Free Market Environmentalism – How Wealth Solves Environmental Issues

Free Market Environmentalism

The phenomenon of free market environmentalism (FME) is the latest buzz word in the environmental community. The concept is simple, remove government control of environmental management and put it in the hands of the people and landowners who intimately know the needs of their land. Provide economic incentives, remove brute force, and the environment will stand a better chance of thriving. While the concept seems simplistic, the details can be complex.

Free Market Environmentalism Explained

“Free market capitalist economics is arguably the most powerful tool ever used by civilization.” – Al Gore

Free market environmentalism rolls off the tongue like an oxymoron. Terry Anderson, President of PERC (Property and Environment Research Center) explains it best. “the first premise of FME is that ‘wealthier is healthier’ – meaning that markets generate the wealth that gives us the (tools) to solve environmental problems. Although many people mistakenly think that markets can only generate consumerism…in reality, it is markets that produce wealth, and thus help the environment.” 

Another major philosophy is that “incentives matter”. The value of providing incentives to a landowner can turn environmental “negatives” (e.g. allowing prairie dog populations to remain on a property instead of exterminating them) into positives. Additionally, FME supporters strongly believe in private property rights because –

  • Prevents the Tragedy of the Commons where it’s every man for himself
  • Private property is transferable and has value
  • Backed by courts when pollution occurs (eg. large company dumps into river running into property)
  • Increases in value if well tended
  • Land is protected from development

An old adage among ranchers in western states is to “shoot, shovel and shut up” if a protected species is found on their property. It’s not a “policy” they like but they’d rather risk prosecution than allow government intervention, possible land value devaluation, among other negatives, to their land. Landowners know more than most about the looming shadow of the government; look no further than the EPA’s plan to limit agricultural dust under the Clean Air Act to understand.

However, when property rights are well defined (measurable, clear boundaries are known), defensible (boundaries are fenced and well defined), and transferable (fewer legal restrictions on owner’s ability to sell) the rest will follow. Referred to as 3-D property rights, the more lawmakers stand clear the more likely property owners are to cooperate in free market solutions. Three-D property rights extend to large companies as well and is a complex topic in itself.

Free Market Environmentalism and the Markets

But, how does one reconcile environmentalism with free markets? The book Economics and the Environment: A Reconciliation makes it appear impossible to reconcile the two as markets are historically driven by material goods, pollution, and living in the “now”. However, the writers conclude that “the market system is an ideal mechanism for allocating scarce resources among competing uses.”

With government interference, the system breaks down as it becomes bogged down in “social costs, market power, non-price competition, and an inadequate view of the future.” The authors call for the system to just work without red-tape, constant assessments and environmental impact statements (in other words, leave the EPA out). The government is obsessed with paperwork over “boots on the ground”.

The book’s authors firmly believe that “most, if not all, goals of the ecological movement can not only be met by the operation of the free enterprise system but can be better met by the market than by any other form of political-economic arrangement.” Economics and the Environment: A Reconciliation, written by Terry Anderson, Walter Block, John Baden, et al., makes for a fascinating exploration of free markets and the environment.

Examples of successful, environmental market-based strategies –

  1. The Nature Conservancy purchases fishing rights off the California coast, reducing the impact of trawlers on marine life. Conducting deals with oil drillers to the mutual benefit of conservation organizations, drillers (and of course the marine life).
  2. Conservation easements allow private landowners the option to preserve their land in perpetuity.
  3. Landowners paid for protecting sensitive areas on their land or areas with endangered species.

These are just a few of multiple examples where free market environmentalism is working.

Many progressives feel that the concepts of free market environmentalism are “disturbingly” conservative in ideology. However, environmental issues are bipartisan as we all share the planet and have a responsibility to be her steward. In the words of Al Gore, “Free market capitalist economics is arguably the most powerful tool ever used by civilization.”

