From the Vault
“If markets can produce bread and cars, why can’t they produce environmental quality?” In 1980, a group of Bozeman economists began asking this question, and founded PERC to research how markets can improve environmental quality. PERC has since moved from being a voice in the wilderness to holding a prominent place on the environmental policy stage. Thirty-five years later, we remain committed to improving environmental quality through property rights and markets.
PERC is globally known as the home of free market environmentalism (FME). This prominence is the result of great ideas, quality research, and focused outreach. Walker Asserson described the foundations and growth of FME in The Economists in the Garden: The Historical Roots of Free Market Environmentalism (2007):
At the heart of the new paradigm lay the audacious claim that the principles undergirding capitalism can be used to remedy the excesses of capitalism in order to help the environment. This approach turned traditional thinking on the matter upside down, and the scholars who advocated it have found policy successes around the world.
The founders of FME saw themselves as Classical Liberals, claiming to uphold the “integrity of the individual and the right to freedom from coercion.” These continue to be manifest today in the movement’s desire for a limited constitutional government, the rule of law, support for private property rights, and a free market economy…. “Whether it is organized around a profit seeking or non-profit undertaking, there are incentives for the owner to preserve the resource … [because they] capture the full capital value of the resource. Self-interest and economic incentive drive the owner to maintain its long-term capital value,” [said John Baden, on of PERC’s founders.]
The scholars in Bozeman believed that well-defined and transferable property rights help remedy the tragedy of the commons by producing information and creating positive incentives for individuals to act in environmentally-friendly ways…. The FME founders applied these insights to the environment, noting that property rights on public lands could be defined to create incentives for sound stewardship, as long as common law and nuisance liability law were similarly enhanced. If done correctly, they believed, environmental resources would become assets for their owners, extending the decision-making calculus to include long-term effects.
Three decades ago, Anderson, Baden, Hill, and Stroup built a movement that now receives widespread national and international attention. They identified environmental problems generated by markets and those endemic to government management, and then developed a broad set of principles necessary to overcome them. Their paradigm challenged the widely held perception that environmental problems were unique and could only be solved through government intervention to mitigate market failure…. To ameliorate these problems the FME scholars strove to align individuals’ self-interest with society’s environmental interest, thus harmonizing environmental goals with responsible economic growth and an appreciation for the ideals of a free society.
[Terry] Anderson, [John] Baden, [P.J.] Hill, and [Richard] Stroup deserve recognition as the originators of a comprehensive new approach to environmental issues. Using the principles powering capitalism to remedy the excesses of capitalism had not previously been advocated in any sustained manner. After thirty years of activism, FME has certainly arrived.
Asserson is right – due to the work of PERC, FME certainly has arrived. But we refuse to hang up our hats and rest on our laurels. Today, we remain dedicated to improving environmental quality through property rights and markets by:
Conducting research on natural resource issues, including private conservation, water marketing, and public lands management. The goal of PERC’s research is to advance our understanding of complex environmental issues and challenge assumptions about whether and how markets and property rights can enhance environmental quality.
Disseminating ideas through publications and environmental outreach. The goals are to inform the public on questions of environmental policy and to inspire new and creative approaches to resolving environmental conflict.
Empowering enviropreneurs (environmental entrepreneurs) by providing the skills, training, and experiences necessary to scale up entrepreneurial efforts that improve the environment using contracts and markets.
The work has paid off. PERC’s Enviropreneur Institute, Student Colloquium, and research fellowships help students, scholars, and conservationists explore the ideas of FME to prepare for the environmental issues we face now and in the future. PERC’s ideas are reaching a growing audience through publications, books, major newspaper articles, radio segments, and television interviews. Since the beginning, PERC has made a name for itself in the environmental policy spotlight and continues today to change the culture of environmentalism.