Free-market environmentalism
Encyclopedia
Free-market environmentalism is a position that argues that the free market
, property rights, and tort
law provide the best tools to preserve the health and sustainability of the environment
. This is in contrast to the most common modern approach of legislation
by which the state
intervenes in the market to protect the environment.
s, free market
environmentalists argue that environmental problems arise because:
As a rule, therefore, free-market environmentalists believe that the best way to protect the environment is to allow tort and contract laws governing and protecting property rights and tort claims to emerge naturally, so that the protection of property no longer suffers from the defects that give governments, individuals, and corporations perverse incentive
s to spoil the environment.
is unable to correct the negative externalities of industrial production and excessive depletion of non-renewable resources. In this view, firms receive the full benefit of creating their products in a way that generates pollutant
s but do not bear the full social cost
s of the increased pollution. They have no economic incentive to create products in a way that minimizes pollution and absent targeted environmental regulations, will continue to do so. This activity would be rational, because it would be profitable for a firm to overpollute, while letting others absorb the costs of its effects and cleanup. Regarded this way, opponents of market solutions to the problem of pollution assert that market mechanisms left to their own devices contain built-in incentives for environmental degradation. The case for free market valuation is complicated by uneven regulation, e.g. the standards set for recycling (under Resource Conservation and Recovery Act, of 1976) are more strict than the government regulation of mining (General Mining Act, 1872).
Ecological economist Robin Hahnel
has enumerated what he terms the four basic defects of a market economy with respect to the environment as:
The prevalence of externalities would have serious implications for market efficiency in its static and dynamic dimensions. If negative externalities are unnaccounted for, it would imply that market prices will not accurately reflect true social opportunity costs, leading to misallocations of goods. As the elementary economics
text book by Baumol and Blinder observes When a firm pollutes a river, it uses some of society's resources just as surely as when it burns coal. However, if the firm pays for coal but not for the use of clean water, it is expected that management will be economical in its use of coal and wasteful in its use of water.
The standard approach to addressing negative externalities is governmental regulation proscribing polluting activities. This approach has been criticized by free-market economists and others as being inefficient and ineffective. Furthermore, the demands of regulation seldom appeal to the social conscience of industries or enterprise owners and violation is often seen as legitimate business practice.
Critics have noted that studies sponsored by firms assessing their own activities are invariably biased and typically exemplify an illegitimately narrow focus that ignores a competitive market context and the prevalence of external effects throughout the supply chain. Amoco's attempts at voluntary measures have met with resistance from the four or five oil refining corporations with greater market share, who expressed a preference to be forced by state regulations before lowering their sulphur content. Following Amoco's gestures, prominent environmental groups were unimpressed. For example, the Earth Day 2000 report, "Don't Be Fooled" named Amoco as one the top 10 "greenwashers" of the year.
While some environmentalists advocate compromises such as carbon trading
schemes, most free-market environmentalists would prefer full accountibility as dictated by courts that respect the rights of property owners in absolute terms.
Some free-market proponents, particularly those influenced by the Austrian economic school, such as B.J. Lawson
claim that sustainability is fundamentally impossible when the money supply exhibits secular inflation
.
that, if industries internalized the costs of negative externalities they would face an incentive to reduce them, perhaps even becoming enthusiastic about taking advantage of opportunities to improve profitability through lower costs. Moreover, economists claim this would lead to the optimal balance between the marginal benefits of pursuing an activity and the marginal cost of its environmental consequences. One well-known means of internalizing a negative consequence is to establish a property right over some phenomenon formerly in the public domain. This requires a little abstract thinking in the case of environmental problems as these Coasians are talking about a grant to pollute or to exploit some limited natural phenomenon. This is a sophisticated variant of the polluter pays principle. However, critics have charged that the "theorem" attributed to Coase is of extremely limited practicability because of assumptions, including that it was theorized to account for adjacent effects where transaction costs for bargaining agents are typically small, but is ill-suited to real world externalities which have high bargaining costs due to many factors.
