Posted: 05/11/2006 | Author: Max Borders
Free-Market Environmentalism Turns 15
With Earth Day having just passed and environmental awareness peaking, it seems appropriate to highlight another important environmental anniversary.
Fifteen years ago, an academic publisher quietly released Free Market Environmentalism by Terry Anderson and Don Leal. At the time, few mainstream environmentalists or politicians saw the book. But, since its publication, free-market environmentalism (FME) spurred a quiet revolution in environmental policy. Now its views and policy approaches are starting to be taken seriously in policy circles.
FME ideas seem counterintuitive. Take private property rights. Most believe a successful environmental policy and private property rights cannot coexist. But incorporating those self-same rights actually can (and does) help the environment.
Here's a simple illustration: suppose you and I are sitting at the drugstore counter. We can either order one extra-large milkshake to share (using two bendy-straws); or we can each order a regular milkshake, separately. We're both thirsty. If we order the extra-large shake, we'll likely stare each other down over the bendy straws until the last drop is drunk. And that process will happen quickly, for each will drink as much as he can, lest the other does.
Such is a simplified version of the "tragedy of the commons." Our resource - the milkshake - is being depleted rapidly because each of us calculates: "if I don't drink it, he will." The same can be said for something like the rainforests of Amazonia: "if I don't cut, he will."
But when we each have our own milkshake, we are more likely to conserve the resource because we may legally keep others from exploiting it. I might save half of my milkshake for a midnight snack, for example. Likewise, someone who owns a mahogany forest has an incentive to conserve this renewable resource in the hope of seeing future returns - or even to permanently preserve the beautiful setting. Either way, economic interests are balanced with ecological ones.
Still don't believe property rights work? Compare the re-growth of North American forests to that of the rest of the world. Even though our timber-industry thrives, there is currently more forestland than at any point in modern history-and it continues to increase. That's because the US and Canada have a robust property rights regime. Sadly, Amazonia does not. There, deforestation is the norm.
There are all sorts of examples where property rights - or at least quasi-property rights - are being used to protect resources: African elephants controlled by villages have helped control poaching; tradable quotas have restored fish stocks; conservation groups buy acres of pristine lands to prevent development; water markets in western US states curb overuse. These policies are successful because they provide incentives for conservation and protection, while preserving the institutions that also allow for increased material well-being-a.k.a. capitalism.
A property rights approach can even work on sludge - i.e. that stuff that gets into the air and water. While there is disagreement about whether systems of cap-and-trade are the best among alternatives, suffice it to say the introduction of market mechanisms like these is an outgrowth of work done by folks in the FME community.
FMEs of all stripes ask policymakers to confront economic realities. Since the 70s and 80s, we've seen both the Environmental Protection Agency (EPA) and the Department of Interior move from costly command-and-control approaches to others that use either cost-benefit methodology or federalism (solving local problems, locally). This is a relatively new development.
Still, FMEs point out that regulations designed to help the environment often actually harm it. For example, it has become difficult since the birth of the EPA to sue polluters. It used to be that if a company left gunk on other people's soil, land or water, you could take them to court. Today courts often toss such cases. As long as a polluter is able to meet federal standards, their activities are perfectly legal-whether or not they cause harm. Indeed, the federal regime still treats most environmental issues as national problems, even though most would be better addressed by local interests with local knowledge.
No matter where you fall on the political spectrum, free-market environmentalism offers some interesting approaches to perennial problems. If nothing else, the fifteenth birthday of Free Market Environmentalism reminds us that private stewardship is just as important as political activism.
Max Borders is Managing Editor of TCSDaily.com and an adjunct scholar with the National Center for Policy Analysis's E-Team project.