Free Market Environmentalism

Terry Anderson, Donald Leal
The totally new edition of an old favorite. This third edition offers compelling new examples of FME in action, and includes the work of younger scholars, such as PERC Executive Director Reed Watson and others who truly are the next generation of free market environmentalism.
Environmentalists, politicians, and scholars express concern about a "race to the bottom" in environmental policy. Yet economic theory indicates that a race to the bottom in environmental policy is highly unlikely, and there is little evidence that such races have, in fact, occurred.
East African Standard March 6, 2007 Applying free market ideas to wildlife conservation By Joseph Magiri
Terry Anderson
What's New at Hoover Hoover Institution January 2006
Steven F. Hayward
American Enterprise InstituteDecember 21, 2005   By Steven F. Hayward
Terry Anderson
Colorado Springs GazetteNovember 19, 2005 Free-market environmentalism is a win-win for everyone By Terry L. Anderson
Thomas Bray
By Thomas J. Bray
Terry Anderson
The Weekly StandardApril 25, 2005 By Terry L. Anderson
Jane Shaw
Business Economics January 2005 Evidence of good environmental stewardship is more extensive than most economists and executives recognize. By Jane S. Shaw
Environmental ForumJanuary/February 2005Minister of Change
Richard Stroup
Book Review Eco-nomics: What Everyone Should Know About Economics and the Environment By Richard Stroup Cato 2003  
Terry Anderson
Case Western Reserve Law Review Fall 2004 Vol. 55:1By Terry L. Anderson
Terry Anderson
Rocky Mountain NewsJuly 3, 2004 By Terry L. Anderson
Terry Anderson
Hoover Digest2004 No.3 Summer Cooling the Global Warming Debate: By Terry L. Anderson
Dominic Parker
Natural Resources JournalPrivate Land ConservationArticles and Comments Compiled by the Property and Environment Research Center
Thomas Bray
Philanthropy Magazine January/February 2004 By Thomas J. Bray
Richard Stroup
Richard L. Stroup
Bruce Yandle
RS-02-1:  2002  By Bruce Yandle, Maya Vijayaraghavan, and Madhusudan Bhattarai
J. Bishop Grewell
PERC has created a syllabus to aid the inclusion of free market environmental ideas in to traditional environmental economics and policy curricula.
Full Text PDFContents HTML
Terry Anderson
Tech Central March 12, 2001 By Lynn Scarlett
By Clay J, Landry To the Reader
Terry Anderson, Donald Leal
By Terry L. Anderson and Donald R. Leal
Terry Anderson, Jane Shaw
This essay explains how the well-accepted principles that explain market behavior and underlie prosperity also explain environmental problems and offer ways to solve them.
Terry Anderson
Terry L. Anderson and Henry I. Miller, M.D. Editors
Richard Stroup, Jane Shaw
Conventional economic wisdom, in a theory first propounded by Nobel laureate Paul Samuelson, holds that the unregulated market cannot be expected to protect the environment.
J. Bishop Grewell
By J. Bishop Grewell Tiny microbes living in the mud-pots and geysers of Yellowstone National Park have sparked a mammoth controversy.
Apple Daily, Hong KongDecember 13, 1999 By Matthew Brown
Orange County RegisterJuly 18, 1999 CLAY LANDRYCopyright 1999 The Orange County Register
Bruce Yandle
The Market Meets the EnvironmentEconomic Analysis of Environmental PolicyBruce Yandle Editor
NWRA (National Water Resources Association): What is PERC’s mission and how are you included in groundwater marketing?
Jane Shaw
Tacoma News TribuneAugust 13, 1998 By Matthew Brown and Jane S. Shaw
Terry Anderson
By Candice Jackson Mayhugh Stanford Review  
Peter Hill
Eco-Sanity:A Common-Sense Guide to EnvironmentalismBy Joseph L. Bast, Peter J. Hill and Richard C. Rue
Terry Anderson
Terry L. Anderson, Editor
Bruce Yandle, Roger Meiners
Roger Meiners and Bruce Yandle, Editors
Terry Anderson
Stanford Review Interview with Terry Anderson
Terry Anderson, Laura Huggins
By Terry L. Anderson and Laura E. Huggins
Andrew Morriss
By Andrew P. Morriss
PERC Executive Director Terry Anderson:
Peter Hill
Full Text of Speech: Morality and Capitalism
H. Spencer Banzhaf
Young scholars from various discipline challenge the PERC founders of free market environmentalism on what works, what could work in the future and how to address large scale problems such as climate change, and also when markets are not the so. They will also discuss situations where markets might not work best or might not work at all.
Free Market Environmentalism is better at managing natural resources than the government. The oil spill clean-up in the Gulf of Mexico is a recent example.
Terry Anderson
Terry Anderson presents the annual Friedrich Wieser lecture at the Prague Conference on Political Economy 2011 to supporters of the Austrian School of Economics and political economy of freedom.
Laura Huggins
PERC Director of Outreach Laura Huggins explores how free market environmentalism is working to save 40 million acres of Patagonia grasslands.
PERC Enviropreneur Institute (PEI) Alum Jeremy Gingerich talks about the importance of open landscapes and how the skills from PEI will help him achieve his goals.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Jonathan Karpoff offers the keynote address highlighting Ronald Coase and environmental finance.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Jonathan Karpoff offers the keynote address highlighting Ronald Coase and environmental finance. Chapter 2 offers an overview of the patron saints.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Jonathan Karpoff offers the keynote address highlighting Ronald Coase and environmental finance. Section 3 highlights Ronald Coase's contributions.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Jonathan Karpoff offers the keynote address highlighting Ronald Coase and environmental finance. Concluding Remarks.
Randy Simmons
Allowing price to ration water may be a bitter political pill to swallow, but it makes economic and environmental sense. Writing at The Conversation, Randy Simmons lends insight into California's water crisis.
Terry Anderson
Long before the EPA was a glint in anyone's eye, property rights were dealing with pollution issues. Watch as PERC's Terry Anderson discusses free market solutions to pollution and other environmental conflicts with John Stossel on Fox Business Network.
Wendy Purnell
In his book on the history of environmental controversies, A Climate of Crisis: America in the Age of Environmentalism, Patrick Allitt provides context for the debates. As two different reviewers point out, though, he misses the importance of the free market environmentalist perspective.
Terry Anderson
In this issue of Capital Ideas -- Live!, Hayes Brown interviews Terry Anderson about free market environmentalism, how conservation benefits can flow from private land stewardship, and more.
Terry Anderson
Terry Anderson joins Russ Roberts for an EconTalk podcast about free-market environmentalism, the dynamics of the Yellowstone ecosystem, and how property rights can protect natural resources.
Terry Anderson
Focusing on externalities distracts economists from understanding how bargaining can solve problems without government intervention.
Reed Watson
Trampling the property rights of beachfront landowners in the name of public access is no way to encourage beach conservation.
Terry Anderson, Gary Libecap
Environmental Markets is the inaugural book in Cambridge Studies in Economics, Choice, and Society, a new interdisciplinary series of theoretical and empirical research focusing on individual choice, institutions, and social outcomes.
Shawn Regan
Cliven Bundy's battle was born out of a broken system that encourages conflict, not negotiation.
Terry Anderson, Carson Bruno
When it comes to hydraulic fracturing, market-based solutions are much more efficient and effective than top-down government regulations.
Terry Anderson
Today's Sagebrush rebels want federal lands transferred to states, while environmentalists want more federal control. Both sides should be careful what they ask for.
Shawn Regan
When environmental groups buy ranchers' permits, there's no need for the feds to start rustling up trouble.
Reed Watson, Peter Hill, Shawn Regan, Laura Huggins
Listen as Aaron Flint of "Voices of Montana" talks with Reed Watson, P.J. Hill, Shawn Regan, and Laura Huggins about free market environmentalism.
Gary Libecap
Thanks to secure property rights, this technology has the power to resuscitate our lagging economy.
For every $100 billion that the United States centrally directs to clean energy, GDP may decrease by over 0.4%, says Dino Falaschetti.
Matt Ridley
The death this week of Ronald Coase, one of the world's most-cited economists, comes at a time when there is lively debate about the very issue he raised: why neither markets nor government are panaceas.
Jonathan Adler
The existence of “externalities” — effects (costs or benefits) of market transactions that are not experienced by those involved in the transaction, but are instead experienced by others, those “external” to the transaction —  is routinely proffered as a justification fo
