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Free Market Environmentalism
The original edition of this seminal book, published in 1991, introduced the concept of using markets and property rights to protect and improve environmental quality. Since publication, the ideas in this book have been adopted not only by conservative circles but by a wide range of environmental groups. To mention a few examples, Defenders of Wildlife applies the tenets of free market environmentalism to its wolf compensation program; World Wildlife Federation has successfully launched the CAMPFIRE program in southern Africa to reward native villagers who conserve elephants; and the Oregon Water Trust uses water markets to purchase or lease water for salmon and steelhead habitats. This revised edition updates the successful applications of free market environmentalism and adds two new chapters.
241 pages, Paperback
First published February 13, 1991
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Displaying 1 - 7 of 7 reviews
November 17, 2007
This guy makes emblematic arguments about the lauded market approach to natural resource allocation, and he's eloquent, but they don't hold much water, as he basically devalues any intrinsic nature has on its own. Removing that aspect only leads to destruction. Thus, it's not possible to value everything monetarily, nor transform it to maximize perfunctory returns.
November 6, 2020
Having heard Terry Anderson's EconTalk interview a couple years ago, I had a fairly good sense that this book would be a reasonable and worthwhile read. So when I happened to see it in a random neighborhood free library box(!) I snapped it up and finally, now that I'm starting to get deeper into libertarian theory, just now got around to reading it. I say all that not to anticipate the left-environmentalist reaction to the mere audacity of the title so much as address the assumption that the book wastes its time in that same vein, responding to actual and potential political resistance to its position rather than exploring its complexities.
The book is kind of a mixed bag on all fronts. If I were still the radical anti-civ environmentalist I was a decade ago, I would have found exactly the corporate shilling I expected. It opens by invoking Emma Marris and Daniel Botkin to discredit the idea of pure, untouched wilderness as a goal for preservation--opening the door to the idea that it's okay for us to do whatever we want to nature. It quotes Hayek, of course. And throughout the book it argues that strict regulation and prohibition are bad for both environmentalists and businesspeople--a happy accident that the things that benefit rich investors and extractive industries would be the same things that are actually good for the environment. Luckily, I'm now pretty completely convinced of all of those premises (in their actual form, not the cynical misrepresentations). I'm a fan of Marris, and certainly accept the dynamic, view of nature and the human relationship to it that her book presents. I think Hayek was ahead of his time, and certainly ahead of ecology, in several important respects even if I might not support all of his political conclusions. And one of those ideas is that profit is an ecologically neutral mechanism for shaping cultural evolution and enabling dynamic responses--both of which are obviously important in managing a human economy interfacing with a dynamic ecosystem.
The actual content of the book walks an interesting line. It's composed of case studies used to illustrate very briefly sketched principles of "free market environmentalism." Half the time that term seems to want to be a relatively rigorous Hayekian argument in terms of philosophy and systems science. Half the time it shoots for something far more shallow. It wants to argue against the orthodoxy that strict regulation--caps on pollution, bans on hunting, exclusion of humans from wilderness zones, etc--are the gold standard of achieving environmental goals. The funny part is that this argument is, I think, potentially far less controversial, but it's framed in the most antagonistically partisan terms.
The thing that I find most interesting about environmental libertarianism, aside from the inherent interest of human ecology, is that it provides a very clear edge case for libertarian premises. The fact that there is no "default" way to assign property rights, for instance, or often no reasonable way to define them at all (much less enforce them) becomes far more clear. And to their credit, Anderson and Leal admit that pretty much right off the bat. The book is not an argument that we *should* adopt property-rights-based solutions to environmental problems. It begins with the premise that such solutions have already emerged in many contexts where they can evolve naturally without state intervention. The content of the book essentially asks, given their absence, how can we design and impose systems that approximate evolved rights as well as possible to reap their benefits in terms of flexibility and efficiency?
