The American Spectator

Free Market Environmentalism also emphasized the tendency of the political sector to externalize costs. The Holy Grail of most economists is to internalize costs, i.e., make those who benefit from the economic activity bear the costs or avoid the spillover effects, e.g., pollution, from their activities. This encourages efficiency and equity by discouraging waste and harm.

BUT GOVERNMENT TENDS TO EXTERNALIZE rather than internalize costs, because politicians and bureaucrats are rewarded for responding to political pressure groups. Thus, “there is no guarantee that the values of unorganized interests will be taken into account even if they constitute a majority of the population,” claimed Anderson and Leal. Voters are “rationally ignorant” because benefits can be concentrated and costs diffused.

If you consider all the environmental degradation, pollution, and over-exploitation resulting from subsidized water, agricultural subsidies, below-cost timber sales, below-cost grazing fees, and tariffs on sugar imports (to the detriment of the Everglades as well as consumers), they all benefit favored constituencies at the expense of the taxpayers and the environment.

Free Market Environmentalism was published in the wake of the collapse of the Berlin Wall, the dissolution of the Soviet Empire, and the revelations of environmental degradation at a scale unimaginable even during the height of the Industrial Revolution in the West. Absent a robust civil society bolstered by private property, a productive economy, and a democratic regime with an active feedback loop, the nations behind the Iron Curtain experienced untold health and environmental catastrophes with which they must cope for generations.

The Soviet Union’s environmental failure was Exhibit One relative to government failure as opposed to the traditional liberal complaints of market failure.This historical context was one reason for the receptivity of many readers to the lessons of Free Market Environmentalism.

ANOTHER TIMELY DEVELOPMENT which encouraged readers to bring an open mind to Free Market Environmentalism was the passage of the Clean Air Act Amendments of 1990 which established the ambitious and, as it turned out, very successful, market-based cap-and-trade program to combat acid rain caused by sulfur dioxide emissions. The GAO has projected the long-term savings of this trading program to be as much as $3 billion per year — over 50% — compared with a traditional command-and-control approach.

The arguments of free market environmentalists are quintessentially Lockean with their emphasis on well-specified, defendable, transferable property rights. These techniques can work very well for certain consumptive uses such as hunting for fee, or individual fishing quotas for marine fishing allotments. However, for a property rights approach to succeed environmentally in these and other areas such as air and water quality, it is often necessary to adopt some regulatory drivers or mandates to create mechanisms such as cap-and-trade programs which allow for the sale of credits generated by a discharger who can reduce pollution more efficiently than others.

To put it another way, while libertarians view free market environmentalism as an end in itself, many others will view it as a means of achieving community or ethical norms of environmental stewardship. Fred Smith of the Competitive Enterprise Institute describes the latter position as “free-market socialism,” but a Burkean conservative might be more forgiving.

But these are abstract questions which need not worry us. There is ample room to inject more freedom, incentives, and efficiency into our existing regulatory programs while pursing this new paradigm in numerous areas of resources management and protection, up to and including biodiversity or ecosystem protection. A concrete example illustrates this point.

Recently PERC’s website provided a link to an article in Orion Magazine (“Prairie Dreaming,” September/October 2006) by Hal Herring on the work of the American Prairie Foundation (APF) on the glaciated plains of eastern Montana cattle country.

Herring, who is a contributing editor at Field and Stream, describes the traditional divide between cattle ranching on the one hand and, on the other, grizzly bears, wolves, elk, prairie dogs as well as the swift fox, the ferruginous hawk, the mountain plover, the prairie rattlesnake, the badger, the black-footed ferret, and a complex web of plants.

At the same time, one in ten people have left the nearby town of Malta and the surrounding Phillips County since 1990. Ranching is tough despite the hardiness of the fourth-generation ranchers in the area. Evidently, a square mile of land can only support no more than six or eight cows.

Less than 1.5% of the native prairie landscapes in the U.S. are under any kind of long-term protection. The bison and prairie dog used to thrive in this region. “Native grasslands that once displayed a diversity as complex as 190 species of grasses and forbs per square meter now have an average of twelve,” says Herring.

UNDER THE LEADERSHIP of Sean Gerrity, a native of Great Falls, Montana, and a former business consultant in Silicon Valley, the Bozeman-based APF is trying to execute a plan called, simply the Prairie Project. According to Herring it seeks “to create one of the largest and most innovative conservation projects on Earth, a grassland reserve replete with as many native species as can be sustained… it eventually could be half again as big as Yellowstone National Park.”

The big difference, though, is that the Prairie Project intends to implement their vision with private, rather than government money. Herring quotes Gerrity as to the project being “a place of vastness” where people will be able to find a “spiritual connection to our native grasslands that’s been lost.” Gerrity can imagine that someday visiting this place will be like visiting a coral reef.