Free-Market Environmentalism

Free-Market Environmentalism
by Edward W. Younkins

Without free markets, nature would be left to the mercy of the state. Central planning is made impossible by the nature of the universe. Government just does not have the means to acquire the detailed information dispersed throughout the world that is essential for efficiency, technological change, and care of the environment. The socialist world suffers from the worst pollution on earth. Natural resources fare much worse in the hands of the government than they do under private control.

Environmental plundering in the socialist world is a prime example of the tragedy of the commons. When property is governmentally or communally owned and treated as a free resource, resources will be overused with little or no regard for future consequences.

The American government also has a record of environmental mismanagement. In its efforts to protect ecology, government has prohibited development along seashores, limited the use of private property that is home to allegedly endangered species such as the spotted owl, prevented the development of land because of potential damage to a government-designated wetlands, etc. In addition, it has been government’s violation of property rights through subsidies, regulation, zoning, and eminent domain that has resulted in misuse of the environment.

Certainly, pollution and toxic waste disposal, overuse of some resources, and so on, are legitimate concerns. However, we need to recognize that resources that have been privately protected have fared better than their politically managed counterparts. Private property and free markets create powerful incentives that lead to more effective and more efficient environmental protection and stewardship. People have natural incentives to care for their own property. This eliminates or reduces the need for collective ownership and control of resources.

Free-market environmentalism seeks ways of placing resources in the hands of individuals or groups concerned about the well-being of the resources and of themselves. In a free market, entrepreneurs compete to develop effective low-cost ways to solve environmental problems. Their incentives flow from their estimates of future potential profits and the freedom to pursue their ideas. The free market permits individuals to discover new opportunities for improving environmental quality and to produce it in the private sector. Creativity is encouraged if individuals are free to use their minds and have adequate incentives to do so. Entrepreneurs care about the future because they care about their short-term and long-term profits. A person who owns resources will earn the rewards of good stewardship and bear the consequences of poor stewardship. When an owner cares for and protects his resources, their value tends to increase or at least be maintained.

Entrepreneurs can use business tools to save endangered species, develop wildlife habitat, preserve open space, etc. For example, there is a large demand for quality recreation, hunting, and fishing experiences by consumers willing to pay user fees for such experiences. The income earned would justify the costs of improving conditions for wildlife, monitoring land use, limiting hunting pressure on various species, leasing water to increase instream flows, etc.

Arbitrary destruction of animals takes place mainly because no one owns wildlife. There would be accountability if wildlife were private property. Some entrepreneurs might believe that the value of certain endangered species in the future would be greater than the cost of preserving land instead of cultivating it. Others who predict that forests will have greater value in the future have incentives to protect them.

Then there is the fact that the free market discourages waste. Given that air pollution is frequently made up of unburnt fuel, profit-making companies have an incentive to save fuel by reducing pollution. Likewise, firms can save money by conserving costly chemicals or metals instead of losing them in the waste stream. Free markets, science, and technology can lead to processes that minimize pollution at the lowest cost. Economic prosperity does not conflict with a healthful environment.

Environmental problems are due to the tragedy of the commons rather than to the privatization of resources and the adoption of principles that prohibit dumping and other forms of trespass. These principles include privately owned property, personal liability, and court enforcement of private property rights. The goal is to define property rights in all natural resources in order to avoid the tragedy of the commons. Without a doubt, it will be challenging to extend property rights to all such resources. For example, creative and unique legal arrangements will be required to protect air sheds and oceans.

A system based on private property rights would encourage people to limit pollution. The common law, along with the doctrines of trespass, wrongful bodily invasion, and public and private nuisance would supply protection through damages or injunctions. If rights have been trespassed, the polluter must find ways to keep the emissions from traveling onto others’ land or airspace. If operations are impossible without pollution that is harmful to others, then the firm will have to cease operations. As a result, private property owners will have incentives to negotiate among themselves with respect to the market value of pollution. In addition, private owners will be motivated to develop and protect property rights by means of technological advances.

Waste, a by-product of human activity, becomes pollution when it is deposited where another property owner does not want it. The imposition of harmful waste product or emissions onto the person or property of another without that person’s consent is considered trespass under the common law which provides a framework in which victims of smoke, chemicals, noise, and so on, can seek redress.

Unfortunately, today’s law has divided nuisances into public and private types. Public nuisances are those deemed to interfere with interests common to the general public. In turn, a private nuisance is said to interfere only with a private person’s use of his land. The law holds that pollution that offends all the neighbors in a given area is considered to be subject to redress only by a public authority. In other words, a private individual is not permitted to sue in such a case.

The English common law tradition of private property rights includes the right to be free from pollution. This tradition must be revived. Sound liability laws are needed to hold people responsible for their actions. Each owner is accountable for what any object under his control does to injure others. Carefully defined property rights will help to reduce social conflicts.

Damaged parties should have their day in court to seek relief from the harmful effects of another’s property through the collection of damages or the issuance of injunctions. A just legal system would prohibit all environmental assaults such as seepage, transmitting toxic substances, and polluting the public realm. The idea is that beyond an innocuous level of waste disposal, no pollution would be permitted. Of course, there are technological problems to be addressed when considering how much exposure constitutes reaching the threshold for injury. Life can absorb some measure of potentially injurious pollution without harm.

Automobile exhaust fumes should be internalized or prohibited when they exceed a certain threshold. Technology is available to measure automobile emissions of traveling vehicles. Fixed emissions checkpoints along the road can measure how much exhaust a car emits. If the car exceeds the threshold, a picture of the license can be taken and the person fined. This approach would be especially attractive if highways were privatized. The highway owner, using emissions measurement devices, could charge user’s fees to persons whose vehicles exceeded certain pollution limits. Furthermore, if homeowners associations were designated as the owners of the airspace in which they live, the highway owner could then pay the association to be permitted to pollute.

We need to ensure that polluters pay for the costs of the harm they inflict upon others. This is best done by decentralizing environmental policy and relying on private solutions and common law remedies. Free and rational men in voluntary actions are the best conservationists.

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