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Institutions and Decision Making for Sustainable Development

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  • Basil Sharp

    ()
    (University of Auckland)

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    Abstract

    Economic theory provides a coherent framework for analysing the elements of growth and sustainable development. Robust policies and appropriate institutional structures are essential to achieving sustainable development. Environmental problems are rooted in failed markets and their resolution requires government taking some kind of action – to establish property rights, set standards of liability, apply polluter pays taxes, or regulate. There is ample evidence showing that market based instruments can achieve the same environmental outcome at considerably less cost relative to command and control. Rational policy must seriously consider the use of market-based instruments. A framework for considering the quality of institutional structures vis-à-vis achieving sustainable development is presented. The framework is applied to aspects of the Resource Management Act 1991. Although the Act aims to promote sustainable management it is the primary legal foundation for sustainable development policy. One result of the Act was to devolve a great deal of environmental management and policy to local government. To a limited extent the Act is permissive and creates opportunities for local and regional government to find effective and efficient ways of achieving environmental outcomes that suit their communities. There is a clear preference for command and control in situations where statute provides a legal framework for market based instruments. But the options for using market-based instruments are limited. There are instances where attempts by regional administrators to implement market-based instruments are thwarted either by statute or by coordination difficulties at higher levels of government. Barriers to using market-based instruments are identified along with suggestions for institutional reform.

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    File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2002/02-20/twp02-20.pdf
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    Bibliographic Info

    Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 02/20.

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    Length: 73 pages
    Date of creation: Sep 2002
    Date of revision:
    Handle: RePEc:nzt:nztwps:02/20

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    Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
    Phone: +64-4-472 2733
    Fax: +64-4-473 0982
    Web page: http://www.treasury.govt.nz
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    Related research

    Keywords: Sustainable development; institutions and decision-making; market-based incentives;

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    References

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