A number of libertarians, such as Rothbardians
, reject the proposed Coasian
solution as making invalid assumptions about the purely subjective notion of costs being measurable in monetary terms, and also of making unexamined and invalid value judgments (i.e., ethical judgments). (http://www.cato.org/pubs/journal/cj2n1/cj2n1-2.pdf PDF) The Rothbardians' solution is to recognize individuals' Lockean
property rights, of which the Rothbardians maintain that Wertfreiheit (i.e., value-free) economic analysis demonstrates that this arrangement necessarily maximizes social utility. (http://www.mises.org/rothbard/toward.pdf PDF)
Proponents of free-market environmentalism use the example of the recent destruction of the once prosperous Grand Banks
fishery off Newfoundland. Once one of the world's most abundant fisheries, it has been almost completely depleted of fish. Those primarily responsible were large "factory-fishing" enterprises driven by the imperative to realize profits in a competitive global market. It is contended that if the fishery had been owned by a single entity, the owner would have had an interest in keeping a renewable supply of fish to maintain profits over the long term. The owner would thus have charged high fees to fish in the area, sharply reducing how many fish were caught. The owner also would have closely enforced rules on not catching young fish. Instead commercial ships from around the world raced to get the fish out of the water before competitors could, including catching fish that had not yet reproduced.
Another example is in the 19th century early gold miners in California developed a trade in rights to draw from water courses based on the doctrine of prior appropriation. This was curtailed in 1902 by the Newlands Reclamation Act
which introduced subsidies for irrigation
projects. This had the effect of sending a signal to farmers that water was inexpensive and abundant, leading to uneconomic use of a scarce resource. Increasing difficulties in meeting demand for water in the western United States
have been blamed on the continuing establishment of governmental control and a return to tradable property rights has been proposed.
According to Richard L. Stroup
, markets in the environmental field, in order to function well, require "3-D" property rights to each important resource — i.e., rights that are clearly defined, easily defended against invasion, and divestible (transferable) by owners on terms agreeable to buyer and seller. The first two rights prevent property owners from being forced to accept pollution, and the third right provides an incentive for owners to be good stewards.
whereby large companies play a large role in setting regulations surrounding public or common property has created a system where things are far too biased in favor of large companies. For instance, in the United States
lands that could be more valuably used for tourism
are often used for resource extraction because the many disorganized tourists cannot have the same impact on government as the few organized corporations. If the land was privately held the land owner would realize that tourism would make more of a profit than logging and nature would be preserved.
s of bands of the electromagnetic spectrum
for telephony, another example of an attempt to manage a scarce resource through property rights rather than regulation. Such auctions offer an alternative to conventional taxation for funding public spending, by capitalizing the expected rent
earned by the privatized good. Some economists, most notably Henry George
in the 1870s, have argued that taxes on income and profits represent taxes on productivity, innovation and creativity and that we should rather tax land rents
and externalities
such as pollution, consumption of fossil fuels and road congestion. Environmental property rights offer a means to shift taxation from "goods" to "bads" and rents.
organization. It has been successful in protecting many sensitive, ecologically important places by simply purchasing them, although this practice has met with controversy in some areas. In some cases the lands are donated or sold to government agencies for management, while in others the Nature Conservancy itself manages these preserves.
Billionaire Ted Turner
has a similar private program that has seen him buy up tens of thousands of acres of wilderness around the United States.
Lawyers who have written on free-market environmentalism include:
Politicians who have supported free-market environmentalism:
Political parties that have supported free-market environmentalism:
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
, property rights, and tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
law provide the best tools to preserve the health and sustainability of the environment
Natural environment
The natural environment encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species....
. This is in contrast to the most common modern approach of legislation
Legislation
Legislation is law which has been promulgated by a legislature or other governing body, or the process of making it...
by which the state
State (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...
intervenes in the market to protect the environment.
Economics of environmental destruction
While environmental problems may be viewed as market failureMarket failure
Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...
s, free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
environmentalists argue that environmental problems arise because:
- Laws override or obscure property rights and thus fail to adequately protect or define those rights.
- Laws governing class or individual tortTortA tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
claims provide polluters with immunity from tort claims, or interfere with those claims in such a way as to make it difficult to legally sustain them.
As a rule, therefore, free-market environmentalists believe that the best way to protect the environment is to allow tort and contract laws governing and protecting property rights and tort claims to emerge naturally, so that the protection of property no longer suffers from the defects that give governments, individuals, and corporations perverse incentive
Perverse incentive
A perverse incentive is an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Perverse incentives are a type of unintended consequences.- Examples :...
s to spoil the environment.
