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Property Rights Better Than Bureaucrats

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Just as centralized economic planning has failed, centralized ecological planning will fail. The solution to our environmental problems will not be found in more government agencies, bureaucrats, and arbitrary regulations. Rather, we need an approach which relies on individual responsibility and its concomitants, individual liberty and private-property rights.

Traditional economists point to pollution as an example of “market failure” due to “externalities.” Actually, pollution results from poorly defined or poorly enforced property rights. We need to establish well-defined property rights in water, air, and land, and privatize publicly owned resources (such as governmental land and water resources) so that the incentives in the system reward those who refrain from polluting and penalize those who do.

Courts and Pollution

The enormous problems we have with pollution are a result of the fact that the courts have historically failed to protect private property from pollution. Over a hundred years ago, when polluters were first being sued for the damage they were causing, instead of protecting the victims of pollution, the courts ruled in favor of allowing the polluters to continue to pollute, arguing that the jobs and economic benefits associated with the polluting factory outweighed the damage of the pollution. If the courts had instead sided with the victims of the pollution, the polluters would have had either to stop polluting or to negotiate with the victims for compensation for a particular level of pollution. This would have set the stage for direct economic incentives to invest in the research and development of pollution — free manufacturing and pollution-reduction technology. Instead, the courts’ failure to protect private-property rights resulted in a situation in which any company which spent money to reduce or eliminate pollution would be at a competitive disadvantage to those companies which treated the environment as a zero-cost waste dump. The result is the pollution on a vast scale which we see today.

To reiterate, the solution is to establish well-defined private-property rights and to get resources into the private sector, so that the incentives are to protect — not violate — the environment.

Here is one example of how private-property rights have protected a natural resource that, unfortunately, rarely receives any protection. In England, there are private “fishing rights” in many streams. These streams are maintained in pristine quality because there are private interests ready to sue those who would pollute them. (In fact, this situation exists only because of the over 1,500 suits that have been fought and won by the Anglers’ Cooperative Association against would-be polluters.) In contrast, because rivers and streams in America are publicly owned, they do not receive similar protection; thus, they suffer accordingly.

Solutions

Here are measures which would better protect our environment:

1. Eliminate the many ways in which the government subsidizes the destruction of the environment, such as water subsidies for agriculture, United States Forest Service subsidies to logging, and “chaining” by the Bureau of Land Management and the Forest Service.

2. Establish well-defined property rights in water, air, and land.

3. Reform the legal system so that the loser pays the court costs and legal fees of the winner.

4. Privatize publicly owned resources (such as government lands and water resources). Once the lands and other resources are privately held, the owners have a direct economic incentive to maintain their value, protect them from would-be polluters, and seek ways to coordinate harmoniously the various alternative uses of the resource (e.g., undisturbed wilderness, hiking, hunting, fishing, biking, rafting, off-road vehicles, etc.), so that, as much as possible, the consumers of environmental amenities are satisfied.

In conclusion, in contrast to the traditional environmentalist approach of more arbitrary authority for government agencies, the free-market environmentalist approach relies on individual responsibility. It decentralizes political power and harnesses the individual’s self-interest to protect and maintain our environment.

This is an edited version of an article which appeared in the November 1, 1992, issue of The Stanford Review, P.O. Box 2343, Stanford, CA 94309. Reprinted by permission.

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    Mr. Olson, a Freedom Daily subscriber, is a student at Stanford University.