In other words, it's not arguing that regulation is bad but that regulation could and must be done better. Framed that way, you'd think a lot more people might be open to its conclusions. It's not a coincidence that the book cites left- and environmentalist-friendly figures like Elinor Ostrom and The Nature Conservancy and universally praises ceding control of natural resources to local indigenous communities. When you put aside the political baggage of "capitalism", there's a much smaller gap between what free market libertarians and left-libertarians want than they've talked themselves into thinking, and the empirical ways to reach those goals are what they are (and don't fall neatly into capitalist or anti-capitalist terms). The vast majority of the book, then, is just a list of things that worked because they went some way toward solving the systemic problems that created undesirable environmental outcomes both before regulation and with bad regulation. They eliminated perverse incentives and inefficiencies, replaced unresponsive rules with flexible feedback, and aligned community interests to enable the rules to be enforced. Without the Free Market theme and the Hayekian framing, you could sell this as a collection of systems-based permacultural solutions or cybernetic complex systems management or something.
The flip side of that is that it doesn't really engage with the questions of hardcore libertarianism that much at all. One thing that really bugs me is the classic libertarian problem of ignoring how property rights are assigned in the first place. For all the work Anderson has done in Native American economics, and for all the mentions of indigenous control here, it's stunning to me that the discussion of public land management, in a chapter titled "This Land Is Whose Land?", focuses on the enclosure of Western pastures by barbed wire, which enabled property rights to prevent a tragedy of the commons, never once mentions the fact that by enclosing that land, settlers were already violating Native property rights. Seems important! If property rights enforcement is what enables efficient allocation of resources, then founding your system on a major rights violation seems like it should somehow interfere with that conclusion.
The other big unacknowledged deviation from Hayekian doctrine is that, by the simple fact that these designed property rights systems have to be imposed by the state, they aren't Hayekian markets at all. This is presented in a somewhat strange way. The book almost completely ignores climate change, one of the few environmental problems were there's just no conceivable way to apply property rights. But when they do address it tangentially in the conclusion, they reject a carbon tax as "not a free market solution" and suggest that cap-and-trade systems are only fake markets, "market-like." This kind of flabbergasted me, because the entire book is about "market-like" systems. I thought we'd been taking this for granted the whole time! Apparently not. Looking back, I can see that there is some variation here. Some of the solutions they propose are more like standard enclosures of the commons, which do produce real markets. But plenty of the rest are literal cap-and-trade systems (eg for pollution of fisheries catch shares). They are fake markets, because the people whose interests they are meant to protect do not engage in transactions. You can't sell your right to clean air or a viable cod population; the government does it for you. Half of the Hayekian knowledge is missing, just guessed at by regulators subject to political pressure from polluters and extractors. In retrospect you can piece it together--emergent systems of property rights enforcement are the best, then fake regulatory markets, then political negotiation, then fiat politics with no opportunity for negotiation--but it's not laid out all that clearly.
I do think their point that political negotiation is a wasteful system to balance the competing value of industry and extraction against conservation is well-made and convincing. It's one of those things that sounds like a slippery slope until you think about it a bit and realize what the alternative has been and is like. At the moment, we hold pitched lobbying battles between environmental activist groups and industrial interests over the whole country or state's policy at a time. And whenever one or the other group wins, all that money and effort exerted by the other group is wasted. There's nothing to show for it. In a market system, you could spend all the money donated to an environmental group on buying and managing land. And because those rights are protected absolutely, there is no risk, as in a political system, that the next administration would reverse the decision and give your land to an extractor. The flip side of course is that extractive industries get to do exactly as they please with their land. The balance comes down to how much money people are willing to spend on preserving or extracting different kinds of habitat.
For me, this poses one of the central dilemmas of libertarianism applied to ecology. Limiting the value of preservation to the monetary value currently living humans are willing to spend on it relative to their other priorities is profoundly unsatisfying. For Anderson and Leal, this conclusion is not just acceptable but ideal. If poor people value the land more for its sale value to loggers than its cultural value, that's their right and letting them sell it is ideal. People want industrial goods and resources so pollution and habitat destruction have positive value that only decreases when they are satiated.