The seasteading concept arises from a desire to make the world a better place to live in. People constantly disapprove of their own societies: either too conservative or too liberal, either too restrictive or too free.
PERC’s Executive Director, Dr. Dino Falaschetti, recently visited the George W. Bush Institute, where he sat down with Dr. Eric Bing to discuss how economic growth affects the environment.
Randy Simmons
James M. Buchanan, the Nobel laureate in economics and father of public choice theory, has passed away at the age of 93. Buchanan's work formed the foundation for PERC's early research on environmental issues.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Richard Geddes of Cornell University presents on congestion pricing.
As part of PERC's FME workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Jamie Brown of Iowa State University presents on entrepreneurial finance and environmental innovation.
As part of PERC's FME workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Jonathan Klick of the University of Pennsylvania Law School presents on estimating the effects of emissions permits.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Micheal Orlando of Economics Advisors Inc. presents on financial contracting, energy, and the environment.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities," Dr. Robin Hanson of George Mason University presents on information markets for environmental services.
As part of PERC's Free Market Environmentalism Workshop, "Financial Contracting, Transaction Costs, and Environmental Amenities,"Jonathan Klick of the University of Pennsylvania Law School offers a summary of the conference and closing remarks on the future of environmental finance.
Terry Anderson
Terry Anderson of PERC supports the Green Tea Party in 2012 and its preseidential candidate Kermit the Frog. Kermit promises environmental quality with limited government and budget cuts.
Editor's Note: Summers are an exciting time at PERC as we welcome dozens of visiting scholars to our summer fellowships programs. Throughout the summer, The PERColator will be bringing you a new Q&A series with many of our outstanding visiting fellows.    Michael 't Sas-RolfesMichael ‘t Sas-Rolfes is an environmental economist with a focus on the role of markets for biodiversity conservation. He has been actively involved in various private conservation initiatives for 25 years, starting as a financial manager of a private game reserve in South Africa and later conducting research on the role of private markets for wildlife conservation in Africa.Michael worked with Francis Vorhies to set up Eco Plus, an innovative consultancy on business, economics, and the environment. His consulting experience includes work on trans-frontier conservation areas, wildlife trade policy, and institutional reform in protected area management. He has written extensively on various conservation issues, especially relating to trade in endangered species.Michael is a 2011 PERC Lone Mountain Fellow researching international wildlife trade policy. Thanks to Michael for taking time to answer our questions.Q: In 1998, you authored a PERC Policy Series called “Who Will Save the Wild Tiger?” What has changed in the world of tigers since you wrote the paper?A:  A lot has been done. There have been many conservation initiatives, much money spent, and many, many meetings. A wide range of conservation NGOs and even the World Bank established initiatives, culminating in last year’s grand “Tiger Summit” in St. Petersburg in Russia. Unfortunately, however, wild tiger numbers have continued to decline. When I wrote the PERC Policy Series paper, the most recent estimate of wild tiger numbers was between 4,800 and 7,300. Last year the official World Wildlife Fund estimate was 3,200. So in another sense, not much has changed at all – the wild tiger remains in trouble.Interestingly, during this time the Chinese government also announced plans to investigate the feasibility of using farmed tigers to provide a legal supply of tiger bone medicines to their domestic market, citing my PERC Policy Series as a partial justification for this. Conservation NGOs (and the World Bank) reacted in a very hostile way to these proposals and the Chinese have not pursued them any further.Q: In your paper you wrote, “Tiger conservation is, ultimately, an issue of incentives.” What are the incentives and who faces them?A:   Conservation NGOs benefit from the tiger’s charismatic high profile as a means to raise funds, and conservation scientists like to study tigers, so one could argue that they have an incentive to prevent them from becoming extinct. By contrast, rural people living near tigers have to deal with threats to their livestock and children, and human-tiger conflict is a serious problem over most of the wild tiger’s range. Rural people have less of an incentive to conserve tigers, especially when offered large sums of money for tiger carcasses.I believe that the main challenge for tiger conservation is that people living next to wild tigers are the ones who actually control their destiny, and right now those people typically don’t benefit much from the presence of wild tigers. The people who do benefit are mostly far away and don’t have much real control over what happens to tigers. There is a mismatch between who pays the costs and who gets to benefit from tiger conservation.Q: How can tigers become assets instead of liabilities?A:  For something to be an asset, it has to be owned by someone. Right now most wild tigers are typically ‘owned’ by governments, but that is a weak and dispersed form of ownership, which does not benefit or incentivize specific people who control the wild tiger’s destiny. Those people are typically rural subsistence farmers and poorly paid government employees. By creating stronger property rights – i.e. more direct ownership of tigers – one could create ways for more specific groups, communities or agencies to control and benefit directly from tigers. Ways to benefit could include genuine “adopt-a-tiger” schemes, contractual agreements with local people, tourist viewing, and possibly trophy hunting (although this is currently banned). This would give tigers much greater asset value.Q: Should conservationists look toward tiger farming as a viable solution to the decline in wild tiger populations? A:  Tiger farming is one of a range of options to consider. It has the potential to satisfy some of the persisting demand for products such as tiger bone, thereby competing with the black market, which currently provides the only channel of supply. It is not a panacea, but it is also not the threat that some conservation groups claim it to be. The Chinese captive tiger population already exceeds the world’s wild tiger population, and conservation groups worry that some products are ‘leaking’ illegally into the marketplace. However, if market demand for these products persists, it would be a bad idea to try to stop this leakage, because it will simply drive up the value of poached tiger products and stimulate poaching even further.Q: You have also done similar work on protecting wild rhino populations in Africa. You recently launched a website called Rhino Economics. What is the purpose of the website?A:  Rhino Economics provides an information source to a wide audience on all of the economic issues relating to rhino conservation, especially the rhino horn trade. The public tends to be poorly informed on this issue. Most people still think that rhino horn is used as an aphrodisiac and that the rhino horn trade ban is a good idea. My research over the past 22 years shows that the smartest way to protect rhinos is to create strong property rights and market incentives, and the example of the southern white rhino success story provides concrete proof. My research also suggests that the greatest threat to rhinos today is in fact the ban on rhino horn trade. The ban is causing an artificial supply shortage that is driving the price up to outrageous levels and thereby attracting highly-sophisticated organized crime syndicates into the trade.The website aims to provide information at three different levels: 1) a quick overview of the issues for the general public, 2) a more detailed explanation of the issues for those who are more interested or involved in rhino conservation and 3) a comprehensive listing of past academic and policy work I have done for students and practitioners of wildlife policy.
Shawn Regan
Originally published at Grist.
Terry Anderson, Laura Huggins
In the past, the economy of the western United States depended on converting natural resources into lumber, metals, and hydroelectricity. More recently, the relationship to natural resources has moved from extraction toward protection. But this shift has led to acrimony and gridlock.


