Ky. Voices: Free environmentalism by using free-market principles

MUG SHOT: John Garen, UK economics professor, Lexington, Ky., Wednesday, Nov. 4, 2009.  Garen will be writing a monthly column for Business Monday. Pablo Alcala | Staff
MUG SHOT: John Garen, UK economics professor, Lexington, Ky., Wednesday, Nov. 4, 2009. Garen will be writing a monthly column for Business Monday. Pablo Alcala | Staff HERALD-LEADER

Earth Day is supposed to be about raising our awareness of the environment. Unfortunately, what's often raised instead is the amount of public scolding over how much water we use, how much trash we generate and how much gas our SUVs require.

This is peculiar, because it doesn't arise in most other situations where we're consuming something. No one makes you feel guilty, for instance, for loading up your shopping cart with groceries or buying weather-appropriate clothing for your family in the summer months.

Environmental goods are different, because — in most cases — we're not paying the tab for what we consume. That leads some to say government ought to determine their use and admonish us for our alleged wastefulness. But evidence shows that environmental problems arise from too little free enterprise, not too much.

Free markets are largely responsible for today's vast array of reasonably priced goods and services, and those same forces can be harnessed to help us address our environmental concerns.

Our collective hand-wringing over the environment takes place because there's no price sticker on the air, the open water, wildlife, the "wide open spaces" and other environmental amenities. In many cases, I'm not required (or able) to pay for the resources I use. In the grocery store, by contrast, nobody bothers me about my consumption of tomatoes or cereal or soda. The price I pay for those items covers the cost of the resources used to produce them.

Free-market pricing correctly incentivizes me not to overuse the goods, and incentivizes suppliers to produce them as long as the price covers their cost. This is absent for most environmental goods.

For prices to exist, we have to define who owns what. That's where the challenge lies with environmental goods, where property rights are sometimes hard to establish. It might be obvious who owns your front lawn, but who owns the sky 1,000 feet above it? Though difficult in some cases, history shows us that this approach is useful in solving basic problems we face right now.

Some of the most dramatic cases of resource overuse, for example, have been solved following the implementation of property rights. The nation of Namibia had long experienced diminishing wild animal populations due to poaching. In the 1990s, their government began allowing groups and communities to own large tracks of rangeland, as well as the wildlife residing there.

Overnight, people gained a personal financial incentive to conserve the wildlife on their land. As a result, a thriving ecotourism industry emerged, resulting in large increases of previously declining populations of animals such as elephants and rhinos.

There are plenty of similar examples where property rights and markets generate eco-related business, which simultaneously protects the environment and produces commerce and economic growth.

In Colorado, the right to have a water stream flow through a landowner's property is protected and has led to privately funded stream restorations and creation of fisheries and wetlands; private ownership of streams in England has produced similar outcomes. Private property protection of oyster beds in Louisiana has led to their flourishing.

Unfortunately, the status-quo approach obstructs this type of progress. Many environmental groups advocate the prevention of this sort of economic activity. And entire government agencies exist to try to micromanage the environment. With a market-based approach, much of this becomes obsolete.

With a market-based approach, prices reflect the cost of utilizing environmental goods. We regulate our own behavior — and pay the cost of it. Where the status quo inevitably pushes government's nose into the minute details of people's lives, property rights-based pricing enables us to take ownership of our own choices and responsibly let go of our burdensome concern about the consumption patterns of others.

This approach is not a panacea, but it offers many advantages over the current guilt-laden approach and points environmental policy in directions we can all appreciate: a cleaner environment, a growing economy and freedom to make our own choices.