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The federal government's role in making decisions about environmental protection has expanded greatly since the early 1970s. In recent years, however, the Congress has considered returning some decisionmaking authority back to state and local governments. An important question when assigning decisionmaking authority is, Which level of government is most likely to make decisions that balance all the relevant benefits and costs?

In response to a request from the Chairman of the Senate Committee on Environment and Public Works, this study examines several considerations that might help determine which level of government is most likely to make efficient decisions with regard to environmental protection. Those considerations are then applied to two case studies, the protection of drinking water and the control of ground-level ozone--the principal ingredient in smog.

Terry Dinan and Natalie Tawil of the Congressional Budget Office's (CBO's) Natural Resources and Commerce Division wrote the study under the supervision of Jan Paul Acton and Roger Hitchner. CBO analysts Kim Cawley, Marjorie Miller, and Pepper Santalucia made valuable comments, and Carl Muelmann provided assistance with data analysis. Outside CBO, Nancy Brooks, Maureen Cropper, Wallace Oates, and Paul Portney made helpful comments on various sections. In addition, several staff members of the Environmental Protection Agency's Office of Drinking Water and Office of Air Quality Planning and Standards provided useful information.

Paul L. Houts edited the manuscript, and Melissa Burman provided editorial assistance. Rae Wiseman typed the drafts. Kathryn Quattrone and Jill Sands prepared the study for publication. Laurie Brown prepared the electronic version for CBO's World Wide Web site.

June E. O'Neill
Director
November 1997
 
 

SUMMARY

ONE - ECONOMIC THEORY OF ENVIRONMENTAL FEDERALISM

• Defining Economic Efficiency
• Choosing the Extent of Environmental Control
• Deciding on the Methods of Pollution Control
• Determining and Funding the Basic Research Agenda

TWO - CASE STUDY OF DRINKING WATER PROTECTION

• Choosing Drinking Water Standards
• Deciding on the Methods of Treatment
• Determining and Funding the Basic Research Agenda

THREE - CASE STUDY OF GROUND-LEVEL OZONE CONTROL

• Background
• Choosing the Extent of Ozone Control
• Deciding on Methods of Control
• Determining and Funding the Basic Research Agenda

FOUR - CONCLUSIONS

• Choosing the Extent of Environmental Control
• Deciding on the Methods of Pollution Control
• Determining and Funding the Basic Research Agenda

APPENDIX

Is Federal Involvement in Inspection and Maintenance Programs Needed for Efficient Outcomes?
 

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