The government’s attempts at solving environmental issues for almost 200 years has failed. The time for environmental management on the local level has come and will continue to grow. Monetary exchanges for lands or waters are working. And environmental entrepreneurialism (aka enviro-capitalism or enviropreneurism) is on the rise and is an important component of free market environmentalism.

Enviropreneurs – Environmental Heros Working for Tomorrow

According to the Goodman Institute for Public Policy Research, “Entrepreneurship is the discovery of previously unexploited opportunities to make people better off.” This is the basic premise of enviropreneurism and an important aspect of free market environmentalism.

Approximately 11 years ago, members of PERC decided the time was right for an institute focused on creating leaders in environmental management. A partnership between PERC and the Kinship Foundation, the PERC Enviropreneur Institute, was formed with the mission to combine “management principles, economics, property rights, markets, and business ideas to the environmental movement.”

PERC created the word “enviropreneur” to describe a person who sees profit in heaps of garbage, opportunity in a pile of waste. An enviropreneur finds economic opportunities to help the environment. According to PERC’s enviropreneur page, persons interested in the program should be “creative problem solvers passionate about things like clean energy and environmental conservation.”

Conscious Connection Magazine’s reports of enviropreneur’s use of the markets to generate income meanwhile helping the environment show the success of the market system. Savers thrift store outlets take unwanted clothes and resell them at a reasonable cost. The Nature Conservancy, among others, have multiple success stories as well.

Free market environmentalism, in essence, returns mankind to a life in concert with nature. Rather than living in a world of man vs. nature, FME suggests public cooperation and enviropreneurial creativity, rather than government reliance and political conflict, to protect the environment through incentives and the creation of voluntary associations. Humankind is connected in the desire for a better life and a better life includes a clean, balanced environment. Free market environmentalism is the best hope for attaining that end.

Debbe Ferris is a senior staff writer at Conscious Connection dedicated to exploring how technology and sustainability trends are converging to solve humanity's grand challenges. With a Bachelor’s in Natural Resource Management, Debbe joined Conscious Connection because of her interest in Free Market Environmentalism with the opinion that many environmental issues can be solved with free markets and innovations in social enterprise.
  • Jody Bickel

    Excellent article! It’s been my privilege to work in private sector entrepreneurial conservation in recent years. It has proven to be much more effective on the ground than my previous 20 years in nonprofit conservation organizations.

  • greenpeaceRdale1844coop

    OK, the article shows that you want to be able to reconcile environmentalism and capitalist economics. The term “free markets” and “government as the problem” is ideological and problematic in a way that does not just go away from entrepreneurial optimism and quoting Al Gore. The BP Deepwater Horizon disaster in the Gulf of Mexico is a classic example. A contracted company cutting costs proved disastrous as its work resulted in a huge and deadly oil leak. Instead, I hope you will consider researching terms like Fair Trade, social entrepreneurship, economic democracy, ordoliberalism, and solidarity economics to get an idea of the ideas behind co-operative and ecological economics.

    Climate Change is a much publicized slice of the much larger pie of ecological problems. “Free markets” and “government as problem” has been used by Big Shareholder and corporate executive controlled corporations which have been monopolizing the energy sector and flooding the government with their influence, both in terms of money and industry reps appointed. Their industrial and corporate drive as part of the Stock Market Big Shareholder system is driving the increasing ecological crises in all the areas that are getting much worse too fast. The Millenium Ecosystem Assessment of 2005 by the World Bank and UNEP, and the WWF supported Ecological Footprint used with the UN’s HDI are not fooled by blind optimism. Things are going down the drain, and corporations are a major reason, along with their control of governments.

