Should localities be allowed to go it alone?

Over at Dot Earth, The New York Times's Andrew Revkin reacts to the collapse of Michael Bloomberg's congestion pricing scheme with a question about self-governance:

If a city that is the economic engine of a state cannot find support for its chosen path to clearing its streets of traffic estimated to cause billions of dollars in lost productivity, that doesn't bode well for a world with astonishingly variegated nations trying to find a common path to limit climate risks without harming economies.

How will we ever think (and act) globally if we can't even act locally?

We saw a similar dynamic play out recently on a much larger scale in the battle between the EPA and a group of 20 states led by California. The state had passed a law forcing automakers to cut their greenhouse emissions. The EPA stepped in, asserting that only the federal government had the right to regulate such emissions. As it happens, the federal rules are less restrictive than California's, so the state is unable to curb auto emissions within its borders as much as its legislature would like to.

Sometimes, even a nation-state finds itself struggling to exercise sovereignty in environmental issues. One example: In 1996, the Metalclad Corporation, a US waste-management company, accused the Mexican government of violating a provision in NAFTA after the governor of the state of San Luis Potosi refused to allow the company to re-open a hazardous waste landfill. The governor shut down the landfill after it was discovered that the landfill was contaminating the local drinking water supply. Metalclad claimed that this act constituted expropriation under NAFTA rules, and and successfully sued the Mexican government and won, eventually settling for $15.6 million.

For those rooting for New York, California, and Mexico to prevail in these battles, it seems like there exists a strong environmental case for political localism. But maybe not. After all, for every local government that wants to blaze an eco-friendly trail without interference from a higher authority, there's a good chance that there's another one ready to take advantage on reduced oversight. For instance, in an important 2001 ruling, the Supreme Court shortened the reach of the Clean Water Act, granting the state of Illinois had the right to build a landfill on a breeding ground for migratory birds.

As political pressure to address environmental crises grows, I expect that we're going to see a lot more of these turf wars. Is there a proper balance between self-governance and global initiatives? If so, what is it?