G. Tracy Mehan III
Why free market environmentalism is the magnum opus of a new generation of greens
Matt Ridley
The eyes of a keen conservationist are opened
Vernon L. Smith
Growing up on a farm in Kansas provided an invigorating child-hood—learning about crops and animals, befriending pet chickens, and shooting rabbits for dinner with an 1890 vintage lever action 12-gauge Winchester.
Thomas Bray
Nobel Laureate sees promise in the future of the environment using markets
Fred Krupp
Making environmental protection profitable leads to results
G. Tracy Mehan III
Somehow I had missed the fact that Chuck Leavell was keyboardist for the Allman Brothers Band and, since 1982, for the Rolling Stones. Nor did I know that he is a forester.
Jane Shaw, Bruce Yandle
By Jane S. Shaw and Bruce Yandle With his 2006 budget, President Bush appears to be championing fiscal responsibility. For environmental policy, this change offers hope for new directions.
Thatcher's environmental views from a new perspective.
Terry Anderson
Hunting and economics meet in South Africa.
Elizabeth Singleton
By Elizabeth Singleton
A friendly critic questions the justice and practicality of PERC's environmental approach.
J. Bishop Grewell
Certification informs consumers about forest management.
Ronald Bailey
Assessing humans' role in nature and the reality of wilderness
Richard Wright
A First Nation in British Columbia in rewriting the rules.
Te Maire Tau
Reinstating indigenous rights to own property and build an economy in New Zealand
Charles Kolstad
Free market environmentalism has a lot to offer, but Kolstad says the case for FME is weaker when dealing with environmental goods such as clean air.

