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The assignment of tasks to the appropriate level of government is an important aspect of environmental policy design. Because the costs and benefits of pollution control policies are closely tied to geography, political solutions should reflect the underlying spatial structure of environmental problems. These solutions should not only incorporate the long-distance effects of air and water pollution, but also account for the mobility of economic actors and the resource base of governments.

There are three general types of environmental problems. Global issues have no complex geographical component. Regional problems arise when political boundaries do not coincide with the pollution's geographical impact. The environmental effects of local issues are confined within existing governmental borders.

After outlining the political-economic arguments for the division of regulatory authority, I examine the actual pattern in two concrete cases: the United States and Germany. Both have advanced capitalist economies governed by representative federal democracies. They have similar levels of economic development and energy use and similar types of pollution problems. Both are viewed as environmental leaders. Public and private spending on environmental protection is high. Germany is, however, much smaller in area and population and is much more densely populated. It is embedded in the European continent, and its economy depends heavily on crossborder trade. Conditions in other European countries affect the quality of Germany's air and water.

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