    While the Reagan era government squashed renewable energy incentives, at least tax credit incentives were created in the 1990s. Nevertheless, those incentives were for large wind park enterprises, as discussed at the Institute for Local Self-Reliance website. However, Danish and German citizens showed the power of citizen social enterprise in fair markets beginning in the 1970s in Denmark, and in the 1990s in Germany. Danish citizens protested against nuke plans, reinvented wind turbines, organized associations, lobbied, and formed wind co-ops as the government fell in line with supportive policies. Then Germany, with its social capitalism spelled out in “ordoliberalism,” lit up. Germans have formed a high number of renewable energy co-operatives and maintained them in a way that has begun to spread around Europe and to the US. In 2002, CoopPower was established in New England, for example.

    Michael Moore’s movie Capitalism: A Love Story presented many problems neglected by the mainstream media and orthodox economic journalists. He also realized an important part of the solution in democratic, co-operative workplaces.

    There are a number of interesting stories that demonstrate how Fair Trade is the business model that needs to be popularized, along with co-operative and ecological economics that internalize all the costs. That also raises the issue of Economic Indicators and Accounting Systems. Greenpeace developed “Greenfreeze” refrigerant years ago, not any industry. Organic agriculture has been developed thanks to the original creation of a non-profit organization in the 1970s. Fair Trade has rejuvenated co-operative economics as the result of the creation of a non-profit in Holland, then Europe. The US organic and Fair Trade co-op Equal Exchange was founded two years before the label, and has become a fantastic example of Fair Trade entrepreneurship and business success for the Triple Bottom Line. The late Ray Anderson, CEO of Interface Carpets, led an environmental revolution at his company thanks to a client’s letter, and described in his book, Mid-Course Correction. Then there is McDonagh and Braungart who wrote Cradle to Cradle and are in the documentary The Next Industrial Revolution. Grassroots Economic Organizing is about the Solidarity Economics perspective and ecological literacy.

    William Greider wrote The Soul of Capitalism and Marj Kelly Owning Our Future, two important books about the importance of democratic economics, giving people their human right to ownership in the workplace. Chris Cobb et al wrote “If the GDP’s Up, Why Is America Down?” about the problem’s of externalizing costs with the prevailing economic indicators. And then talk to me. Citizens can organize social enterprise and get government support for social and environmentally sustainable enterprise. However, that is mostly happening in places like Vermont, Denmark, Germany, and in communities like the MST farmer co-ops of Brazil. Big Business is not the answer, and they will have to reform some time in the future when real sustainability simply can’t be made into a publicity exercise. Also, when economic “corrections”, or crises drive people into protests and the streets because too many people will have been excluded by a very anti-democratic business world.

    • Thanks for your comments. We have actually written extensively on the topics of Fair Trade and social entrepreneurship which you can see by perusing our Social Business and Sustainability columns. We have also flagged your additional suggestions with this contributor for future editorial explorations.

      • greenpeaceRdale1844coop

        Hi, Anthony! My name is Mark Rego-Monteiro. I actually wrote a piece on FT at your site that you no longer attribute specifically to me!
        You all have a great forum here! Let me know if you want me to prepare a piece for you!

        • Hi Mark – yes, I remember you! We went through a site upgrade a while back and older author profiles were accidently deleted. We can update that attribution for you no problem. Send me an email at [email protected] and we can get it updated and talk about an additional contribution. Cheers, Anthony

    • Thanks for the extensive reply! My first response would be to note that, as internet author, I have a limited amount of space and time to make a point. Thus, I included some excellent books for you to check out for more information on the topic. I highly suggest picking up a copy of “Free Market Environmentalism” by Terry Anderson and Donald Leal for an extensive narrative on the topic. I also referenced “Economics and the Environment: A Reconciliation” and the PERC (www.PERC.org) website. All are excellent resources for more information.

      I disagree with many of your highly charged opinions but I have promised my publisher to have a civil discourse on this matter. FME is not necessarily a “big business” proposition, though “big businesses” are getting on board. Ironically, your mentioning Greenpeace as the developer of “Greenfreeze” and “Fair Trade” are excellent examples of FME in action. I really would love for you to look into the references provided for more information as I am, unfortunately, unable to cover all aspects of such a complex topic in only 1,000 words or less. Thanks for you interest and remember, we are ALL in this together!

