Decentralization and the Environment

A part of the literature on fiscal federalism over the years has dealt with environmental policy as a particular case of the supply of public goods. The central issue is the identification of criteria on how to allocate powers and functions over environmental management at different levels of government. The main stream of literature focuses on the conditions needed to establish whether pollution standards and regulatory programs should be set and designed by central or rather by local governments. This paper provides a review of the debate and explores a few potential limits of the prevailing line of enquiry.