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PERC: Free Market Environmentalism in Action

By Reed Watson -- March 9, 2012

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]

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


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.


  1. Jon Boone  

    Watched the video. Consulted the website. Found no substance, or examples in the real world, or specifics of any kind. Reminded ever so much of ginseng/weight loss commercials. Would have been instructive to have had, say, the folks who run Kings Ranch. Or some chaps from Ducks Unlimited. Or reps from some prominent hunting organizations. People who have been actively engaged over many years in promoting conservation, protecting wildlife and sensitive habitats–because it’s in their self interest.


  2. Lionell Griffith  

    The problem with a focus on conservation is that it is a focus on NOT using something and , ultimately, NEVER using it. Yet to live, man must use and change the environment. The choice is not between abuse or never use. To abuse the environment is to destroy values that could sustain and advance human life. To not use it means to commit suicide. Neither represents a real choice. The real choice is about how to use and modify the environment in the best possible way for the benefit of human life. Property rights and free markets are the only way that has been discovered that both respects the moral right of each individual to own himself, his property, and his produce and that actually works in practice.

    But..but…what if someone is not using his property right? It is HIS property so butt out. It is none of your damn business! Just because you don’t approve of how someone uses their property does not give you the right to interfere with that use. You have even less right to go to the government to prohibit that use. Only if such use actually and physically infringes on YOUR property do you have the right of redress.

    You do have a right to attempt to persuade and show a better way if you have one. However, the actual owner must have the last say or you have neither property rights nor free markets nor respect for individual rights.

    Conservation is nothing but a smoke screen for the taking of someone’s property by force and without compensation.


  3. Jon Boone  

    Yours is a far too Manichaean view for me, Lionell, for there are many shades of grey between your either/or calculus. Which makes for a complex and complicated interconnected web of issues that our species is only in the beginning stages of addressing.


  4. Gil  

    Or to put it another way there’s no such thing as “the environment” just flora and fauna that can come under productive human use and what can’t must disappear. “3D property rights?” That sounds like an artificial imposition onto true property rights. Real Libertarians would argue government enforcement of property rights should only ocmpletment the private enforcement of property rights. In other words, government can’t create new rights to own property that wouldn’t exist under a free-market. One obvious example is “intellectual property” most Libertarians feel it a fake form of property rights because I.P. doesn’t have scarcity – downloading a movie doesn’t deprive the owner of their movie data hence little-to-no I.P. rights could emerge in a free market society. Likewise 3D property sounds like a government-imposed fudge for Libertarians to appease Environmentalists, i.e. something that wouldn’t emerge in a free market.


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