The market failure view
Some economists believe that the marketMarket
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
is unable to correct the negative externalities of industrial production and excessive depletion of non-renewable resources. In this view, firms receive the full benefit of creating their products in a way that generates pollutant
Pollutant
A pollutant is a waste material that pollutes air, water or soil, and is the cause of pollution.Three factors determine the severity of a pollutant: its chemical nature, its concentration and its persistence. Some pollutants are biodegradable and therefore will not persist in the environment in the...
s but do not bear the full social cost
Social cost
Social cost, in economics, is generally defined in opposition to "private cost". In economics, theorists model individual decision-making as measurement of costs and benefits...
s of the increased pollution. They have no economic incentive to create products in a way that minimizes pollution and absent targeted environmental regulations, will continue to do so. This activity would be rational, because it would be profitable for a firm to overpollute, while letting others absorb the costs of its effects and cleanup. Regarded this way, opponents of market solutions to the problem of pollution assert that market mechanisms left to their own devices contain built-in incentives for environmental degradation. The case for free market valuation is complicated by uneven regulation, e.g. the standards set for recycling (under Resource Conservation and Recovery Act, of 1976) are more strict than the government regulation of mining (General Mining Act, 1872).
Ecological economist Robin Hahnel
Robin Hahnel
Robin Hahnel is a Professor of Economics at Portland State University. He is best known for his work on participatory economics with Z Magazine editor Michael Albert. He is currently a visiting professor at Lewis & Clark College....
has enumerated what he terms the four basic defects of a market economy with respect to the environment as:
- overexploitation of common property resources;
- overpollution;
- too little pollution cleanup; and
- overconsumption.
The free-market environmentalist response
In response to these concerns, economists who prefer the free-market environmentalist approach argue that:- OverexploitationOverexploitationOverexploitation, also called overharvesting, refers to harvesting a renewable resource to the point of diminishing returns. Sustained overexploitation can lead to the destruction of the resource...
occurs to the extent of the lack of ownership incentives to care for the property, and that this communalization effect occurs to the extent of multiplicity of ownership. Overexploitation reduces the intrinsic and retail value of the property, the effect of which is most clearly felt by individual owners or through limited co-ownership. - Pollution occurs where and to the extent that victims are prevented or hindered from seeking tortTortA tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
restitutionRestitutionThe law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. Obligations to make restitution and obligations to pay compensation are each a type of legal response to events in the real world. When a court...
for such aggressionAggressionIn psychology, as well as other social and behavioral sciences, aggression refers to behavior between members of the same species that is intended to cause humiliation, pain, or harm. Ferguson and Beaver defined aggressive behavior as "Behavior which is intended to increase the social dominance of...
. Legislative and Judicial authorities have tended to favor heavy industries over individual or class actionClass actionIn law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
in favor of public propertyPublic propertyPublic property is property, which is dedicated to the use of the public. It is a subset of state property. The term may be used either to describe the use to which the property is put, or to describe the character of its ownership...
and the common goodCommon goodThe common good is a term that can refer to several different concepts. In the popular meaning, the common good describes a specific "good" that is shared and beneficial for all members of a given community...
. - Pollution clean-up also occurs naturally in a free market, because reducing the negative value of a property is a net gain, again leading to a higher intrinsic or retail value, and thus marketability.
- Overconsumption is a flawed concept, because it assumes that resources are non-renewable. The market, through supply and demand, regulates consumption by adjusting it according to supply. For example, if a resource becomes more scarce, its value increases and thus also its cost. This forces consumers to redirect their purchases to alternate resources which are in more plentiful supply. In addition, the higher market value of the resource creates an incentive to create more of the commodity, and allows for a greater expenditure in doing so.
The prevalence of externalities would have serious implications for market efficiency in its static and dynamic dimensions. If negative externalities are unnaccounted for, it would imply that market prices will not accurately reflect true social opportunity costs, leading to misallocations of goods. As the elementary economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
text book by Baumol and Blinder observes When a firm pollutes a river, it uses some of society's resources just as surely as when it burns coal. However, if the firm pays for coal but not for the use of clean water, it is expected that management will be economical in its use of coal and wasteful in its use of water.
The standard approach to addressing negative externalities is governmental regulation proscribing polluting activities. This approach has been criticized by free-market economists and others as being inefficient and ineffective. Furthermore, the demands of regulation seldom appeal to the social conscience of industries or enterprise owners and violation is often seen as legitimate business practice.
Critics have noted that studies sponsored by firms assessing their own activities are invariably biased and typically exemplify an illegitimately narrow focus that ignores a competitive market context and the prevalence of external effects throughout the supply chain. Amoco's attempts at voluntary measures have met with resistance from the four or five oil refining corporations with greater market share, who expressed a preference to be forced by state regulations before lowering their sulphur content. Following Amoco's gestures, prominent environmental groups were unimpressed. For example, the Earth Day 2000 report, "Don't Be Fooled" named Amoco as one the top 10 "greenwashers" of the year.
