Why Does Environmental Policy in Representative Democracies Tend to Be Inadequate? A Preliminary Public Choice Analysis

There is a widespread consensus among the most important players in developed countries (voters, politicians, producers, traditional and green interest groups and bureaucracies) that a shift towards an eco-social market economy is essential for sustainable growth. Nevertheless, market-based instruments have not been implemented satisfactorily in environmental policy yet. To identify the reasons for this insufficient implementation in the past decade the Public Choice theory is used. The players’ behavior is analyzed in order to show that their incentives for implementing market-based instruments in environmental policy instead of command-and-control measures are surprisingly weak. Knowing the obstacles to implementing market-based instruments provides valuable insights into how to overcome them.