      Cheers,
      Debbe Ferris

      • greenpeaceRdale1844coop

        My basic points remain important, and it seems you are operating from a place where you feel compelled to maintain the vocabulary usage in terms of the “free market” ideologies.
        From the point of view of economic activism, Greenpeace defied orthodox “free market” ideological approaches by making the patent for “Greenfreeze” ozone-safe refrigerant open source. In fact, they approached a technological institute in Germany, where the economy is social capitalist according to German “ordoliberalism”. They value government regulation, and require large corporations to include a Workers Council. Those kinds of social values also contributed to Greenfreeze being accepted domestically within a year, with a ban on other ozone harmful technologies.
        I tracked the story’s interesting twists, all requiring astute economic activist measures by Greenpeace. In the US, corporate legal action kept a prohibition on what the disdainful lawyers called “that German technology” despite efforts by Ben and Jerry’s (Unilever) and another major manufacturer until 2011.
        Fair Trade also shows its presence in social economics and as economic activism. Nestle finally agreed to make its Kit Kat bar FT only in the UK after much pressure by Oxfam. Which they didn’t acknowledge in their announcement. Free market environmentalism? Only very loosely, where ideology makes other ideas the source of friction, and very much social economics and economic activism.

        I’m now based in Latin America, and don’t have easy access to many books, and so have to be very selective..

        • Thus I would, again, refer you to the PERC website (PERC standing for the Property and Environment Research Center). I believe much of the content for “Economics and the Environment: A Reconciliation” can be located online as well.

          I would love to continue this discussion on a forum such as the Environmental Economics group, of which I am a member, on Linked In. I believe, from much of your discourse, that political ideologies ARE at the heart of this conversation as well as many issues related to the environment among other matters. But, as exemplified below, the government’s choices aren’t always the RIGHT choices…

          I am of the belief that less government is better government, which is the framework the Founding Fathers of the U.S. truly wanted when this country was established. For example, my husband works for the NRCS (Natural Resource Conservation Service) where the government “decides” how our Natural Resources, particularly that of plants, are managed. Ironically, the government, in all her “wisdom” occasionally sells plants recommended to farmers and ranchers for various functions, such as windbreaks. One of the plants they suggest is a non-native plant from Afghanistan and I am astounded at the lack of foresight! On one hand, we are trying to rid the nation of invasive species while on the other, we bring them in? This is why I believe that each state should control what their particular ecological needs as who else, but the states, would know what is most appropriate for their landscape.

          You see “adequate government involvement” as a positive and I see it as a negative. As far as “non-profit maximization”…This I do not understand as “for profit”, as well as “non-profit”, organizations are in the environmental ballgame. I do not believe, and am shocked, that a company such as Nestle, referenced above, should be “forced” to move their company out of the U.S., taking jobs away with them, just because they aren’t “fair trade” enough in the eyes of an organization. I as a HUGE proponent of “Fair Trade” but now, not so much so. Your OXFAM example has made me see it through different eyes…

          By the way, I had never heard of “ordoliberalism” until you brought it up in your response. Created by German scholars and economists during the Nazi period, it lies somewhere between capitalism and socialism. An article I found in Pieria, a UK online publication, describes it thus -“Government intervention in the economy should, according to the ordoliberal tradition, aim to allow the market to function in a manner akin to the textbook assumption of perfect competition.”

          http://www.pieria.co.uk/articles/the_trouble_with_ordoliberalism

          THEN, I researched “perfect competition” – http://www.investopedia.com/terms/p/perfectcompetition.asp

          Companies can easily enter the markets but profits are cut to bare bones. “The industry that most closely resembles perfect competition in real life is agriculture.” And, as my husband’s family is agricultural, I know how little money THEY make. One line on Pieria really hit home for me, “The euro crisis isn’t so much a crisis of politics as it is a crisis of ideas.” The world is ablaze with the crisis of ideas, not just Europe, and this has been evidenced of late by the mass protests seen in the streets of many large cities in the U.S. seemingly on a daily basis.