That's all well and good but it seems to place an enormous weight on accidents of history and trajectories strongly affected by prior rights violations, like the invalidation of native property rights. To put it in even more speculative but more libertarian terms, there are mutually beneficial transactions to be made between rich contemporary people and poor people in the past. How much would we pay colonists not to kill the last dodo, or passenger pigeon? How much value did Ernest Thompson Seton fail to capture by preserving bison for us, and how many more species would be preserved if eco-entrepreneurs could capture such future value? I realize that it's not fair to place such questions at Anderson and Leal's feet. They are actively encouraging people to 1) respect property rights, including indigenous property rights and 2) design systems that overcome such transaction costs, to make markets for conservation more effective. You can't blame them for the past failure of other people to respect their rules. But it is still somewhat disappointing that these hard, fascinating questions are not the ones this book wants to spend time exploring.
The book is kind of a mixed bag on all fronts. If I were still the radical anti-civ environmentalist I was a decade ago, I would have found exactly the corporate shilling I expected. It opens by invoking Emma Marris and Daniel Botkin to discredit the idea of pure, untouched wilderness as a goal for preservation--opening the door to the idea that it's okay for us to do whatever we want to nature. It quotes Hayek, of course. And throughout the book it argues that strict regulation and prohibition are bad for both environmentalists and businesspeople--a happy accident that the things that benefit rich investors and extractive industries would be the same things that are actually good for the environment. Luckily, I'm now pretty completely convinced of all of those premises (in their actual form, not the cynical misrepresentations). I'm a fan of Marris, and certainly accept the dynamic, view of nature and the human relationship to it that her book presents. I think Hayek was ahead of his time, and certainly ahead of ecology, in several important respects even if I might not support all of his political conclusions. And one of those ideas is that profit is an ecologically neutral mechanism for shaping cultural evolution and enabling dynamic responses--both of which are obviously important in managing a human economy interfacing with a dynamic ecosystem.
The actual content of the book walks an interesting line. It's composed of case studies used to illustrate very briefly sketched principles of "free market environmentalism." Half the time that term seems to want to be a relatively rigorous Hayekian argument in terms of philosophy and systems science. Half the time it shoots for something far more shallow. It wants to argue against the orthodoxy that strict regulation--caps on pollution, bans on hunting, exclusion of humans from wilderness zones, etc--are the gold standard of achieving environmental goals. The funny part is that this argument is, I think, potentially far less controversial, but it's framed in the most antagonistically partisan terms.
The thing that I find most interesting about environmental libertarianism, aside from the inherent interest of human ecology, is that it provides a very clear edge case for libertarian premises. The fact that there is no "default" way to assign property rights, for instance, or often no reasonable way to define them at all (much less enforce them) becomes far more clear. And to their credit, Anderson and Leal admit that pretty much right off the bat. The book is not an argument that we *should* adopt property-rights-based solutions to environmental problems. It begins with the premise that such solutions have already emerged in many contexts where they can evolve naturally without state intervention. The content of the book essentially asks, given their absence, how can we design and impose systems that approximate evolved rights as well as possible to reap their benefits in terms of flexibility and efficiency?
In other words, it's not arguing that regulation is bad but that regulation could and must be done better. Framed that way, you'd think a lot more people might be open to its conclusions. It's not a coincidence that the book cites left- and environmentalist-friendly figures like Elinor Ostrom and The Nature Conservancy and universally praises ceding control of natural resources to local indigenous communities. When you put aside the political baggage of "capitalism", there's a much smaller gap between what free market libertarians and left-libertarians want than they've talked themselves into thinking, and the empirical ways to reach those goals are what they are (and don't fall neatly into capitalist or anti-capitalist terms). The vast majority of the book, then, is just a list of things that worked because they went some way toward solving the systemic problems that created undesirable environmental outcomes both before regulation and with bad regulation. They eliminated perverse incentives and inefficiencies, replaced unresponsive rules with flexible feedback, and aligned community interests to enable the rules to be enforced. Without the Free Market theme and the Hayekian framing, you could sell this as a collection of systems-based permacultural solutions or cybernetic complex systems management or something.
