The promise and problems of free market environmentalism

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In the summer issue of PERC Reports Charles Kolstad, author of Environmental Economics, suggests that “free market environmentalism works well for problems pertaining to natural resource allocation, where well-defined property rights solve the problem of excludability,” but that it is “less efficient at dealing with environmental goods, such as the provision of clean air, which is nonrival.”

As Kolstad points out, proponents of free market environmentalism often offer a solution to air pollution that includes a technological innovation such as seeding emission streams with tracers to determine specific sources of ambient pollution. Another solution is to rely on common law—"if party A is causing injury to party B through pollution discharge, then party A may seek remedy in court."

Kolstad believes these ideas for managing air pollution are unsatisfactory. What are your thoughts?

Huggins is a research fellow and former director of outreach with PERC as well as a research fellow at the Hoover Institution at Stanford University. Her association with PERC goes back several years, although she has recently embarked on a new venture as the manager of economic initiatives for the American Prairie Reserve. Huggins coauthored...
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