          You are highly versed and intelligent in your beliefs and I have my own framework of beliefs. This is why humanity is so diverse. However, in that diversity, conflict arises, as we all have belief systems which are strongly felt. This is why I believe this would be a great topic to put up on the Enviro. Economics section of Linked In for further debate as a wide range of opinions could be heard. Thus, I will post this article in that group and perhaps we can go from there.

          Kind Regards (and thanks for reading!) –
          Debbe Ferris

          • greenpeaceRdale1844coop

            Good to get your extended response. I’ll be glad to take a look at PERC, and your LinkedIn group.

            You say that you believe ideologies are the heart of this discussion. I am dedicated to academic principles as is generally used in non-profit universities, and the best socially responsible businesses and areas, and to clear communication. I am also committed to the Public Interest, and sustainability, especially the social and environmental kind in the economic context.

            The term “ideologies” tends to refer to ideas that are policies defended despite evidence and to ignore and/or overcome criticisms and deny real problems and acknowledge real choices. “Free market ideology” and its “government as the problem” is an extremist policy like that, since it has become a justification for Big Shareholder corporations controlled by corporate executives to control markets, and influence government so that it is in fact controlled by corporations.

            Governments are not necessarily the source of correct solutions, but under principled management in the Public Interest, they can often be part of the solution. Given corporate control of the US government, for example, government appointees now favor solutions that favor corporations and their preferred products.

            Government should also mean local government, and the democratic process should involve stakeholders, communities, and so on. The preparation of Federal Organic Agriculture policies originally involved public comment back in the 1990s, for one.
            When you say you consider “adequate government involvement” to be a negative, are you aware of the problem of corporate control? The documentary Food, Inc is one of the films that tells how one or another Big Agriculture Corporation used aggressive legal tactics to control the lives of farmers with GMO technology. Michael Moore’s films have also shown that in Health Care and in a number of kinds of businesses. Wall St., and real estate, of course.

            “Profit maximization” is the ideology underlying the so-called “free market ideology” of US-led Big Shareholder corporations. Michael Moore’s films illustrate it well. Auto companies and others have not even left American communities because they were not making a profit, but because they could make the most profits by employing maybe Mexicans in Mexico without labor unions maybe or without environmental regulations, etc. That is how China has become so important in the modern economy. US Corporate executives have been attacking unions and employee rights, while they have been increasing their own salaries.

            Your interpretation of the Nestle-Oxfam event is not what I explained. Nestle only changed their production of Kit Kat chocolate bars in the UK. They continue to make Kit Kat in or for the US, but it is NOT FAIR TRADE. That means that Nestle is not supporting its producers when prices go down because they only want to maximize their profits no matter what, while Fair Trade is about maintaining a strong and supportive relationship between companies and their farmer producers. Beyond that, Nestle has been involved in profit-maximizing ventures on community water systems and acting as if they are stealing the water.

            Ordoliberalism is basically about government anti-monopoly regulation to protect market competitioin. It is not related to “Nazi Germany”, except by the coincidence of the time period. It’s more accurately called part of the Freiburg School of thought. Its ideas are about regulated markets for social well-being and to preserve competition. Germany as such has protected their middle industries, and along with maintaining strong educational systems, including free education, is the largest and wealthiest nation in Europe. Wealth is also better distributed than in the US and many nations, according to the Gini index.

