Economic Dynamics of Environmental Law

David M. Driesen, ECONOMIC DYNAMICS OF ENVIRONMENTAL LAW, MIT Press, 2003

Posted: 24 Mar 2003

See all articles by David M. Driesen

David M. Driesen

Syracuse University College of Law

Abstract

The Economic Dynamics of Environmental Law proposes an alternative to static efficiency-based analysis and policy prescription, focusing primarily upon the environmental law example. It argues for an approach that takes change over time seriously.

In particular, an economic dynamic exists that tends to diminish environmental quality over time, principally through increased consumption and population growth. For that reason environmental policy should compensate for these tendencies by encouraging pro-environmental innovation, which the free market often fails to foster. The literature has blurred attention to the innovation problem by failing to acknowledge the tension between fostering innovation beneficial for the long-term and regulation aimed at short term efficiency. Environmental policy cannot foster innovation by treating each regulatory decision as a separate transaction governed by principles of allocative efficiency. Rather, environmental policy-makers should aim to address this larger picture by securing a sufficient number of environmentally positive decisions to countervail numerous private decisions that tend to degrade the environment.

This book employs an institutional economic framework, placing some emphasis on Douglas North's idea of adaptive efficiency, to analyze how to think about the environmental law's economic dynamic. It critiques cost-benefit analysis, emissions trading, and free trade-based restraints on environmental protection. It uses the free market as a model, not of efficiency, but of a dynamic encouraging innovation and adaptation in the face of uncertainty. And it urges consideration of a variety of reforms based on economic dynamic analysis. This book contends that its economic dynamic theory offers a viable alternative to policy prescription based on a neoclassical economic framework in a variety of areas, and includes an application of the theory to the law of regulated industries.

Keywords: cost-benefit analysis, institutional economics, environmental law, environmental policy, adaptive efficiency, regulation, risk regulation, emissions trading, economic incentives, free trade, allocative efficiency, cost effectiveness, innovation, technology policy, administrative law, public choice

JEL Classification: B52,D61,D62,D73,F18,I18,K23,K00,K32,O31,O38

Suggested Citation

Driesen, David M., Economic Dynamics of Environmental Law. David M. Driesen, ECONOMIC DYNAMICS OF ENVIRONMENTAL LAW, MIT Press, 2003, Available at SSRN: https://ssrn.com/abstract=389800

David M. Driesen (Contact Author)

Syracuse University College of Law ( email )

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