While some environmentalists advocate compromises such as carbon trading
Carbon emission trading
Carbon emissions trading is a form of emissions trading that specifically targets carbon dioxide and it currently constitutes the bulk of emissions trading....
schemes, most free-market environmentalists would prefer full accountibility as dictated by courts that respect the rights of property owners in absolute terms.
Some free-market proponents, particularly those influenced by the Austrian economic school, such as B.J. Lawson
B.J. Lawson
William "B.J." Lawson is a Republican Party politician who ran for the United States House of Representatives in North Carolina's 4th congressional district in both the 2008 and 2010 elections....
claim that sustainability is fundamentally impossible when the money supply exhibits secular inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
.
Property rights
Some economists argue from the Coase TheoremCoase theorem
In law and economics, the Coase theorem , attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to...
that, if industries internalized the costs of negative externalities they would face an incentive to reduce them, perhaps even becoming enthusiastic about taking advantage of opportunities to improve profitability through lower costs. Moreover, economists claim this would lead to the optimal balance between the marginal benefits of pursuing an activity and the marginal cost of its environmental consequences. One well-known means of internalizing a negative consequence is to establish a property right over some phenomenon formerly in the public domain. This requires a little abstract thinking in the case of environmental problems as these Coasians are talking about a grant to pollute or to exploit some limited natural phenomenon. This is a sophisticated variant of the polluter pays principle. However, critics have charged that the "theorem" attributed to Coase is of extremely limited practicability because of assumptions, including that it was theorized to account for adjacent effects where transaction costs for bargaining agents are typically small, but is ill-suited to real world externalities which have high bargaining costs due to many factors.
A number of libertarians, such as Rothbardians
Murray Rothbard
Murray Newton Rothbard was an American author and economist of the Austrian School who helped define capitalist libertarianism and popularized a form of free-market anarchism he termed "anarcho-capitalism." Rothbard wrote over twenty books and is considered a centrally important figure in the...
, reject the proposed Coasian
Coase theorem
In law and economics, the Coase theorem , attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to...
solution as making invalid assumptions about the purely subjective notion of costs being measurable in monetary terms, and also of making unexamined and invalid value judgments (i.e., ethical judgments). (http://www.cato.org/pubs/journal/cj2n1/cj2n1-2.pdf PDF) The Rothbardians' solution is to recognize individuals' Lockean
John Locke
John Locke FRS , widely known as the Father of Liberalism, was an English philosopher and physician regarded as one of the most influential of Enlightenment thinkers. Considered one of the first of the British empiricists, following the tradition of Francis Bacon, he is equally important to social...
property rights, of which the Rothbardians maintain that Wertfreiheit (i.e., value-free) economic analysis demonstrates that this arrangement necessarily maximizes social utility. (http://www.mises.org/rothbard/toward.pdf PDF)
Proponents of free-market environmentalism use the example of the recent destruction of the once prosperous Grand Banks
Grand Banks
The Grand Banks of Newfoundland are a group of underwater plateaus southeast of Newfoundland on the North American continental shelf. These areas are relatively shallow, ranging from in depth. The cold Labrador Current mixes with the warm waters of the Gulf Stream here.The mixing of these waters...
fishery off Newfoundland. Once one of the world's most abundant fisheries, it has been almost completely depleted of fish. Those primarily responsible were large "factory-fishing" enterprises driven by the imperative to realize profits in a competitive global market. It is contended that if the fishery had been owned by a single entity, the owner would have had an interest in keeping a renewable supply of fish to maintain profits over the long term. The owner would thus have charged high fees to fish in the area, sharply reducing how many fish were caught. The owner also would have closely enforced rules on not catching young fish. Instead commercial ships from around the world raced to get the fish out of the water before competitors could, including catching fish that had not yet reproduced.
Another example is in the 19th century early gold miners in California developed a trade in rights to draw from water courses based on the doctrine of prior appropriation. This was curtailed in 1902 by the Newlands Reclamation Act
Newlands Reclamation Act
The Reclamation Act of 1902 is a United States federal law that funded irrigation projects for the arid lands of 20 states in the American West....
which introduced subsidies for irrigation
Irrigation
Irrigation may be defined as the science of artificial application of water to the land or soil. It is used to assist in the growing of agricultural crops, maintenance of landscapes, and revegetation of disturbed soils in dry areas and during periods of inadequate rainfall...
projects. This had the effect of sending a signal to farmers that water was inexpensive and abundant, leading to uneconomic use of a scarce resource. Increasing difficulties in meeting demand for water in the western United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
have been blamed on the continuing establishment of governmental control and a return to tradable property rights has been proposed.
