Free Market Environmentalism
Our environment is what sustains us. We rely on the environment to feed us, clothe us, and provide us with inspiration and spiritual renewal. Some of these uses go together, while others compete with each other. How we allocate environmental resources affects our lives. At PERC we look for cooperative allocation methods that provide positive incentives for good stewardship. We start with free market environmentalism.
Free Market Environmentalism: Unregulated voluntary trade that produces good environmental outcomes.
Examples of free market environmentalism include:
- Making fabric out of used plastic
- Creating energy from landfill waste
- Enhancing fish habitat by trading instream water flows
- Diversifying ranch income by providing recreation and hunting opportunities
Free market environmentalism comes from entrepreneurs seeking ways to enhance environmental quality and the bottom line. By covering costs and earning profits, this type of environmentalism is sustainable. It stems from clearly defined ownership of resources and the right to trade them.
Ownership is important because people tend to take better care of what they own. Good stewardship is rewarded with increased value. Most people take better care of their own home than a rental, for example.
Accountability is also enhanced with clear ownership rights by making people responsible for harm done to others. The driver responsible for an auto collision, for example, is liable for any damages done.
Trade encourages owners to realize what value others put on a resource. For example, a conservation group willing to pay for water that is left instream forces an irrigating farmer to consider the conservation value of the river.
One outcome of free market environmentalism is water conservation. In the West, landowners have ownership, or a property right, to a certain amount of water from a river. Historically, due to established usage requirements, this water had to be withdrawn from the river for agricultural uses, such as growing the crops and livestock that kept us fed.
This approach often meant that too little water was left in the river for fish, wildlife, and recreation. Many markets for trading water-use rights have emerged so that conservation groups are now able to buy water from ranchers or farmers and leave it in the stream.
Because ranchers benefit by selling excess water, they are willing to invest in water-saving technology or leave areas unirrigated. Thanks to clear ownership rights and trade, ranchers receive financial returns, conservationists get the rights to water they otherwise would not have, and fish and wildlife have water left instream.
Environmental entrepreneurs, or enviropreneurs, create products, services, or market platforms that help solve environmental problems. Enviropreneurs create tools that enhance conservation and generate the revenues to pay for it, such as smart technology to reduce energy consumption or market platforms that harness private investment to reduce wildfire risk. These entrepreneurial-spirited solutions—based on coming together through trade—have not only avoided or mitigated community battles and environmental degradation but have also revealed numerous opportunities for environmental gains.
Explore how free market environmentalism is improving conservation outcomes around the globe.
A Different Shade of Green
Government is often the default solution when environmental problems occur. But the political process usually pits different user groups against each other creating winner-takes-all solutions and litigious responses. Furthermore, wins under one government administration are often reversed under another.
Conservation will ultimately boil down to rewarding the private landowner who conserves the public interest – Aldo Leopold
Even with publicly owned resources, market-based approaches generally align incentives better than top-down control. For instance, reforms that allowed individual national parks to keep revenues from recreation fees have given local managers flexibility to use their funds to improve visitor experiences and address maintenance needs.
The most lasting conservation outcomes do not depend on political strength but rather come from cooperation and mutually beneficial exchange. Cooperative solutions to environmental problems help bridge the divide among various stakeholders and create incentives to sustain the practices no matter the political climate. Free market environmentalism presents this alternative.