A Debate on Effective Environmental Governance: US v. China [Part 1]

Editor’s Note: This is Part 1 of a three part series on federal environmental governance. The series will examine what type of state is most effective at creating effective environmental policy and promoting sustainable development. Governments across the world have taken diverse approaches, from free-market reliance to regulatory guidance to environmental authoritarianism. More specifically, this series will discuss the approaches of how the world’s two largest emitters – the U.S. and China – have tackled environmental change, and what insights their successes and failures may have on effective environmental governance.


Environmental governance in the U.S. is shaped by democratic and capitalist forces. These both constrain and empower the U.S. government to promote effective environmental policy. Without the ability to strong-handedly enforce its opinions, the U.S. state has relied largely on an assortment of market-based and regulatory approaches to forward the national interest in environmental sustainability. However, some voices have called against governmental intervention in orchestrating environmental action entirely. In this article, I discuss some of the major approaches to environmental governance that have shaped U.S. policy.

Battle Over Markets

In 1970, the Nixon Administration started the modern era of U.S. environmental policy with the establishment of the Environmental Protection Agency (EPA). The EPA serves as the bureaucratic arm of the government responsible for the direction and enforcement of environmental regulation. Backlash came, however, from those who viewed environmental regulation as an infringement on the free market. Since then, U.S. environmental policy has been a battleground for the sanctity of markets.

Free market environmentalists argue that the free market is the best means by which to preserve the environment, rejecting the need for any form of government-backed environmental regulation. They argue that privately owned resources are well-maintained in the marketplace. Unowned or politically-controlled resources outside the market are poorly managed. In contrast, well-defined property rights to natural resources give owners – from individuals to large corporations – an incentive to avoid environmental damage, in alignment with their own self-interests.

President Reagan was a strong proponent of free market environmentalism. During his presidency from 1981 – 1989, he positioned the U.S. government to take actions that restricted its direct regulatory power. Viewing the EPA as a harmful waste of resources, Reagan cut the agency’s budget by 22% and laid off many of the agency’s employees. At the same time, Reagan promoted the incorporation of environmental resources into the market, for example claiming U.S. sovereign rights to all coastal resources 200 miles offshore. His 1982 Coastal Barrier Resources Act cut federal subsidies for development on designated coastal barriers, as a free market method to protect natural resources and reduce wasteful federal expenditures.

Others have argued against the idea that reliance on the free market can produce beneficial environmental outcomes. On the contrary, they say that environmental damages are examples of how markets fail to maximize the public welfare. Policy interventions are necessary to curb negative externalities like environmental change. The recent Obama administration has demonstrated these beliefs, enacting a flurry of environmental policies within the past three years. However, environmental regulation is not unique to liberal ideologies. Some of the most major environmental policy developments have come from Republican presidents. Nixon created the EPA, as previously discussed, while George H.W. Bush pushed forward the first large-scale cap-and-trade system for sulfur dioxide (SO2) emissions to address the problem of acid rain.

Market-Based vs. Command-and-Control Policy

While the debate between free market environmentalists and environmental policy advocates is ongoing, the United States government has predominantly taken the latter approach in supporting at least some form of environmental regulation. However, the specifics of what U.S. environmental law should be have varied significantly. Some administrations have pushed for “market-based” approaches, while others have relied on “command-and-control”.

Market-based approaches to environmental policy attempt to internalize environmental change into the market. The SO2 emissions cap-and-trade system, pushed forward by the George H.W. Bush administration, is an example of such an approach. The system creates an overall “cap” on the allowable level of emissions. Allowances (i.e. permits for pollution) are then auctioned off (or freely given) to individual companies and can be “traded” amongst companies, thereby making pollution a part of the market.

In contrast, “command-and-control” policies use rules and regulations that restrict business’s emissions levels according to set performance and design standards. The EPA’s 1970 Clean Air Act demonstrated the concept of command-and-control by setting national air quality standards and increasing federal authority to regulate hazardous air pollutants.

Persistent Political Challenges

Market-based policies like cap-and-trade are likely to be more cost-effective than command-and-control regulations. In his first term, Obama attempted to establish a national, economy-wide greenhouse gas emissions cap-and-trade system with the Waxman-Markey Bill. The bill would have set emission caps to reduce aggregate greenhouse gas emissions to 3% below their 2005 levels in 2012, with a long-term goal of 83% below 2005 levels in 2050. The bill passed the House of Representatives in a tight 219 to 212 vote in June 2009, but failed to make it through the Senate.

The bill’s failure to pass through the U.S.’s bipartisan legislature suggests that command-and-control policies may be more politically palatable at the national scale necessary to counter the significant damages of climate change. After the failure of the Waxman-Markey Bill, Obama instead moved towards command-and-control policies that could be enacted on the basis of executive power alone. In August 2015, he announced the Clean Power Plan in conjunction with the EPA. The plan promises to cut national carbon emissions from fossil fuel-fired power plants by 32 percent below 2005 levels by 2030. To achieve this, it requires states to meet specific individual standards set according to their current contributions towards national emissions.

The Clean Power Plan does incorporate market-based mechanisms into its regulatory structure. States are given flexibility to propose their own plans to meet emissions standards. If they fail to comply, they will be required to meet the EPA’s emissions restrictions on state power plants, with allowances for plants to trade credits within and outside of the state. This would, in essence, establish a de facto federal cap and trade system.

While the plan successfully avoided a legislative stalemate in being passed, enforcement of the plan has been fraught with legal battles and intense opposition from the coal, oil, and natural gas industries. The Supreme Court stayed the rule in February 2016, and 27 states sued the plan in West Virginia (et al) v. EPA (et al). Just recently (March 28th), Trump officially ordered the EPA to axe the plan. Evidently, command-and-control policies cannot circumvent the stalemate of competing interest groups in the U.S. either.

The challenges of both free market and command-and-control environmental policies made under the Obama administration show that neither approach is immune to political challenges. Environmental governance in the U.S. necessarily takes place within the context of many interest groups, from climate change-denying big business to grassroots environmental activists. Within this network of diverse and opposing interests, the U.S. government has attempted to promote effective environmental action while arbitrating the opinions of different individuals and groups. However, continued resistance from some has made it difficult to create long-lasting and effective changes.

In the next article of my series, I will discuss an alternative approach to environmental governance used by the Chinese government – one that uses strong-handed authoritarianism to enforce government-designed strategies for climate action, without opportunity for opposition.


Image courtesy of Flickr. Originally published by S&S on April 12, 2017.


Related posts