Free Market Environmentalism

  • Nature, Animals & Parks
  • 1980

As far back as the 1930s, pioneer conservationists like Aldo Leopold argued that in a country like the U.S. built around private property and markets, it is important to find ways to harness those mechanisms to work productively for environmental quality. In 1980, a group of economists trained in the Chicago school of economics founded the Bozeman, Montana, organization now known as the Property and Environment Research Center. “We asked ourselves: If markets can produce bread and cars and make them available for everyone, why can’t they produce environmental protection?” says PERC president Terry Anderson, who also teaches at Stanford University. “Most Americans operate under the assumption that if we have economic growth, we destroy the environment, and if we preserve the environment we destroy economic growth. We at PERC don’t see that conflict.” PERC accepts no government money and little corporate funding, relying on private giving for its annual support. The organization’s 1991 book Free Market Environmentalism helped spark new thinking on how property rights and economic incentives can be used to encourage individuals to be better stewards of land, water, animals, and other natural resources.

Since this beginning, groups like the Environmental Defense Fund, which hired the first Ph.D. economist to work full-time at an environmental organization, have become adept at employing economic tools for ecological benefit. In 1995 EDF launched the “safe-harbor” mechanism that allows economic use of private land where endangered species are present, so long as a certain level of habitat protection is provided. Market-based approaches have also been folded into acid-rain regulation, efforts to restrain packaging waste, fishing regulation based on catch shares (see 2003 entry), Western water law, pollution auctions, and other places.