Federalism and Environmental Protection: Case Studies for Drinking Water and Ground-Level Ozone

Author(s)
Congressional Budget Office
Date
1997
Abstract
In 1970, the federal government established the Environmental Protection Agency (EP A) and be- gan to take over a large part of the decisionmaking responsibility for environmental protection that had previously belonged to state and local governments. By 1974, the Congress had charged that newly created agency with the responsibility for establishing national standards for air pollutants, drinking water contami- nants, and water pollutants discharged by industries. Since 1974, federal decisionmaking responsibility has continued to expand. It now includes setting performance standards for treating and disposing of hazard- ous wastes, issuing regulations to reduce the risks from the production and use of commercial chemical sub- stances, and evaluating the need for cleaning up aban- doned hazardous waste sites. In recent years, the Congress has considered return- ing some decisionmaking authority for protecting the environment to state or local governments. Its motive stems from a variety of factors, including a desire to reduce the size and reach of the federal government as well as a concern about the cost of environmental pro- tection. One reflection of that interest is the recent Congressional action to address the growing number and cost of federal mandates with which state and local governments must comply. The political process determines the level of government that makes decisions about environmental protection or indeed any other public issue. The Constitution constrains the powers of the federal government over the states, but the distribution of power also reflects political forces that may favor centralized or decentralized government.Economic analysis cannot prescribe which level of government should be making the various decisions about environmental protection. Economics does, how- ever, help to answer the question of which level of gov- ernment is most likely to make efficient choices about environmental protection that is, choices that balance all of the relevant benefits and costs. Environmental federalism is a relatively new area of study in econom- ics. Although it does not capture all of the forces that affect governmental behavior, it offers useful guidelines about how to allocate decisionmaking authority in a way that improves economic efficiency.
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