Toward Optimal Environmental Governance

Abstract

Better environmental results depend less on fine tuning theories of environmental federalism than on improving regulatory performance. Simply put, how we regulate is more important than where we regulata Current environmental policy efforts fall short for a number of reasons: technical and information shortcomings, "structural" or jurisdictional mismatches, and public choice distortions. In this Article, Professor Daniel Esty argues that a theory of optimal environmental governance must seek to address each of these sources of regulatory failure. Improved results depend, in par on developing a better capacity to delineate, exchange and enforce environmental property rights. Because a property rightsbased environmental regime will not always suffice governmental intervention may be necessary to mitigate market failures and to improve social welfare. But such intervention may lead to regulatory failures of various types. A theory of optimal environmental governance must therefore seek to minimize the welfare losses from the full range of regulatory shortcomings through strategies that: (1) address problems at a range of geographic scales; (2) generate a mix of regulatory "competition" and "cooperation" both horizontally and vertically; (3) remedy information failures (an especially important category since policymaking today often falls short for lack of good data and because technological advances offer considerable promise in allowing us to fill analytic gaps in the future); and (4) promote an appropriate mix of public engagement and delegation in the policymaking process. Finally, optimal environmental governance not only must minimize welfare losses from market and regulatory failures but also must attend to other virtues and sources of social welfare. The demands of better environmental performance must be balanced against other competing goals of conmunities such as justice, equity, and civic republicanism. This Article maps the current terrain and charts a path toward such optimal environmental governance.