One of the difficulties for a Libertarian is resolving our distrust of regulations and regulatory agencies with good stewardship of our environment. That doesn’t mean we don’t care about the environment just like everyone else, we do. The photograph to the right is a promotional display for the very first Earth Day Teach In at Nicholls University in Thibodaux, LA, forty years ago today. I was the organizer, and I glued the cans on that display. We thought the world was on the brink of destruction then too. Then it was the Population Explosion and Chlorinated Hydrocarbon pesticides. It was the year after the Cuyahoga River caught on fire. For those who are young, and only know the last 20 years, it is hard to imagine how bad it was then or to see how much progress has been made. Yet we are told the sky is still falling and only government can save us.
In general, Libertarians believe that voluntary transactions between individuals are best managed by the marketplace acting in accordance with the basic laws of economics. But when dealing with issues of the environment, there are two areas where market economics fail to adequately address problems. These are the economic paradoxes of External Costs and the ‘Tragedy of the Commons’ but we must find ways to resolve these issues without destroying our Liberty.
External costs, or “externalities” are costs of a transaction which do not fall on either party to the transaction. For example, if producing a ton of steel costs the producer $450 (numbers pulled from air) and it could be sold for $500, it would be profitable to produce steel. But if the pollution resulting from that effort damaged a neighbor’s property by $100 for each ton produced, the cost of producing that steel would now be more than it is worth. However, since neither the buyer nor the seller pays that cost, the transaction takes place anyway. That $100 is an unresolved ‘externality.’ Ideally, that externality would be resolved in the courts as the neighbor sued for his damages, raising the cost of producing that steel above the selling price. The producer would then either have to try to raise the price of steel in a competitive market or find ways to prevent the pollution, or both, so that the entire cost, both direct and external, is accounted for in the price. But what if that damage is not to a single neighbor but to 100,000 neighbors downwind of the steel plant? Do they each sue for a penny?
Obviously that isn’t going to work, so externalities must be resolved collectively, either through regulation or economic means.
The other problem area is the Tragedy of the Commons. Historically, this refers to pastures commonly owned by a town which are available to all for grazing their horses while in town for business or shopping. However, if all the townspeople use the commons to graze livestock for their own profits without regard to the total number, overgrazing destroys the pasture and it is lost to all.
We see this problem most often in the exploitation of domestic fish stocks, but the air and the oceans are commons too. No one person, or one country, owns the oceans. But with modern methods, it is quite possible for the fishermen of a single country, or even a single commercial operation, to fish a species to the point where they are so few it is no longer worth the effort to fish for them. This hurts everyone. Further, because life exists in balance, depletion of one species has effects on others.
One would think that through enlightened self-interest, fishermen would restrict their harvest for long-term, sustained yield so they could continue their profession into the future, but again, unresolved externalities interfere. It does no good for one fisherman, or the fishermen of a single corporation or country, restrict their harvest if others do not. Further, even if all the fishermen could voluntarily act in concert, it makes economic sense to fish a species heavily until it becomes too scarce to be commercially viable, and then fish a different species to near extinction while the first recovers, moving from species to species rapaciously until the first species has become commercially viable again. However, to do so would wreak havoc with the balance of nature.
So, some involuntary limits on harvest, by local regulation for lakes and rivers and by treaty for migratory fish stocks, is necessary.
So, these are areas where we must act collectively through government if the environment is to be protected. Unfortunately, once government becomes involved, all the bad things governments do will intrude in those efforts as well.
When quotas are used to regulate fish harvests, for example, government gains the power to choose winners and losers in the marketplace, which invariably leads to corruption which often defeats the purpose of the regulations. We need only to look to the regulation of the Menhaden fishery in Virginia to see that problem.
Cap and trade taxation systems, which attempt to resolve externalities with taxes on pollutants, can be effective in reducing some forms of pollution. Such systems were effective in controlling sulfur dioxide emissions, however, such schemes are often self eliminating. As companies find ways to reduce their sulfur pollution, the taxes collected fall off. Governments are reluctant to lose a tax base, so when such schemes are successful in reducing a pollutant, they often protect tax revenue by moving the goalposts, raising the tax or lowering the thresholds until it becomes impossible to meet the goals, or even worse, government redefines pollution to maintain its tax base. We see that now in the effort to redefine Carbon Dioxide as a pollutant using very questionable science.
So, managing the environment remains a difficult area for Libertarians and everyone else, even if they are unaware of it, with the need to balance the need for collective action with the dangers of empowering government.
Only by educating ourselves and keeping close tabs on what government does in our name can we strike the proper balance through our legislatures. If we fail to do so, corrupt, or over zealous, unelected, bureaucrats will defeat or intentions with ineffective regulations and excessive economic costs unrelated to the problems.
One need only travel to a densely populated third world country to understand that a clean environment is an expensive luxury only a healthy economy can support. If we allow over regulation to wreck our economy, we could easily undo all the progress we have made in these last forty years.