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TBT: A Free Market Earth Day

Throwback Thursday: From the Vault

Photo courtesy of Stanley Zimny

Nearly 50 years ago on April 22, 20 million Americans took to the streets to protest the deterioration of the environment – the first Earth Day. Since then, April 22 has become a global day of celebrating our natural world and raising awareness for environmental challenges. Many protest perceived environmental injustices, some clean up their neighborhoods, and others head outside to bask in the wonders of the world.

Tomorrow, as we celebrate Earth Day, more than 150 world leaders are expected to sign the Paris climate agreement to fight climate change. This will be the largest single signing of an international agreement in world history. But will it make any difference?

In recent years, Germany has been championed for “pioneering an epochal transformation it calls the energiewende—an energy revolution that scientists say all nations must one day complete if a climate disaster is to be averted.” Yet, despite the German government’s efforts to curb carbon, Germany’s carbon dioxide emissions increased by an estimated 10 million tons from 2014 to 2015.

In fact, during last year’s climate negotiations in Paris, even U.S. Secretary of State John Kerry expressed doubt: “I don’t frankly look to government to solve this problem over the course of the next few years. It’s not going to happen. I look to the private sector…. I have absolute confidence in the ability of capital to move where the signal of the marketplace says ‘go’ after Paris.”

Here at PERC, we agree. Back in 1991, Terry Anderson and Don Leal described how market structures and property rights can save the environment far better than government efforts in Free Market Environmentalism:

Many people see free markets and the environment as incompatible; for them, the very notion of free market environmentalism is an oxymoron. Even many “free marketeers” find themselves on opposite sides of the fence when it comes to governmental regulation of the environment.

At the heart of free market environmentalism is a system of well-specified property rights to natural resources. Whether these rights are held by individuals, corporations, non-profit environmental groups, or communal groups, a discipline is imposed on resource users because the wealth of the owner of the property right is at stake if bad decisions are made. Of course, the further a decision maker is removed from this discipline—as he is when there is political control—the less likely it is that good resource stewardship will result. Moreover, if well-specified property rights are transferable, owners must not only consider their own values, they must also consider what others are willing to pay.

By confronting our entrenched visions, we can move beyond the status quo of political control of the environment and unleash environmental entrepreneurs on the tougher problems we face. The popularity of Earth Day 1990 illustrated the heightened environmental consciousness of people around the world. Most of the proposed solutions to perceived environmental problems, however, call for centralized approaches that are not consistent with the science of ecology. Moreover, these solutions pit winners against losers in a zero-sum game that tears at the social fabric. Free market environmentalism depends on a voluntary exchange of property rights between consenting owners and promotes cooperation and compromise. In short, it offers an alternative that channels the heightened environmental consciousness into win-win solutions that can sustain economic growth, enhance environmental quality, and promote harmony.

Building on the theories of the original book, in last year’s edition of Free Market Environmentalism for the Next Generation, Anderson and Leal called greenhouse gases “the mother of all global problems,” and pointed out various reasons political action is unlikely to effectively address climate change. As with other problems, they argue, the dynamic forces of the market are better tools to deal with a changing climate.

PERC loves any chance to celebrate the environment – including Earth Day. However, we think there are ways to celebrate smarter. Instead of petitioning our representatives or picketing on the steps of gas companies, let’s look for market-based innovation. Let’s support enviropreneurs who are decarbonizing energy in developing countries. Let’s adopt more public-private partnerships to manage forests and wildfire suppression. Let’s reform oil and gas leasing on public lands so climate change activists have an opportunity to compete with energy developers and “keep it in the ground.” This Earth Day, let’s replace rhetoric with results. 

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