According to Richard L. Stroup
Richard L. Stroup
Richard L. Stroup is a free market environmentalist adjunct professor at North Carolina State University, research fellow at the Independent Institute, adjunct scholar of the Cato Institute, and former professor of economics at Montana State University, where he served as head of the Department of...
, markets in the environmental field, in order to function well, require "3-D" property rights to each important resource — i.e., rights that are clearly defined, easily defended against invasion, and divestible (transferable) by owners on terms agreeable to buyer and seller. The first two rights prevent property owners from being forced to accept pollution, and the third right provides an incentive for owners to be good stewards.
Regulatory capture
Many free-market environmentalists argue that the problem of regulatory captureRegulatory capture
In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...
whereby large companies play a large role in setting regulations surrounding public or common property has created a system where things are far too biased in favor of large companies. For instance, in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
lands that could be more valuably used for tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
are often used for resource extraction because the many disorganized tourists cannot have the same impact on government as the few organized corporations. If the land was privately held the land owner would realize that tourism would make more of a profit than logging and nature would be preserved.
Taxation
The implementation of property rights provides governments with an opportunity to raise revenues. This has been illustrated by recent auctionAuction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
s of bands of the electromagnetic spectrum
Electromagnetic spectrum
The electromagnetic spectrum is the range of all possible frequencies of electromagnetic radiation. The "electromagnetic spectrum" of an object is the characteristic distribution of electromagnetic radiation emitted or absorbed by that particular object....
for telephony, another example of an attempt to manage a scarce resource through property rights rather than regulation. Such auctions offer an alternative to conventional taxation for funding public spending, by capitalizing the expected rent
Economic rent
Economic rent is typically defined by economists as payment for goods and services beyond the amount needed to bring the required factors of production into a production process and sustain supply. A recipient of economic rent is a rentier....
earned by the privatized good. Some economists, most notably Henry George
Henry George
Henry George was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land...
in the 1870s, have argued that taxes on income and profits represent taxes on productivity, innovation and creativity and that we should rather tax land rents
Land (economics)
In economics, land comprises all naturally occurring resources whose supply is inherently fixed. Examples are any and all particular geographical locations, mineral deposits, and even geostationary orbit locations and portions of the electromagnetic spectrum. Natural resources are fundamental to...
and externalities
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
such as pollution, consumption of fossil fuels and road congestion. Environmental property rights offer a means to shift taxation from "goods" to "bads" and rents.
Nature preserves
One example of free market attempt to protect the environment is The Nature ConservancyThe Nature Conservancy
The Nature Conservancy is a US charitable environmental organization that works to preserve the plants, animals, and natural communities that represent the diversity of life on Earth by protecting the lands and waters they need to survive....
organization. It has been successful in protecting many sensitive, ecologically important places by simply purchasing them, although this practice has met with controversy in some areas. In some cases the lands are donated or sold to government agencies for management, while in others the Nature Conservancy itself manages these preserves.
Billionaire Ted Turner
Ted Turner
Robert Edward "Ted" Turner III is an American media mogul and philanthropist. As a businessman, he is known as founder of the cable news network CNN, the first dedicated 24-hour cable news channel. In addition, he founded WTBS, which pioneered the superstation concept in cable television...
has a similar private program that has seen him buy up tens of thousands of acres of wilderness around the United States.
Criticisms
There are a number of arguments against free-market environmentalism:- Historically, Tort Law has been of limited efficacy for confronting environmental problems. According to the World Bank, "tort law, based as it is on the protection of individual rights and the need to prove specific injury, has not been a significant means of preventing environmental degradation." Similarly, in "Law in Environmental Decision-Making" legal scholar Jenny Steele notes that in respect to protection of the environment, "a number of historical studies have assessed the extent of tort's impact in this respect, to generally critical effect." In the environmental law textbook, "Environmental Protection", Sue Elworth and Jane Holder argue that the most significant limitation of common law, including tort law "was, and continues to be that the protection of private property is the rationale of private law and its motivation...Environmental protection may be effected through the protection of property rights. But private law is said to act only to protect the individualized self-interested claim, which considerably constrains legal action. The main doubt about the ability of private law to provide an appropriate means of protecting the environment is that environmental problems demand collective action, there is therefore some resistance to the idea that individual rights might contribute to collective progress towards environmental protection." Class actionClass actionIn law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
, however, is every bit as capable of direct tort-based restitution as individual legal action.
