Type of Document	Dissertation
Author	Tavares, Antonio Fernando Freitas
URN	etd-09042003-183333
Title	State and Local Institutions and Environmental Policy: A Transaction Costs Analysis
Degree	Doctor of Philosophy
Department	Public Administration and Policy, School of
Advisory Committee	Advisor Name Title Richard Feiock Committee Chair Charles Barrileaux Committee Member Lance deHaven-Smith Committee Member Richard Chackerian Committee Member
Keywords	State and Local Environmental Policy
Date of Defense	2003-06-01
Availability	restricted
Abstract 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 theoretical framework argues that state-local relations can be thought as contracts between a principal (the state legislature) and a series of agents (local governments). This agency relationship is characterized by information asymmetry and different preferences between the principal and the agents. As a result, I argue that each state legislature will tailor the legislation to the specific characteristics of the state, including local institutions and sociodemographic characteristics. The match between the features of the approved legislation and state characteristics assures the minimization of economic and political transaction costs by state legislators. In other words, the legislation approved depends on a series of economic and political efficiency variables which, ultimately, determine the content and features of the law. With this in mind, 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 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 policy instruments enacted by local governments are specific of each policy area. Accordingly, the dissertation discusses the use of a group of solid waste management instruments (recycling, incineration, landfilling, and source reduction) and a group of growth ontrol/management tools (population/building caps, large lot zoning, urban service boundaries, impact fees, transfer of development rights, and incentive zoning). The preferences of local officials for one or several instruments depends on a series of factors. First, the choice can be motivated by economic efficiency reasons. In this case, the adoption of specific policy instruments helps local governments to deal with local market failures. Second, local officials choose the instrument or combination of instruments that allows them to minimize political transaction costs. In other words, local officials aiming at reelection choose the tool(s) that closely mirror the sociodemographic composition of each community. Finally, policy instrument choice is influenced or constrained by local institutions (form of government, system of election, and home rule status) and 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. In both local level analyses, it is possible to verify 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, perhaps 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. For the first time, this project applies the policy instruments approach to local policy choices. From this perspective, I was able to show the vast number of tools at the disposal of local officials to address each jurisdiction’s specific problems while reaching their political goals in the process. There is also potential for future work to extend this research to a larger set of policy instruments that communities employ in their efforts to control or manage development and to examine the influence of various interest groups and organizations in the community.
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