Web Exclusives

Earlier this fall, Bobby McCormick, PERC senior fellow, spoke at the annual meeting of the International Union for Conservation of Nature in Madrid.


Terry Anderson
Step away from the blackboard
Terry Anderson
When Donald Leal and I wrote Free Market Environmentalism in 1991, we mostly theorized about how property rights and markets could enhance environmental quality. We focused more on political failures than market successes because there were more of the former than the latter.
Daniel Benjamin
A market approach to conservation: Buy land.
Terry Anderson
Seeing environmental problems as opportunities.
Terry Anderson
Restoring Indian Dignity
Reed Watson
Preserving Property Rights in Iowa
Terry Anderson
The federal government can help produce fish and wildlife habitat.
Reed Watson
As free market environmentalism becomes more mainstream, PERC continues to evolve.
Terry Anderson
Nobel laureate Ronald Coase has passed away at the age of 102. Coase's work provided the intellectual foundation on which free market environmentalism is built.
Terry Anderson
If you are in favor of economic growth, free markets, and less government, join the Green Tea Party and support Kermit the Frog for president.
Terry Anderson
For traditional environmentalists, 2010 is important because the first Earth Day occurred 40 years ago. For free market environmentalists, 2010 is more than an anniversary— it’s cause for celebration.
Terry Anderson
The drive to be greener than others begs two questions. Why is everyone so green here and now, and what really constitutes being green?


Brent Fewell
Q&A with PERC's new executive director Reed Watson.
H. Spencer Banzhaf
What the birth of free-market economics can teach us about today's natural resource policies.
James G. Workman
One sunny day in La Jolla, at the public Windansea Beach, I tried to catch a wave and sit on top of the world. I splashed into the “wild, open, and free” waves with the Beach Boys’ “Surfin’ Safari” melody in my head.  
Linda Platts
The oily red flesh of southern bluefin tuna makes the finest sashimi on the planet.
Carol Ferrie
Of course I wanted to make the environment better. Doesn’t everybody?

FME in Action

Wendy Purnell
Maritime industry protects marine mammals.
Wendy Purnell
Water markets reconnect the Colorado to the Pacific.