- Not all aspects of the public domain are easily "privatisable" in practice. It may be impossible to establish property rights on things like air and water that circulate the globe, so stopping air pollutionAir pollutionAir pollution is the introduction of chemicals, particulate matter, or biological materials that cause harm or discomfort to humans or other living organisms, or cause damage to the natural environment or built environment, into the atmosphere....
or global warmingGlobal warmingGlobal warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
on an individual basis would be very difficult. CoasianCoase theoremIn law and economics, the Coase theorem , attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to...
environmentalists often support carbon tradingCarbon emission tradingCarbon emissions trading is a form of emissions trading that specifically targets carbon dioxide and it currently constitutes the bulk of emissions trading....
schemes advocated by other environmentalist movements. The US Clean Air Act of 1990, for instance, set up a system of emissions tradingEmissions tradingEmissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
for sulfur dioxideSulfur dioxideSulfur dioxide is the chemical compound with the formula . It is released by volcanoes and in various industrial processes. Since coal and petroleum often contain sulfur compounds, their combustion generates sulfur dioxide unless the sulfur compounds are removed before burning the fuel...
. The Kyoto protocolKyoto ProtocolThe Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
also seeks to establish a system of emissions tradingEmissions tradingEmissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
for carbon dioxideCarbon dioxideCarbon dioxide is a naturally occurring chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom...
and other greenhouse gasGreenhouse gasA greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
es. RothbardiansMurray RothbardMurray Newton Rothbard was an American author and economist of the Austrian School who helped define capitalist libertarianism and popularized a form of free-market anarchism he termed "anarcho-capitalism." Rothbard wrote over twenty books and is considered a centrally important figure in the...
reject government-imposed emissions tradingEmissions tradingEmissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
schemata, and instead maintain that pollution is by definition a matter of LockeanJohn LockeJohn Locke FRS , widely known as the Father of Liberalism, was an English philosopher and physician regarded as one of the most influential of Enlightenment thinkers. Considered one of the first of the British empiricists, following the tradition of Francis Bacon, he is equally important to social...
property rights being violated, and hence should be handled as a subject of individual or class actionClass actionIn law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
tortTortA tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
, as any other invasion of property.(http://www.cato.org/pubs/journal/cj2n1/cj2n1-2.pdf PDF) As long as there is an aggressor and a victim, there is a tort.
- Some believe that the conservation of endangered speciesEndangered speciesAn endangered species is a population of organisms which is at risk of becoming extinct because it is either few in numbers, or threatened by changing environmental or predation parameters...
is not necessarily achievable using the free market, especially where there is little economic value in the species in question. For example: there might be only limited profit to be made from a piece of land by maintaining it as the habitat of a rare beetleBeetleColeoptera is an order of insects commonly called beetles. The word "coleoptera" is from the Greek , koleos, "sheath"; and , pteron, "wing", thus "sheathed wing". Coleoptera contains more species than any other order, constituting almost 25% of all known life-forms...
, whereas alternative economic uses for that land (which might be deleterious to the welfare of the beetle) - such as building a parking lot on it - might yield a greater profit. Regardless of the broader ecological importance of the beetle, it is much more likely that the landowner will prioritize short-term profits to be gained from development, rather than a long-term benefit which may be of comparably little (perhaps even imperceptible on the surface) benefit to himself. Thus, threatened or endangered species could be lost by relying on the willingness of individual landowners to take a loss in order to protect them.
- A related philosophical objection is that free-market environmentalism is entirely anthropocentric and ignores the "innate" value of nature outside of human perception. (see ecocentrismEcocentrismEcocentrism is a term used in ecological political philosophy to denote a nature-centered, as opposed to human-centred, system of values. The justification for ecocentrism usually consists in an ontological belief and subsequent ethical claim...
). But even in the world of politics, someone must see and place a value on the environment or species in question in order for it to be protected.
- The principle of limited liabilityLimited liabilityLimited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
protects investors from the costs of the activities from which they benefit. In the U.S., there have been recent suggestions that, while limited liability towards creditors is socially beneficial in facilitating investment, the privilege ought not to extend to liability in tortTortA tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
for environmental disasterEnvironmental disasterAn environmental disaster is a disaster to the natural environment due to human activity. It should not be confused with the separate concept of a natural disaster.-History:...
s or personal injuryPersonal injuryPersonal injury is a legal term for an injury to the body, mind or emotions, as opposed to an injury to property. The term is most commonly used to refer to a type of tort lawsuit alleging that the plaintiff's injury has been caused by the negligence of another, but also arises in defamation...
