Category — Free Market Environmentalism

“We appear to be on the Road to Serfdom, paved with green bricks rather than red bricks…. It is actually likely that the United States is now approaching State ownership of about 50 percent of all its land—a level of socialist land ownership unequalled in the world.”

It is a fabulous honor to receive the Julian Simon Memorial Award. Julian was one of the seminal thinkers of the 20th century—and one of the first to challenge the radical Greens’ attack on freedom and progress.

Simon demolished the limits to growth and the belief that human progress was bound in a Malthusian straitjacket, and limited by the known or presumably known physical supplies of natural resources. He argued that the ultimate resource was the limitless nature of man’s mind—his intelligence, innovation, discovery, and invention, constantly discovering and creating new resources where none had existed before. For instance, the looming scarcity of copper vanished with its replacement by abundant beach sand, by silica.

In the past decade, the doomsayers returned again, gleefully predicting the end of growth and the need to reduce population and living standards because of their long hoped-for exhaustion of fossil fuels and the arrival of peal oil and peak gas. But then to their dismay, they witnessed the ultimate resource, man’s intransigent mind, turn the Earth’s abundance of shale deposits into a potential cornucopia of oil and natural gas, requiring nothing more than a drill and water pressure—hydraulic fracing—to once more shatter the supposed limits to growth. [Read more →]

The Property and Environment Research Center (PERC) is the nation’s oldest and largest institute dedicated to improving environmental quality through private property rights and markets.

Founded 30 years ago in Bozeman, Montana, PERC began as a think tank where scholars documented how government regulation and bureaucracy have led to environmental degradation. At the same time, they sought to explain how markets could be harnessed to improve environmental quality. From this work originated the idea of free market environmentalism.

What is FME?

PERC senior fellow emeritus Richard Stroup has written a 2,400-word essay on free market environmentalism (FME) for the Library of Economics and Liberty. “Free-market environmentalism emphasizes markets as a solution to environmental problems,” explains Stroup. “Proponents argue that free markets can be more successful than government—and have been more successful historically—in solving many environmental problems.”

Stroup’s 2,400-word essay is worth reading, but here are some excerpts:

“While [market failures] can be quite real, growing evidence indicates that governments often fail to control pollution or to provide public goods at reasonable cost. Furthermore, the private sector is often more responsive than government to environmental demands. This evidence, which is supported by much economic theory, has led to a reconsideration of the traditional view.”

“For markets to work in the environmental field, as in any other, rights to each important resource must be clearly defined, easily defended against invasion, and divestible (transferable) by owners on terms agreeable to buyer and seller. Well-functioning markets, in short, require “3-D” property rights. When the first two are present—clear definition and easy defense of one’s rights—no one is forced to accept pollution beyond the standard acceptable to the community.”

“Environmental problems stem from the absence or incompleteness of these characteristics of property rights. When rights to resources are defined and easily defended against invasion, all individuals or corporations, whether potential polluters or potential victims, have an incentive to avoid pollution problems. When air or water pollution damages a privately owned asset, the owner whose wealth is threatened will gain by seeing—in court if necessary—that the threat is abated.”

“Could parks, even national parks like Grand Canyon or Yellowstone, be run privately, by individuals, clubs, or firms…? Private individuals and groups have preserved wildlife habitats and scenic lands in thousands of places in the United States.”

Ideas to Action

PERC researchers have carefully documented real world examples of FME in action. And to get from theory to action, PERC established a program to empower individuals – environmental entrepreneurs – by showing them how to use property, contracts and the market process to enhance environmental quality. PERC’s Enviropreneur Institute attracts people from around the globe who are seeking to put FME to work.

PERC continues to grow with the newly created PERC University. As PERC seeks solutions to some of our toughest environmental problems, the university is a place where scholars, journalists, policy makers, and environmental practitioners can come together to share knowledge, refine their work, and engage in robust discussion. The university is flourishing as representatives of many disciplines inspire each other as they explore the possibilities for applying FME.

The late Julian Simon once said, “With every mouth to feed comes two hands and a brain.” Ever the optimist, especially on environmental issues, Simon was alluding to the ability of human ingenuity to overcome resource scarcity in an increasingly populous world.

