to engage sub-national actors in national target-setting early on.     

Enforcing the Clean Water Act: The effect of state-level corruption on compliance

This paper uses an event study to examine the transition from federal to state management of the Clean Water Act (CWA). I find that, overall, the transition from federal to state control has little effect on facility compliance, measured by the violation rate. However, states with a long run prevalence of corruption see a large decrease in the violation rate after authorization relative to states without corruption. Alternative specifications support these findings. I explore whether the response to transition to state control differs across political ideology, GDP and income per capita, government size, environmental preferences and government management performance. None of these alternative state level characteristics seem to account for the observed difference.     

Institutions for Interstate Water Resources Management1

Abstract:  This paper evaluates alternative approaches to management of interstate water resources in the United States (U.S.), including interstate compacts, interstate associations, federal‐state partnerships, and federal‐interstate compacts. These governance structures provide alternatives to traditional federalism or U.S. Supreme Court litigation for addressing problems that transcend political boundaries and functional responsibilities. Interstate compacts can provide a forum for ongoing collaboration and are popular mechanisms for allocating water rights among the states. Federal‐interstate compacts, such as the Delaware River Basin Compact and federal‐state partnerships, such as the National Estuary Program, are also effective and complementary approaches to managing water resources. However, all of these approaches can only make modest improvements in managing water resources given the complicated and fragmented nature of our federalist system of government.