Multi-Level Environmental Governance: Exploring the Economic Explanations

Multi-level environmental governance has become a commonplace, yet few attempts have been made to explain in economic terms why it should have emerged. This article examines four economic explanations for multi-level environmental governance. The first explanation considers multi-level environmental governance as a solution for overcoming collective action challenges when a large number of actors are involved. The second explanation has it that multiple levels of environmental governance may be needed to minimise governance costs. Third, path dependency and economies of scope could explain multilevel environmental governance. Fourthly, ecosystem service flows generated by complex and multifunctional resource systems may have benefit catchments of different size, and multilevel governance solutions may be needed to link providers and beneficiaries. While they are to a degree complementary, the analysis suggests that the multi-functionality explanation is the most nuanced one of them and offers the best diagnostic for governance challenges that an environmental resource system poses.