ABSTRACT
Governments are bound by numerous international conventions concerning the environment and the use of natural resources in particular (see Chapter 10) and investments, political relations, and trade (e.g., the General Agreement on Tariffs and Trade [GATT], the World Trade Organization [WTO]) in general. At least two distinct sets of factors affect domestic environmental policymaking imposed by international regulations: international externalities and the trade, investments, and other economic relations between countries that may indirectly restrict local policymaking. International policymaking plays a necessary role in the provision of public goods and in dealing with problems of transboundary or global pollution. The literature on fiscal federalism indicates that the case for harmonization or international policy is not so strong when pollutants are purely local (Amacher 1998b; Murty 1996; Oates 1972; Oates and Schwab 1996).
