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The Theory of Environmental Agreements and Taxes

CO2 Policy Performance in Comparative Perspective Martin Enevoldsen, formerly Assistant Professor of Public Policy, University of Aarhus, Denmark
Although there is a huge demand for accurate analysis of environmental policy outcomes in both the academic and policy-making communities, there is currently very little theoretical research on this issue. This ambitious book redresses the balance by constructing a new theoretical framework at the crossroads between economics and political science to account for the effectiveness of environmental governance. Drawing on insights from new institutional economics, environmental economics, collective action theory and social capital theory, the author analyses how policy outcomes are influenced by institutional factors that constrain and empower the target groups of environmental regulation.
Extent: 304 pp
Hardback Price: $156.00 Web: $140.40
Publication Date: 2005
ISBN: 978 1 84376 880 7
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  • Economics and Finance
  • Environmental Economics
  • Public Finance
  • Environment
  • Environmental Economics
Although there is a huge demand for accurate analysis of environmental policy outcomes in both the academic and policy-making communities, there is currently very little theoretical research on this issue. This ambitious book redresses the balance by constructing a new theoretical framework at the crossroads between economics and political science to account for the effectiveness of environmental governance. Drawing on insights from new institutional economics, environmental economics, collective action theory and social capital theory, the author analyses how policy outcomes are influenced by institutional factors that constrain and empower the target groups of environmental regulation.

This is the first attempt towards a general theoretical treatise of voluntary environmental agreements, based on a dual institutionalist approach that allows for comparisons between environmental taxes and agreements. The author systematically compares the performance of the radically different CO2 policy strategies of Austria, Denmark and the Netherlands – non-intervention, earmarked CO2 taxes and energy agreements. From this unique cross-national study, it is concluded that CO2 taxes are generally more effective than voluntary energy agreements which, if practised in specific institutional settings, will outperform laissez-faire policy alternatives.

This book will be required reading for environmental economists, political scientists and climate change researchers. It will also provide policymakers with useful empirical evidence and advice on how to design voluntary environmental agreements and green taxes to maximize environmental benefits.
‘Martin Enevoldsen offers a thorough and thought-provoking exploration of the theoretical properties of the most contested policy instruments in environmental policy. His comparative econometric analysis of CO2 emissions and policies in three small European states underlines the superiority of the tax approach from an environmental perspective.’
– Mikael Skou Andersen, Professor, National Environmental Research Institute, Denmark

‘Martin Enevoldsen’s book is a pioneering work that compares the impacts of various non-regulatory environmental strategies in achieving measurable pollution reductions. Much has been written on the theoretical virtues and drawbacks of green taxation versus the adoption of voluntary agreements when it comes to effective implementation of environmental goals. In convincing detail, this book makes the case for the effectiveness of environmental taxation, its barriers being primarily political in nature rather than economic. Green taxes are highly controversial even in the most environmentally conscious nations, particularly when they are regarded as a purely fiscal instrument. The successful Danish CO2 taxation on industry, which this study proves to be much more effective than the Dutch system of voluntary agreements or the Austrian laissez-faire policies, relied not only on the inducement of the CO2 tax itself; all of the tax revenue was ploughed back into industry as subsidies for investments in advanced energy saving technologies. Martin Enevoldsen’s book is simply a “must” for political scientists, environmental economists and environment policymakers.’
– Svend Auken, M.P. and former Danish Minister for Environment and Energy
Contents: Preface 1. Introduction 2. Approaches to Environmental Governance in Economics and Political Science 3. A Dual Institutionalist Approach 4. Voluntary Agreements and the Free-Rider Problem 5. Institutions, Social Capital, and Voluntary Environmental Agreements 6. On the Institutional Design and Effectiveness of Green Taxes 7. Comparative Analysis of CO2 Policies Towards the Industrial Sector 8. Indirect Regulation of Industrial CO2 Pollution in Austria, Denmark and the Netherlands 9. A Comparative Analysis of CO2 Policy Performance at the National Level 10. Econometric Analysis of Industrial CO2 Emissions Over the Period 1958–2000 11. The Micro-Level: Policy Stimulation of Cleaner Energy Technologies 12. Reflections on Theory and Policies Appendix 1: Statistical Data Sources Appendix 2: List of Interviewed Organizations References Index