Document Type

Chapter of Book

Publication Date

2010

Keywords

public choice, market theory, government, welfare, regulation, environmental problems, efficiency

Abstract

This paper is a draft of a chapter for a forthcoming book, Research Handbook in Public Law and Public Choice, edited by Daniel Farber and Anne Joseph O'Connell, to be published by Elgar. It reviews the public choice literature on environmental policy making, first generally and then with respect to four fundamental environmental policy questions: (1) whether or not government action is warranted; (2) if it is, the scope and stringency of the government action, including the manner in which a bureaucracy will implement and enforce any statutory standards; (3) the level of government that assumes responsibility; and (4) the type of regulation, or regulatory instrument, that government employs.

The review traces how public choice writing on these problems has been influenced by two evolutionary improvements in public choice thinking: (1) a shift from models that posit policy will always be dominated by concentrated economic interests to models that incorporate the possibility of broad-based citizen collective action under certain conditions; (2) a shift from models employing thick-rationality assumptions that take the preferences of actors to be defined exclusively in terms of their material self-interest, to models with thin-rationality assumptions that acknowledge the possibility that principled commitments, including to the general social welfare or to sound public policy, can form part of the preference set of many political actors. Empirical work has validated these theoretical and modeling improvements.

The models that are emerging from these two shifts remain faithful to public choice's fundamental orientation toward envisioning a "politics without romance," and they persist in analyzing public decision making by understanding the individual motives for action. At the same time, they acknowledge a fuller range of possibilities from government action than the simpler but less accurate rent-seeking models do. The simpler models predict only grim results from government decision making, suggesting that government action routinely fails to address environmental problems constructively and does so primarily as a means of transferring wealth to powerful economic interests away from the rest of us. Under the improved models, government can be responsive to the public's interests and the general welfare when conditions are right.

Public choice has always traced an intellectual lineage back to neoclassical market theory, which has made important contributions to environmental policy by developing a toolkit of environmental market-improving measures such as fees, pollution taxes, subsidies and cap-and-trade, along with analyzes of the pros and cons of each tool in light of the environmental problem to be addressed. Going forward, public choice research can make similar contributions to the study of how environmental policy is made if the newer public choice models are deployed to develop more systematic recommendations of feasible ways to improve the quality of governmental decision making.

Comments

This is pre-print of the article that appears in in Research Handbook on Public Choice and Public Law.