The Economic Dynamics of Environmental Law: Cost-Benefit Analysis, Emissions Trading, and Priority-Setting

Abstract

An economic dynamic approach to environmental law offers a more promising avenue for regulatory reform that the current static-efficiency-based approach. An economic dynamic approach seeks to emulate the creativity and innovation that free markets sometimes produce, instead of the efficiency that the economists ascribe to it for purposes of economic modeling. Environmental law must cope with a predictable set of economic dynamics. Population and consumption increases tend to increase pollution and natural resource destruction over time while empowering dirty old industries. We need a reform agenda focused on regulatory design that encourages innovations adequate to cope with significant environmental change over time. Such an agenda would emphasize changes in regulatory process to reduce the influence of existing dirty industries, regulatory designs that encourage innovation, and creative efforts to circumvent problems with languid and sometimes ineffectual governmental decisionmaking processes.