Ecosystems, legal systems, and governance: an institutional perspective

Economic analysis can bring important new insights to institutional design in the environmental arena. New perspectives on the environmental repercussions of human activities have given rise to new questions about how best to characterize and value the benefits to human society of ecosystem dynamics, and how to trace the causal relationships between human and natural systems. Scientific understandings of climate change and the irreversibility of anthropogenic impacts from carbon emissions, in particular, have brought renewed attention to the potential outcomes of different institutional arrangements. At the same time, technological advances in environmental monitoring, communications, and data processing have opened up new possibilities for coordinating automated responses across property and political boundaries. Economists have important roles to play in assessing the costs, benefits, and distributional effects of institutional arrangements that orchestrate the interactions of human activities and natural systems. By studying variations across locations or over time, paying close attention to the allocation of property rights, the configuration of jurisdictional boundaries, and the implications of externalities, economists can offer important observations about the structure and environmental repercussions of legal systems and other forms of governance.