            While the US has allowed corporations to close US factories and send them to places like China, letting corporate executives earn profits while US workers go unemployed and earn less in worse kinds of jobs with no job security. Germany has had much less of that, and has strong unions because of its social economics philosophy and public interest regulation by the government. Europe in general, actually. Examples include Microsoft, which got away with its monopolistic tactics in the US, but got fined in Europe. Amazon US does not have unionized workplaces, while in Germany, they are unionized.
            Believe what you want, and face the consequences. I began my search valuing human rights, along with ecology, and I studied science. The question then becomes for any beliefs, what values do they promote, and how do they align with reality. Corporate executive beliefs are responsible for a lot of negative events that are happening. Beliefs based on social and environmental responsibility are causing a lot of good things to happen. Reality is waiting, and beliefs can make it good, or break it.
            I worked for a non-profit public interest group, in social services, in a food co-op, and for a financial services firm, to name a few. I’ve got relatives and friends who work in business, and just don’t know how important ecology and human rights are.
            Good talking with you.

          • I have an older edition (content still relevant) of a book by Terry Anderson and Donald Leal entitled “Enviro-Capitalists – Doing Good While Doing Well” that I ordered from Amazon, not knowing that I have an updated version of basically the same book. I was going to send it back to Amazon for a refund but, since this conversation, would love to give it to YOU, as a gift – you said something about “limited availability” (or something to that effect). Thus, I want to make it available.

            This comes with NO strings attached. I’m not attempting to bring you over to “my side”. I just think that an in-depth look at what I was trying to get across in the article is much better represented by these individuals – leaders of the “enviro-capitalist” movement.

            I EMPHATICALLY re-state that I am NOT attempting to change your philosophy. The authors of this book have the luxury of explaining the concepts in-depth whereas word counts “hamstring” me as to how much content I can get into a typical, web based article. And I know that you are aware of this fact as you have written for Anthony in the past, from what I have read. I would be happy to read a book (or article(s), of your choice, in exchange for this. Again, NO STRINGS ATTACHED.
            If interested, I will mail you the book. My email address is [email protected]. Just send me your address, I’ll pay postage, obviously.
            If you want it, great. If not, I’ll send it back. However, I’d hate to send back information that I could share with another person who cares so deeply about the world around us, just as much as I do. Information that I deeply care about.
            I think I mentioned that I have a B.S. in Natural Resource Mgt. and my husband has his Masters in the same.
            We are ALL like minded but, again, ideologies, politics, and personal feelings aren’t as “cut and dried” as a degree. The largest roadblock in ALL things environmental stem from the uniquely human ability to analyze, politicize, and create conflict over IDEAS. I suppose nature does the same, but THAT usually ends in the death of one combatant or the other, lol! I’m happy that humans are able to discuss matters in a more “civilized” manner (again, lol!).
            Anyway, I would like to give you this book rather than send it back – absolutely NO strings attached! (And Anthony is my witness as he can review this exchange at any time…).

            Cheers,
            Debbe 🙂

          • greenpeaceRdale1844coop

            Debbe, sounds good. I’ll drop you a line. Since our disagreement begins with terminology, I don’t think this is exactly a “sides” thing in the conventional sense of strategies used to protect the environment. We could talk about “carbon markets,” and then we might disagree in our attitudes about the strategy!

            I took a look at that website, PERC, and noticed that they are careful to use the essential terms, markets and property rights, in their public presentation.

            My own bachelor’s is in human evolutionary biology, and my masters is in International Relations, social and environmental political economics. I wrote my thesis on citizen social enterprise in renewable energy in Denmark, Germany, and the UK.

            Dave Korten wrote The Post-Corporate World: Life After Capitalism, and there he makes reference to the original theory of economics. William Greider’s The Soul of Capitalism is one of my favorite books of all time. His treatment is brilliant and he raises the problem to raise the solution of how property rights in markets relate to every individual. And he keeps the environmental dimension very much alive the whole way as he gets to the ultimate consideration, ecological economics. Marj Kelly has a brilliant critical work, The Divine Right of Capital, and an excellent solution work, Owning Our Future. Michael Conroy is an economist who wrote Branded! about socially responsible certifications. Brian Czech is a biologist who has taken on economics using ecological economics in his Shoveling Fuel for a Runaway Train.
            I’ll send you an email.