Power sharing and pollution control : coordinating policies among levels of government

Traditional approaches to pollution control emphasize the government's role in providing incentives to alter the behavior of relevant economic agents. But to exploit cost advantages at different levels of government, pollution control policies typically involve assigning a variety of responsibilities to different public agencies. These responsibilities can include choosing policy targets, controlling instruments, and developing and implementing strategies for monitoring and enforcement. A hierarchically decentralized management structure introduces problems of coordination because different agencies may have different objectives. These problems can be alleviated by modifying intergovernmental relations, particularly by using implicit and explicit financial transfers and by dividing initialproperty rights equally among local authorities to ensure that they will want to participate in the negotiating process. The author concludes that : a) no single level of government should be responsible for all environmental policy; b) coordination of government policies may be improved using intergovernmental incentive schemes; c) one can grant the local government financial autonomy, so that funds collected from enforcement are retained locally; d) one can affect the enforcement budget of a local regulator through control of lump sum transfers; and e) under decentralized control, command and control policies may be implemented more efficiently.