. In fact, most free-market environmentalists oppose limited liability in torts as a form of corporate welfareCorporate welfareCorporate welfare is a pejorative term describing a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations. The term compares corporate subsidies and welfare payments to the poor, and implies that corporations are much less...
and a limitation of full property rights.
- Countering the tragedy of the commonsTragedy of the commonsThe tragedy of the commons is a dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this...
claim, Elinor OstromElinor OstromElinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...
has studied a large number of empirical cases where common property resources have been managed successfully. Her work emphasizes neither private property/market arrangements nor government regulation but the successes of communities consciously designing institutional arrangements in response to particular common property dilemmas. The stress is on democratic institutions that allow the users of the common to govern the commons.
Free-market environmentalists
Economists who have written on free-market environmentalism include:- John BadenJohn BadenJohn A. Baden is founder and chairman of the Foundation for Research on Economics and the Environment based in Bozeman, Montana. FREE's focus is environmental economics and policy analysis....
- Roger BateRoger BateRoger Bate is an economist who has held a variety of positions in free market, libertarian, and conservative think tanks and lobby groups promoting anti-regulatory, pro-business causes. His current work focuses on counterfeit and substandard medicines, particularly those in the developing world. ...
- Walter BlockWalter BlockWalter Edward Block is a free market economist and anarcho-capitalist associated with the Austrian School of economics.-Personal history and education:...
- Laura Jones (Fraser Institute)Laura Jones (Fraser Institute)Laura Jones is a leading contributor to the Canadian libertarian think tank The Fraser Institute. She writes on a variety of issues and is published widely in the Fraser Forum, the monthly peer reviewed journal published by the Institute. Jones is Director of the Centre for Studies in Risk and...
- Julian MorrisJulian MorrisJulian Morris is director of think-tank International Policy Network, was formerly a Research Fellow and subsequently Director of the Environment and Technology Programme of the Institute of Economic Affairs. He is also a visiting professor of Economics at the University of Buckingham. Recently he...
- Murray N. Rothbard
- Julian Lincoln SimonJulian Lincoln SimonJulian Lincoln Simon was a professor of business administration at the University of Maryland and a Senior Fellow at the Cato Institute at the time of his death, after previously serving as a longtime business professor at the University of Illinois at Urbana-Champaign.Simon wrote many books and...
- Fred L. SmithFred L. SmithFred L. Smith, Jr. is the President and Founder of the Competitive Enterprise Institute, a Washington, D.C.-based nonprofit libertarian think tank. He has written on topics as antitrust law, environmental regulation, and the economic impacts of global warming....
- Bruce YandleBruce YandleBruce Yandle is dean emeritus of Clemson University's College of Business & Behavior Sciences and a professor of economics emeritus at Clemson. He is a Distinguished Adjunct Professor of Economics at the Mercatus Center, a faculty member with George Mason University's Capitol Hill Campus, and a...
Lawyers who have written on free-market environmentalism include:
- Jonathan H. AdlerJonathan H. AdlerJonathan H. Adler , is an American legal commentator and law professor at the Case Western Reserve University School of Law...
Politicians who have supported free-market environmentalism:
- Daniel Cohn-BenditDaniel Cohn-BenditDaniel Marc Cohn-Bendit is a Franco-German politician, active in both countries. He was a student leader during the unrest of May 1968 in France and he was also known during that time as Dany le Rouge...
- Rodney HideRodney HideRodney Hide is a New Zealand politician who was leader of the political party ACT New Zealand from 2004 to 2011. From 2005 to 2011 he represented the electorate of Epsom as its Member of Parliament. Rodney Hide was Minister of Local Government, Associate Minister of Commerce and Minister of...
- Ron PaulRon PaulRonald Ernest "Ron" Paul is an American physician, author and United States Congressman who is seeking to be the Republican Party candidate in the 2012 presidential election. Paul represents Texas's 14th congressional district, which covers an area south and southwest of Houston that includes...
Political parties that have supported free-market environmentalism:
- United Kingdom Libertarian Party
- Liberal Democratic PartyLiberal Democratic Party (Australia)The Liberal Democratic Party is a classical liberal Australian political party founded in 2001.-Party name:In 2007 the party tried to register federally under the name "Liberal Democratic Party" but this was opposed the by the Liberal Party, so the party chose to register as the "Liberty and...
