State and local institutions and environmental policy: A transaction cost analysis

This project focuses on the intergovernmental relationship between states and their local communities in environmental policy in the United States. The dissertation examines both state and local policy tool choices using a single theoretical framework recently developed by Avinash Dixit—a neoinstitutional transaction cost politics framework. Transaction cost politics (TCP) is a positive analytic approach to the study of public policy that combines elements of organizational economics and public choice.; The dissertation addresses two subjects within the environmental policy area: solid waste management and growth management. The first question I attempt to answer is: “To what extent do transaction costs of intergovernmental relations determine the degree to which states attempt to constrain and direct the behavior of local governments in environmental policy making?” The results of the empirical analysis of the 50 U.S. states indicate that state legislators share the risks of policy choices and decisions with local level officials and consider past and present local government practices when adopting specific legislation. In addition, the degree of professionalism of state legislatures seems to be an important factor in the approval of state environmental policy. Finally, the political transaction costs arguments are confirmed by the results regarding the influence of local institutions in state level policy making. The empirical findings indicate that, when one considers the effect of local institutions in the aggregate, the impact on state environmental policy is important, affecting the expectations and monitoring costs of state legislators.; The second major question this project attempts to answer is: “To what extent do transaction costs of local politics affect environmental policy instrument choices made by local governments?” I employ the concept of policy instrument/policy tool to convey the idea that local government officials have goals that are pursued by using certain means (“tools”). The preferences of local officials for one or several instruments depends on a series of factors: economic efficiency, political transaction costs, and influences or constraints imposed by local institutions (form of government, system of election, and home rule status) as well as state level constrains (state grants to local governments).; The empirical findings reveal that none of these factors can be ignored in explaining local environmental policy options. Both local level analyses of the 67 Florida counties indicate a pattern in terms of community characteristics which favors both recycling and growth management programs. In general, wealthier, more educated and racially homogeneous communities are more likely to engage in environmental policy programs, because the concern of local officials is to maintain a high quality of living for their constituents and this can be best accomplished using specific policy tools.