Instrument choice in environmental policy: a comparative study of pollution taxes and tradable pollution rights in British Columbia, Germany, and the United States
Creators: name: Seeliger, Robert
Publisher: name: University of British Columbia
Year: 2008

description: Current theories of instrument choice in environmental policy suggest that policy makers choose policy instruments based on the distribution of costs and benefits in society. It is postulated that policy makers will select those policy instruments which confer concentrated benefits on interest groups that will return favours. Others suggest that instrument choice is an outcome of interest groups struggles. However, these approaches do not explain the variation of instrument choices across countries. This thesis is a comparative investigation of instrument choice situations, and actual instrument choices. Combining propositions of public choice theory, blame avoidance theory, and policy style analysis it studies the factors that determine the choice between pollution taxes and tradable pollution rights in three countries (Canada, Germany, and the United States). It is found that institutional structures, particularly the distribution of policy making authority among the various jurisdictions of a state, is the single most important variable. Federal states with centralized authority, e.g. the U.S., have a greater choice among policy instruments, unless other factors, such as ideology, exclude instrument options from the choice set. Federal states in which authority is functionally shared between federal and state governments based on historical precedent, such as Germany, are more likely to adopt pollution taxes. The implementation of tradable pollution rights would require substantial legislative changes at all levels of government. Although eswtablished patterns of interjurisdictional cooperation may facilitate such changes, it would still be a major undertaking that may not be justified by the potential macroeconomic gains associated with emission trading. In federal states with authority overlap-ping between federal government and provinces, such as Canada, the adoption of either pollution taxes or tradable pollution rights is extremely difficult. Unilateral actions could, in the case of pollution taxes, damage a province's competitive position vis-a-vis the other provinces, and thus the adoption is unlikely. Emission trading, however, is subject to the constraints of international agreements by the federal government, and consent by all other jurisdictions on the fixing of an emission cap. Provincial governments guard their jurisdictional authority and are more likely to choose policy instruments that resemble pollution taxes but will not disadvantage the provincial economy. Such taxation schemes will likely be means to raise revenue rather than serving to achieve specific environmental quality objectives. A preliminary survey of instrument choices in other countries suggests that this pattern is not restricted to federal states but possibly is indicative and representative of jurisdictional relationships within states in general. Aside from the distribution of policy making authority among jurisdictions, other factors influencing instrument choice are: agenda setting, ideology and political culture, and the structuring of the decision making process. In none of the case studies did the distribution of costs and benefits among stakeholder groups significantly affect policy instrument choice.