- United States Libertarian PartyLibertarian Party (United States)The Libertarian Party is the third largest and fastest growing political party in the United States. The political platform of the Libertarian Party reflects its brand of libertarianism, favoring minimally regulated, laissez-faire markets, strong civil liberties, minimally regulated migration...
See also
- EnvironmentalismEnvironmentalismEnvironmentalism is a broad philosophy, ideology and social movement regarding concerns for environmental conservation and improvement of the health of the environment, particularly as the measure for this health seeks to incorporate the concerns of non-human elements...
- Green libertarianismGreen libertarianismGreen Libertarianism is a hybrid political philosophy that has developed in the United States. Based upon a mixture of political third party values, such as the environmental platform from the Green Party and the civil liberties platform of the Libertarian Party, the green libertarian philosophy...
- Eco-capitalismEco-capitalismEco-capitalism is one of several strategies of the green movement and Green Parties. Its central idea is that capital exists in nature as "natural capital" on which all wealth depends...
- Wise useWise useThe wise use movement in the United States is a loose-knit coalition of groups promoting the expansion of private property rights and reduction of government regulation of publicly held property. This includes advocacy of expanded use by commercial and public interests, seeking increased access to...
- Green syndicalismGreen syndicalismGreen syndicalism or eco-syndicalism has been used as a name for the philosophy of the green guild or sustainable trades movement.- Background :...
- Foundation for Research on Economics and the EnvironmentFoundation for Research on Economics and the EnvironmentThe Foundation for Research on Economics and the Environment , based in Bozeman, Montana, is a think-tank that promotes free-market environmentalism. FREE emphasizes reliance on market mechanisms and private property rights, rather than on environmental regulation, for protection of the environment...
- Natural capitalismNatural capitalismNatural Capitalism: Creating the Next Industrial Revolution is a 1999 book co-authored by Paul Hawken, Amory Lovins and Hunter Lovins. It has been translated into a dozen languages and was the subject of a Harvard Business Review summary....
- Property and Environment Research CenterProperty and Environment Research CenterThe Property and Environment Research Center, or PERC, is a free market environmentalist think tank based in Bozeman, Montana, United States. Established in 1982 as the Political Economy Research Center, PERC is dedicated to original research on market approaches to resolving environmental problems...
- Waterkeeper AllianceWaterkeeper AllianceWaterkeeper Alliance is an environmental organization founded in 1999, responding to a growing movement of organizations with the name Riverkeeper, Baykeeper, Soundkeeper, and other related "keeper" names, of which there are over 150 around the globe...
- Enviro-Capitalists: Doing Good While Doing WellEnviro-Capitalists: Doing Good While Doing WellEnviro-Capitalists: Doing Good While Doing Well is a 1997 book written by economists Terry Lee Anderson and Donald R. Leal. In this book, Anderson and Leal further developed the concept of free market environmentalism, which they first described in their 1992 book Free Market Environmentalism...
External links
For more information, please see the review of this Wikipedia article at: http://www.fraserinstitute.org/Commerce.Web/product_files/CanadianStudentReview_Summer2007.pdf- http://www.public.iastate.edu/~tonys/44%20Against.pdf Tony Smith - The Case Against Free Market Environmentalism
- "Law, Property Rights, and Air Pollution," 1.8 MB PDF Murray N. Rothbard, Cato Journal, Vol. 2, No. 1 (Spring 1982), pp. 55–100.
- "Resolving the Tragedy of the Commons by Creating Private Property Rights in Wildlife," Robert J. Smith, Cato Journal, Vol. 1, No. 2 (Fall 1981), pp. 439–468.
- "Free-Market Environmentalism Reading List," The Commons Blog: Markets Protecting the Environment.
- "Environmentalism, Free-Market," Richard L. Stroup, The Concise Encyclopedia of Economics: Library of Economics and Liberty
- A Hayekian Defense of Free-Market Environmentalism
- Trading Away the Earth: Pollution Credits and the Perils of "Free Market Environmentalism"
- The sale of trees for profit, Trees Instead
- The Thoreau Institute - a pro-free market environmentalism group
- The Nature Conservancy has posted much information on conservation easements and other tools pertaining to free-market environmentalism
- Fighting Global Warming–Free Market Style
- Supply Side Environmentalism: EcoWorld
- Association of Environmental and Resource Economists (AERE).
- - JEEM: Journal of Environmental Economics and Management (AERE's official "technical" journal).
- - REEP: Review of Environmental Economics and Policy (AERE's official "accessible" journal).