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Home > Free-market environmentalism


 

Free market environmentalism is an ideology that argues the free market is the best tool to preserve the health and sustainability of the environment. This is in sharp contrast to the most common modern approach of looking to government intervention to help prevent excessive destruction of the environment.

1 Economics of environmental destruction

Economists view many environmental problems as arising from the negative externalities of industrial production and other activities. An industry may receive the full benefit of producing a pollutant but, in general, they do not pay the full social costs of polluting the environment. This leads to a situation analogous to the tragedy of the commons where the industry keeps all the benefits of an activity itself but shares the costs with all the other members of society. In such a situation it is rational to pollute. 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.

A conventional strategy to try to solve such a commons problem is by governmental regulation to proscribe polluting activities. Free market economists have criticized this approach as being at best inefficient and at worst ineffective. By allowing industries to pollute up to a specified limit, regulators effectively set the value of a clean environment at zero. Research at Amoco concluded that were the money that is currently spent on meeting regulations instead spent on reducing pollution, in ways that the company itself was already able to identify, the net benefits to the environment would be greater. Furthermore, the demands of regulation seldom appeal to the social conscience of industries or individuals and violation is often seen as legitimate business practice.

2 Property rights

Economists argue from the Coase Theorem that, were industries compelled to internalize the costs of their negative externalities they would face an overwhelming incentive to reduce them, perhaps even becoming enthusiastic about taking advantage of opportunities to improve profitability through lower costs. Moreover, this would strike the optimal balance between the benefits of pursuing an activity and 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 we are talking about a right to pollute or to exploit some limited natural phenomenon. This is a sophisticated variant of the polluter pays principle. There are a number of problems for which such solutions have already been proposed or implemented.

An example is 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. If the fishery had been owned by a corporation it would have had an engrained interest in keeping a renewable supply of fish to maintain profits over the long term. They would thus have charged high fees to fish in the area sharply reducing how many fish were caught. They also would have closely enforced rules on not catching young fish. Instead ships from around the world raced to get the fish out of the water before competitors could include catching fish that had not yet reproduced.

Another example is in the 19th centuryAlternative meaning: Nineteenth Century (periodical ( 18th century — 19th century — 20th century — more centuries) As a means of recording the passage of time, the 19th century was that century which lasted from 1801- 1900. Events The Little Ice Age ended 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 1902Events January-April January 28 The Carnegie Institution is founded in Washington, DC with a $10 million gift from Andrew Carnegie. France, Loisy's L'evangile et l'Eglise which inaugurates the Modernist Crisis February 11 Police beat up universal suffrage by the Newlands Reclamation ActThe Newlands Reclamation Act (or National Reclamation Act of 1902, named for its author, Representative Francis G. Newlands of Nevada, funded irrigation projects for the arid lands of the American West. The act at first covered only 16 of the western stat which introduced subsidies for irrigationSahara Irrigation (in agriculture) is the replacement or supplementation of rainfall with water from another source in order to grow crops. In contrast, agriculture that relies only on direct rainfall is sometimes referred to as dryland farming. How it wo 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 StatesThe United States of America also referred to as the United States U. America ¹ or the States is a federal republic in central North America, stretching from the Atlantic in the east to the Pacific Ocean in the west. It shares land borders with Canada in have been blamed on the continuing establishment of governmental control and a return to tradable property rights proposed.



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