The flip side of that is that it doesn't really engage with the questions of hardcore libertarianism that much at all. One thing that really bugs me is the classic libertarian problem of ignoring how property rights are assigned in the first place. For all the work Anderson has done in Native American economics, and for all the mentions of indigenous control here, it's stunning to me that the discussion of public land management, in a chapter titled "This Land Is Whose Land?", focuses on the enclosure of Western pastures by barbed wire, which enabled property rights to prevent a tragedy of the commons, never once mentions the fact that by enclosing that land, settlers were already violating Native property rights. Seems important! If property rights enforcement is what enables efficient allocation of resources, then founding your system on a major rights violation seems like it should somehow interfere with that conclusion.
The other big unacknowledged deviation from Hayekian doctrine is that, by the simple fact that these designed property rights systems have to be imposed by the state, they aren't Hayekian markets at all. This is presented in a somewhat strange way. The book almost completely ignores climate change, one of the few environmental problems were there's just no conceivable way to apply property rights. But when they do address it tangentially in the conclusion, they reject a carbon tax as "not a free market solution" and suggest that cap-and-trade systems are only fake markets, "market-like." This kind of flabbergasted me, because the entire book is about "market-like" systems. I thought we'd been taking this for granted the whole time! Apparently not. Looking back, I can see that there is some variation here. Some of the solutions they propose are more like standard enclosures of the commons, which do produce real markets. But plenty of the rest are literal cap-and-trade systems (eg for pollution of fisheries catch shares). They are fake markets, because the people whose interests they are meant to protect do not engage in transactions. You can't sell your right to clean air or a viable cod population; the government does it for you. Half of the Hayekian knowledge is missing, just guessed at by regulators subject to political pressure from polluters and extractors. In retrospect you can piece it together--emergent systems of property rights enforcement are the best, then fake regulatory markets, then political negotiation, then fiat politics with no opportunity for negotiation--but it's not laid out all that clearly.
I do think their point that political negotiation is a wasteful system to balance the competing value of industry and extraction against conservation is well-made and convincing. It's one of those things that sounds like a slippery slope until you think about it a bit and realize what the alternative has been and is like. At the moment, we hold pitched lobbying battles between environmental activist groups and industrial interests over the whole country or state's policy at a time. And whenever one or the other group wins, all that money and effort exerted by the other group is wasted. There's nothing to show for it. In a market system, you could spend all the money donated to an environmental group on buying and managing land. And because those rights are protected absolutely, there is no risk, as in a political system, that the next administration would reverse the decision and give your land to an extractor. The flip side of course is that extractive industries get to do exactly as they please with their land. The balance comes down to how much money people are willing to spend on preserving or extracting different kinds of habitat.
For me, this poses one of the central dilemmas of libertarianism applied to ecology. Limiting the value of preservation to the monetary value currently living humans are willing to spend on it relative to their other priorities is profoundly unsatisfying. For Anderson and Leal, this conclusion is not just acceptable but ideal. If poor people value the land more for its sale value to loggers than its cultural value, that's their right and letting them sell it is ideal. People want industrial goods and resources so pollution and habitat destruction have positive value that only decreases when they are satiated.
That's all well and good but it seems to place an enormous weight on accidents of history and trajectories strongly affected by prior rights violations, like the invalidation of native property rights. To put it in even more speculative but more libertarian terms, there are mutually beneficial transactions to be made between rich contemporary people and poor people in the past. How much would we pay colonists not to kill the last dodo, or passenger pigeon? How much value did Ernest Thompson Seton fail to capture by preserving bison for us, and how many more species would be preserved if eco-entrepreneurs could capture such future value? I realize that it's not fair to place such questions at Anderson and Leal's feet. They are actively encouraging people to 1) respect property rights, including indigenous property rights and 2) design systems that overcome such transaction costs, to make markets for conservation more effective. You can't blame them for the past failure of other people to respect their rules. But it is still somewhat disappointing that these hard, fascinating questions are not the ones this book wants to spend time exploring.