This sentiment is at the core of PERC’s Enviropreneur Institute, a two-week educational program that empowers environmental entrepreneurs in the application of property, contracts, and markets to enhance environmental assets. Watch the video!

This year’s Institute will run from June 24 to July 6, in scenic Bozeman, Montana. The curriculum features lectures in economics, business planning, marketing, and project management, field trips to nearby businesses that exemplify Simon’s enviropreneurial ethic, and one-on-one mentoring from experts in free market environmentalism.

During the two weeks, fellows develop their own business plans for linking environmental conservation with economic opportunity. Successful applicants will be early to mid-career environmental leaders with an interest in innovative approaches to conservation. Those accepted will receive a $2,000 travel stipend. [1]

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[1] The curriculum, on-line application, and more details are available at www.enviropreneurs.org. The application deadline is March 12, 2012.

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Mr. Watson (reed@perc.org) is Director of Applied Programs at PERC, as well as co-director of Enviropreneur Institute. His expertise lies in developing and promoting market-based solutions to natural resource conflicts, particularly for water and wildlife. Watson is coauthor (with Terry Anderson and Brandon Scarborough) of Tapping Water Markets (forthcoming, RFF Press/Routledge).

Watson holds a J.D. and M.A. in Environmental Economics from Duke University and a B.S. in Economics from Clemson University.

“It’s time to move the debate past the dogmatic view that carbon dioxide is evil and toward a world view that accepts the need for energy that is cheap, abundant and reliable.”

- Robert Bryce, “Five Truths About Climate Change,” Wall Street Journal, October 6, 2011.

“Every [energy] policy objective should be viewed through the lens of affordability.”

- John S. Watson, Chairman and CEO, Chevron Corporation
Remarks at the Peterson Institute for International Economics, Washington, D.C., October 19, 2011.

Chevron CEO John Watson delivered a major address last month in Washington, D.C. that reorients energy sustainability from controversial neo-Malthusian notions toward consumer affordability and reliability. As such, it marks an end to the ‘apologetic’ era launched by BP’s John Browne in his 1997 Stanford University speech, which proclaimed that fossil fuels were problematic in relation to anthropogenic climate change. The moral high ground of consumerism also points to market capitalism in place of political capitalism.

Watson’s speech follows verbatim with subtitles added.

This is one of those places in our nation’s capital where serious minds turn to serious matters. The spirit of the Institute is to take the long view, to look past election cycles to the fundamentals of good policy, in this country and beyond. That’s an attitude that serves us well in any place and time, and certainly right now, in this fourth year of low economic growth, high unemployment and many other challenges.

This room is filled with people who spend a lot of time analyzing these problems, and advocating policy prescriptions to deal with them. And few policy issues are more contentious than energy.

There’s a reason for that. When it comes to energy policy today, we’re talking past one another. We all want a secure source that
minimizes adverse environmental impacts. But we’re failing to be clear about what our central priority ought to be among our energy objectives.

Affordable Energy

Today, I’d like to share what I believe that priority should be. I submit to you that affordable energy is the priority that should underpin all of our actions. Every policy objective should be viewed through the lens of affordability.

To make the case, think back over the last 150 years. We’ve seen the greatest advancements in living standards in recorded history because we have developed abundant, affordable energy. Light, heat and mobility have been made available to billions of people.

Agriculture has been mechanized, freeing populations to spend time developing other industries and toiling less for the very basics of life.

The evolution of energy supply over that time period has been just as stunning. As late as 1910, about a quarter of all U.S. farmland was still devoted to feeding horses used for transportation. Today, we use half as much land for all of our roads and highways, oil pipelines, refineries and wells combined.

Since Edison switched on his first generators in 1882, the average price of a kilowatt hour of electricity has fallen almost without interruption. Markets have driven a diverse portfolio of affordable energy sources that is anchored by oil, natural gas and coal, but also includes nuclear, hydropower and other renewables.

And we’re using our energy more efficiently. It takes 60 percent less energy today to produce a dollar of GDP than it did in 1949.

Affordable energy supports the very foundation of American life. Americans love their mobility, whether for business or pleasure. The population has roughly doubled since 1950, but gasoline consumption has quadrupled, even as gas mileage has improved. And we’re flying more. U.S. airlines use about 80 percent more fuel today than when I was in college, even as they have became more fuel efficient. [Read more →]