The case for an independent environmental agency

In recent decades, Western democracies have seen a trend towards the use of independent agencies (IAs) to insulate certain policy issues from direct political influence. Of course, such delegations can be revoked, but they do put the decisions in question at arm’s length from elected representatives for the time being.

Given the emphasis on the accountability of elected representatives in a democracy, how can one justify such instances of delegation? Advocates of IAs claim that they will do a better job at attaining the policy objectives in question. In particular, this will be the case in policy areas where governments face commitments problems that will prevent them from adopting optimal policies. For example, modern monetary theory is built on the idea that elected representatives cannot credibly commit to an inflation target, because they will be tempted to use short-term monetary expansions in order to get re-elected.

My main goal in this blog is not to defend IAs as such, but rather to advance a conditional argument: If there are any policy fields where creating IAs is a good idea, then environmental policy to fight climate change will be among them. Two features of climate mitigation explain why governments should not be trusted to come up with effective policy in this domain. First, mitigation is costly, and politicians are reluctant to impose costs on the people they want to vote for them. Second, both the effects of pollution and the effects of climate change mitigation are felt with a time lag. For any climate change mitigation effort, this means that its costs occur now, whereas most of the benefits will only be reaped long after the next election.

Therefore, I submit, if there ever has been a clear-cut case for delegating to an IA, climate change mitigation is it. Just as we have an independent central bank, we should have an independent climate change agency with a mandate to limit global warming to 1.5 degrees centigrade. Climate change mitigation will clearly be more effective if it is science-based rather than constantly in search of elusive parliamentary majorities.

Sceptics are likely to raise the following objection. IAs are a good idea in technocratic policy areas, but they should not be employed in highly political contexts, notably ones that involve the redistribution of income and opportunities between different segments of the population and between different sectors of the economy. Climate change mitigation is such a field. A credible commitment to 1.5 degrees centigrade global warming would predictably turn a lot of fossil fuels into stranded assets, resulting into major job losses in that sector, while boosting greener alternatives. Such political decisions, so the objection runs, should be made by elected representatives.

At the heart of this objection lies a question concerning the legitimacy of political decision-making. What is more important, the fact that people have direct political input into decision-making through their elected representatives, or the quality of the decision made? Input legitimacy or output legitimacy? In many cases, there is no straightforward answer to this question.

However, the answer is clearer than it might seem at first sight in the case of climate change mitigation. Leaving climate change mitigation to politicians will make everyone worse off in the long run. On the other hand, if the relative losers of climate change mitigation receive compensation, they – just as everybody else – will be better off compared to the no-mitigation scenario. It is possible in principle to have output legitimacy with respect to climate mitigation at the same time as input legitimacy with respect to the distributive implications of this policy.

This points to the following conclusion: Delegation to an independent climate mitigation agency can be justified, provided elected representatives put in place programmes designed to compensate the losers from climate mitigation, such as retraining programmes or programmes to compensate for temporary loss of income. This is precisely what governments should have been doing all along, but they cannot commit to this optimal policy path on their own. It is high time that an independent climate mitigation agency give them a hand. Just like the actions of central banks, the policies of national climate mitigation agencies will need to be coordinated at the global level to live up to their full potential.

For a paper that elaborates on parts of the argument made in this entry, click here.