July 12, 2024
AN ARGUMENT IN FAVOR OF GREAT MARKET-DRIVEN APPROACHES TO THE ENVIRONMENT
They wrote in the first chapter of this 1991 book, for "Neo-Malthusians... governmental control---... we challenge this common perception and offer an alternative way of thinking about environmental issues, markets, and political choice. This way of thinking does not always provide solutions... The development of free market environmentalism has progressed from an examination of the relatively easy problems of land and energy development to the tougher problems of water quality and quantity."
The authors frankly admit that "managers in the private sector would dump production wastes into a nearby stream if they did not have to pay for the cost of their action" (pg. 10), and that a system of private water allocation "may not provide a sufficient supply of instream flows for wildlife habitat and environmental quality" (Pg. 14). They also concede that lumbermen "made attempts to raise the prices of processed wood through cartels." (Pg. 43)
They assert, "free market environmentalism presupposes well-specified rights to take actions with respect to specific resources. If these rights cannot be measured, monitored, and marketed, then there is little possibility for exchange... Private ownership of land works quite well for producing timber, but measuring, monitoring, and marketing the land for endangered species habitat requires entrepreneurial imagination." (Pg. 21)
The authors assert that a "market solution" to water pollution is "troublesome," that a free market solution to water pollution "seems elusive," and that "a case can be made for some regulatory authority, such as the Environmental Protection Agency, to control the level of pollution." (Pg. 138-139) They further admit the difficulties with air pollution, "Because it is difficult to identify the polluter, the harm, and the recipient..." (Pg. 155) They also concede that "the property rights approach offers no panacea. Property rights are costly to define and enforce"; nevertheless, free market environmentalism "moves us in the direction of a bargaining process between the polluters and the receptors of pollution." (Pg. 167)
This book is a refreshingly candid free market defense, but one which owns up (rather than glossing over) to the difficulties in their approach.
They wrote in the first chapter of this 1991 book, for "Neo-Malthusians... governmental control---... we challenge this common perception and offer an alternative way of thinking about environmental issues, markets, and political choice. This way of thinking does not always provide solutions... The development of free market environmentalism has progressed from an examination of the relatively easy problems of land and energy development to the tougher problems of water quality and quantity."
The authors frankly admit that "managers in the private sector would dump production wastes into a nearby stream if they did not have to pay for the cost of their action" (pg. 10), and that a system of private water allocation "may not provide a sufficient supply of instream flows for wildlife habitat and environmental quality" (Pg. 14). They also concede that lumbermen "made attempts to raise the prices of processed wood through cartels." (Pg. 43)
They assert, "free market environmentalism presupposes well-specified rights to take actions with respect to specific resources. If these rights cannot be measured, monitored, and marketed, then there is little possibility for exchange... Private ownership of land works quite well for producing timber, but measuring, monitoring, and marketing the land for endangered species habitat requires entrepreneurial imagination." (Pg. 21)
The authors assert that a "market solution" to water pollution is "troublesome," that a free market solution to water pollution "seems elusive," and that "a case can be made for some regulatory authority, such as the Environmental Protection Agency, to control the level of pollution." (Pg. 138-139) They further admit the difficulties with air pollution, "Because it is difficult to identify the polluter, the harm, and the recipient..." (Pg. 155) They also concede that "the property rights approach offers no panacea. Property rights are costly to define and enforce"; nevertheless, free market environmentalism "moves us in the direction of a bargaining process between the polluters and the receptors of pollution." (Pg. 167)
This book is a refreshingly candid free market defense, but one which owns up (rather than glossing over) to the difficulties in their approach.
May 12, 2022
Great intro into the fundamentals of the issues involving the market and environment.
Read
November 21, 2009None
April 2, 2011
Thought provoking.
December 26, 2025
This book only achieved its second star because Anderson has wonderful prose. Syntactically immaculate ideologically inept. Fuck the free market.
Displaying 1 - 7 of 7 reviews