Chapter 12: The Political Economy of Environmental Regulation Flashcards
What 2 main obstacles that stand in the way of effective government action to control pollution?
- Imperfect Information
- Opportunity Political Influence
What shift took place in US environmental policy in 2016?
2016: Shift US Environmental Policy BIG
- Corrumption, but politicians are people, they have incentives and opinions
-“We want to achieve this outcome” = doesn’t give a plan on how
What is the process to pass environmental legislation in the US and Canada?
United States:
Step I: US congress passes bill
Step II: EPA drafts regulations
Step III: State governments implement and enforce regulations
Canada:
Parliament passes law, to regulate that → responsibility passed onto another body of government
- PBO (non political oganization) assess economic costs to compare w numbers given by industries
- Need to assess if the nums given by the industry are correct
- MC (given by the industry): overstate costs of cleanup to cleanup less
What is the EPA?
E.P.A.
- Founded 1970 as an independent agency w executive branch
- Employ 160,000 people in 10 offices and W DC
- Annual budget +$6 billion
- REquire develop, implement, and enforce thousands of regulations under dozens of different laws
Regulatory Process:
- US Regulatory Model: “Judicial” (Regulations can be challenged in court)
- Influenced at dozens points prior legal challenge
How does imperfect information affect legislation?
- Provided limited resources - needs priorities
- Sponsors limited research > turn to industry, environmental groups, or universtiies for data about costs and benefits
How good is this information?
Reponses to Reporting Bias Problem:
- Improve in-house analytic capability of agency
- Rely “incentive-compatible” reegulation:
Legislation where your incentive are compatible w my incentives
eg. give share of sales to employees at so they want to maximize revenue by cleaning up and giving good service
*eg. giving project certain quality cleanup to the country has to lowest cost → incentive to reduce costs to get contract*
How does Bureaucratic Discretion and Political Influence impact legislation?
Retain substantial discretion in regulatory decision making due to imperfect information
- Ambiguous and often contradictory goals
- Uncertain in scientific and economic analysis
Regulatory decisions impose substantial costs on industries, firms will devote resource influence process
Bureaucrats likely use positions to …
(1) Agency building
(2) External career building
- Revolving Door: many people working environmental agencies often go on to work firms in industry regulate
- have lot knowledge how governemnt and regulatory agencies work
(3) Job satisfaction
Ideology: *Environmental or free-market?* - Exercise of power and authority - Desire for “quite life” → dont want new legislation (disruption)
Is there is bias towards “over-regulation” or “under-regulation?
Who wins influence game?
Votes: Environmentalism (must contribute time/money)
Dollars: Industry
Therefore,
- businesses most power regulatory process
- Votes more power legislation process
legislation passed often stricker than should be → businesses chip away = efficient outcome
What is the Power of Dollars?
(Efficient)
Dollars used buy num of things influencing regulatory debates:
- Tech studies
- Lobbying staff
- Promise future jobs
- Access legislators and regulator
- Votes (ads)
Use money to convey opinion = best tool
Influence
What is the balance of power?
Environmentalists (sometimes) edge in legislative arena
Business dominate regulatory sphere
- Environmentalists, anticipating laws weakened upon implementation - try push through stringent goals
- Industry, galvanized by threat, pours more resourcees into mitigating regulatory impacts
Influence
How is gaining influence a Zero-Sum Game?
- Gains one party only come expense other
Leads parties overinvest resources in unproductive competition: lobbying
Regulatory Capture: Politicians captured by people supposed overseeing
- Ministery Environment end up being “captured” industry
- Hence, gov not up for job :(
How can influence be reduced in the political process?
- Eliminate status lobbying now holds as tax-deductible business expense
- Campaign finance reform could reduce efforts by all sides to gain advantage
- Environmental federalism: moving more responsibility to state level?
How did the EPA change due to the 2016 election?
Change in 2016: EPA goes “Industry-Friendly”
- Trump election signal end 45-year Bipartisan Consensus EPA develop regulations based scientific risk assessment & cost-benefit analysis
Flip to presumption that vitually all regulations are excessive - roll back more than 90 of them
Republic support declines - disappears
1970-1992: US Congress passes bipartisan series environmental protection laws - end UNFCC (1992)
1992-2010: R transforms gradually towards “industry-friendly” perspective
2016-…: Triumph of “industry-friendly” governance across the board
Why?
- Social media drives political polarization
- Industry $$
- Anti-elite populism discredits scientific judgement
What is the future of the EPA?
- Extreme partisanship - limit ability EPA return “normal”
- Accelerating Climage change + influence young R = restore bipartisan action
- New environmental regualtion will emerge at state level till then
What is the “ultimate solution?”
- Former USSR shows governments can create environmental disasters rival those generated private economic actors
Ex: many worst hazardous waste sties in US resulted US military) - In capitalist countries, governments not the primary source of environmental problems
Needed: effective government process forcing economic actors interalize externalities
Demand environmental protection expressed most efficitively thorugh democratic pressure on government
Better info, more democracy
