People fear that devolving federal government functions to the states would lead to a “race to the bottom.” For example, states might weaken environmental regulations so that they can compete with other states for economic development. But David Konisky casts some doubt on such fears:
This article examines several of the key hypotheses suggested by the race to the bottom theory in environmental regulation. The research studies annual state-level enforcement of federal air, water, and hazardous waste pollution control regulation, covering the period from 1985-2000. Specifically, the study estimates a series of strategic interaction models to examine whether a state’s environmental regulatory behavior is influenced by the regulatory behavior of the states with which it competes for economic investment. While there is clear evidence of strategic interaction in state environmental regulatory behavior, states do not respond in the asymmetric manner suggested by the race to the bottom theory.
One might speculate that this pattern of states increasing their regulatory effort in responses to increases by their competitors still reflects economic competition, but economic competition that takes another form. States competing for mobile capital in non-polluting industries, such as those in the service sector – may want to provide amenities such as environmental protection. States advertise their public education and infrastructure to attract new firms, so perhaps they also highlight their “clean” environments. This pattern of behavior would support a race to the top type argument. Alternatively, the collective ratcheting upward of regulatory enforcement effort among economic competitor states may suggest policy coordination. There are several examples of states working together to address common environmental challenges, and it may be the case that they do so through their enforcement effort as well.
This paper is well worth reading.