In the ongoing debate over what to do about the environment, there seem to be two prominent views. One, that the government should intervene and steer the country toward a green future. The other, to do nothing.
Both are wrong, however, as both deny that the free market is capable of tackling climate change or other environmental concerns. Without a doubt, however, the free market can solve this crucial problem much more efficiently than the government can. Liberating the market from unfair subsidies, reforming tort laws, and allowing property rights to save our species and our lands are just some of the several ways this can happen.
Opponents of our current economic system claim it is a free market. There’s nothing free, however, about the chains of burdensome regulations and subsidies. Much of the environmental degradation we witness can be traced back to the billions of dollars of government kickbacks given to both the fossil fuel industry and farmers, a state of play that also prevents the proliferation of clean energy firms.
The Failings of Subsidies
This year, for instance, farmers were paid almost $50 billion in subsidies, an amount that accounted for a third of their income. These subsidies contribute to the overuse of farmland while hurting our wetlands and forests by increasing the use of pesticides and fertilizers. Furthermore, these subsidies increase prices on food and result in a reduced incentive to innovate.
But will eliminating farm subsidies hurt small farmers? Consider this: 70 percent of subsidies go to farmers of wheat, corn, and soybeans on typically big farms that don’t even need it. Once you include peanuts, cotton, and rice, the percentage of subsidies heading to Big Farming is 94 percent.
The vast majority of small farmers receive very little subsidies and vegetable, meat, and fruit farmers are almost entirely left out. In 2017, there were more than two million farms, of which 90 percent were small farms making less than $350,000 in annual gross cash farm income. To view this another way, 1.85 million farms receive almost nothing.
The fossil fuel industry receives far more in subsidies and the effects are similar. We give oil and gas companies almost $650 billion a year, which is enough for every adult to receive a stimulus of $2,600 a year. These subsidies encourage waste and distort the economy. Clean energy companies can’t be expected to compete when, at $200 billion, their industry is three times smaller than just the subsidies paid out to these corporations.
Where competition is nearly impossible due to government interference, is incredibly hard to have a free market where enterprising businesses can develop and eventually thrive.
Tort Law Reform Is Part of the Solution
Tort law reform would allow those who are hurt by environmental damage to receive compensation. This can be best exhibited in an example used by the economist Murray Rothbard: Suppose an airport is established and is quite noisy. The sound waves travel over the empty, unowned land. A housing development is built nearby and, later, the homeowners sue for noise pollution.
The airport can only pollute the land it owns, and any pollution it creates must be contained within its borders. Polluting land outside its borders is aggression and an assault committed on the homeowners. Therefore, with tort law, they’d receive monetary compensation and the airport would be forced with the choice to either innovate and reduce its noise output or continue paying those fines.
Under current tort law, however, small parties that pollute more are spared as the Environmental Protection Agency goes after bigger targets, resulting in high costs and legal delays. If we moved toward proportional liability where those more responsible pay more, increasing costs would push polluters towards reform.
Property Rights Are Key to Helping the Environment
The last element of using the free market to solve our current environmental dilemmas is to expand property rights. For this, the nation of Namibia serves as a shining example of how property rights can save species. When poaching was shrinking Namibia’s small number of black rhinos, the tiny African country allowed private landowners to breed their own black rhinos and protect them from poachers. In return, the landowners are paid for tourism and trophy hunting. Since 2013, the black rhino population has increased from 60 to 200.
South Africa has a similar problem with its white rhino population, so it too has encouraged the private ownership of wild rhinos. In 1982, a live rhino was worth 1,000 South African rand (about $1,000 at the then exchange rate of $1 equal to 1 rand) but a trophy was 6,000 rand (about $6,000), meaning there was little reason to keep them alive. In 1990, a live rhino was 49,000 rand (about $16,000 at the then exchange rate of $1 equal to 3 rand) while a trophy was 80,000 ($26,600).
Then, in 1991, a law was passed that allowed the private ownership of tagged animals. As it then made sense to keep and breed them, the white rhino population tripled by 2007. It makes sense. Why sell a trophy for 80,000 rand when a family of four rhinos is worth almost 200,000 rand and they can continue to produce more rhinos? To move away from rhinos to something more accessible, why cut down an apple tree for timber when the sale of its apples can make you far more in the long run or help feed your family?
If America implemented the system in South Africa and Namibia, it’d go a long way to saving our own endangered species. We did it with the nearly extinct North American bison and we can do it again. Our threatened species can be privately owned while our least-concern species can be wild and free.
Now, it is worth noting that, while some species would benefit from a South African/Namibian-style system like the polar bear or the red wolf, there are other species that people wouldn’t want to hunt or eat. So, what about creatures like the golden-cheeked warbler or the Chiricahua leopard frog?
Well, there are many reasons these species are endangered. The golden-cheeked warbler’s habitat is over-browsed by goats and white-tailed deer. One possibility — again lying in the realm of tort law — would see the owners of a specific population of warblers suing the owners of the deer and the goats that eat too much of their habitat and have them removed from that specific area. That allows the warbler to enjoy all the excesses of its ecosystem without the worry of competition from much larger creatures.
The Chiricahua leopard frog faces a different situation. One of the things that threaten it (besides climate change) is the chytrid fungus. If we allowed owning these frogs, the owner could move them to a safe marsh or wetland where no fungus could infect them. Private investment in efforts to develop a cure could fast track it just like what is happening with the coronavirus now.
The Freedom to Preserve
Ultimately, another beneficial move would be to extend property rights to the environment and not just the species that inhabit it. Yet, currently, it is illegal for someone to buy land sold for energy, grazing, or timber needs and not harvest, extract, or develop those resources. Energy leasing regulations force individuals to extract the oil or lose the lease, thus preventing anyone from buying land and protecting it.
The environmental activist Terry Tempest Williams and her husband, Brooke, tried to buy land they had no intention of developing, forming an energy company after purchasing 1,120 acres in Utah. Their lease was canceled by the Bureau of Land Management, however, for violating the Mineral Leasing Act of 1920.
Regulations like this and others prevent good Samaritans from keeping land from the fossil fuel industry. Like in Africa, if we allowed people to buy or lease this land and do whatever they wanted with it, our natural resources would be far better protected than they are today.
The solution to environmental problems doesn’t lie in the hands of the state, nor will things resolve themselves by doing nothing. To harness the undeniable power and benefits of the free market system, we must eliminate all unfair farm subsidies, ending the farming sprawl created by corporate farms that invade our forests and wetlands.
We must eliminate the subsidies that benefit the fossil fuel industry to the detriment of clean energy, putting them on equal ground.
We must reform tort law so that those responsible for damaging our environment pay for those damages. Finally, we must extend property rights so that our endangered species can survive and thrive and for our green good Samaritans to be able to buy or lease land to protect it from fossil fuel extraction. All of these measures would significantly reduce our carbon footprint while creating a powerful, modern economy where everyone prospers — a bright, green future for us, our children, and humanity.