This is the second part of a two-part essay by Jason Scorse, Assistant Professor of International Policy Studies at the Monterey Institute of International Studies. Go here to read an introduction and part one.


Does this mean private property rights solve everything? Of course not; however, the worst forms of environmental abuse generally occur in areas where property rights and markets are non-existent, or where the market is distorted by perverse subsidies that encourage over-exploitation. Even with enforceable property rights and a solid system of environmental accounting, markets are not perfect and are subject to unintended consequences.

Global warming presents a particularly difficult challenge. The atmosphere is the world’s preeminent open access resource, and exclusion is impossible. Some of the solutions currently being discussed for long-term climate management are enforceable limits on greenhouse gas emissions through a system of tradable atmospheric pollution permits. While some environmentalists oppose pollution permits on the grounds that they establish a "right to pollute," all industrial activities require some level of greenhouse-gas pollution and tradable permits may provide both the cheapest and most equitable way of achieving targeted reductions (big greenhouse polluters like the U.S. would likely end up buying credits from less-polluting nations).

One concern many people express regarding private property is that resources that typically were free or available at little cost to almost everyone are now being "commodified." Common examples include water and botanical genetic resources. While we can all agree that everyone should have access to clean drinking water, the fact is that billions of people, for a variety of reasons, do not. Sometimes the water has been contaminated, the aquifers have been depleted, regions have suffered droughts, or the public agency in charge is corrupt. In addition, water purification and delivery are extremely expensive and entail complex systems of infrastructure and maintenance. Privatization of water systems in many instances can bring much needed capital into areas that lack infrastructure and actually improve people’s access to clean water, including the poor. There are other instances where privatization has led to large rate increases and lower levels of access. The appropriate response is to ask why privatization has worked well in some areas and not in others, not to condemn it across the board. (Consider: food is also necessary for life, but no one is waging a battle against farmers who happen to be in the private business of bringing food to your table.)

Regarding botanical genetic resources, there is a worldwide system of international gene banks to which virtually all nations have free access. In addition, patents provide a legal system whereby individuals or corporations can gain exclusive rights to modified organisms. This can bring much needed research money into plant development, with the potential of improving nutrition and productivity in poor regions of the world. Granted, there is also an underlying danger that patents can be abused when they are issued for relatively minor modifications to staple crops. Again, the key question to ask is: How do we establish a patent system that is equitable and efficient?

People often forget that privately-owned does not mean unregulated.

Many environmentalists claim that the world’s resources are priceless. Priceless to whom? And if they are priceless, who will protect them? And who will pay for this protection? Who is liable if they aren’t protected? There are some resources that most of us can agree are so unique and spectacular that they should be protected forever. Yosemite and the Great Barrier Reef are two that come to mind, and efforts have been undertaken to protect these resources in perpetuity. However, even here we are faced with tough questions, as the high demand to view these natural wonders has created strains that threaten their long-term viability. How do we determine who gets entry or what areas should be off-limits to the public? More generally, when thinking about environmental preservation, how do we prioritize areas? Although biological richness is a key indicator of preservation value, what about the opportunity cost for lost development, or the costs of monitoring, or public access? Is every last species equally valuable? What level of contaminants indicates a pristine environment?

Environmentalists should also recognize that attempts to assign monetary values to the environment are often used in circumstances where the default value is zero. This is not to say that monetizing the environment doesn’t have its limitations or that it can’t be abused, only that rejecting it as immoral is poor policy. Think about it: Every time one of us gets into a plane to go on vacation, we have decided that the hundreds or thousands of dollars we’re spending on leisure is more important than saving another acre of trees or giving money to the poor (alternative uses of our money); so, through our actions, we implicitly put values on all types of supposedly priceless things all the time.

In summary, economic reasoning, property rights, and well-functioning markets may not provide all the answers to our environmental problems, but there are many situations in which economic principles, applied rigorously and thoughtfully, offer the best hope for environmental improvement and preservation, as well as improvement in living standards. If environmentalists spent more time learning about economic policy, they would likely become some of its most ardent supporters.