Environmental Policy for the Anthropocene: Information, Incentives, and Effective Institutions

Published: 
Thursday, October 20, 2016

Originally published in Environmental Policy in the Anthropocene (PERC, 2016). Download this full chapter here.

Even without knowing what environmental changes the Anthropocene will bring, we can consider what types of institutions will support effective policy in response to those environmental changes. In this chapter, we look to the public economics literature to see what it can tell us about the relative merits of centralized and decentralized decision-making in an era of not-yet-understood climate change. We argue that the optimal degree of centralization/decentralization will depend, in part, on (i) whether new information regarding the effects of climate change will be more easily observed at the central level or the local level and (ii) what types of institutions will be most effective in keeping the incentives of decision-makers aligned with the costs and benefits of their decisions. We explain how our main argument applies in the context of greenhouse gas emissions, water use, and the protection of wildlife habitat.

Type: 
Robert K. Fleck is a professor of economics at Clemson University and a 2016 Lone Mountain Fellow at PERC. His research combines theoretical and statistical analysis, and his major fields of interest include political economy, public finance, economic history, and development economics. 
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F. Andrew Hanssen is professor of economics at Clemson University and a 2016 Lone Mountain Fellow at PERC. His areas of research include institutions, law and economics, political economy, and industrial organization. Before getting a Ph.D., he was a management consultant, working in Europe, Latin America, and the Far East.
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