By Vidushi Dembi
Ever since the impact of human induced climate change transpired in the international community, governments have been the face of all the major action. It’s a tug of war between regulators that want to regulate everything and libertarians who want the freedom to choose and act as they please – how do we align these skewed incentives?
After the Earth reportedly experienced cooling between 1940-1970 as a result of a post- world war aerosol build up which led to increase in the Earth’s albedo, the late 1980s witnessed visible global warming and consequently early 90s began the mark of global recognition and prominent discussions on anthropological climate change. Climate models and predictions demonstrated the possible future scenarios, should humans continue with business as usual, with Intergovernmental Panel for Climate Change (IPCC) presenting multiple scenarios of our future on this planet ever since. The global movement didn’t originate only at the governmental level; civil society had also begun organizing itself primarily in the form of anti-nuclear movements across Global North. Several individuals with the likes of Donald Leal, Dennis Hayes, Sunita Narain emerged into limelight along with organizations such as Greenpeace and the radical ‘Earth Liberation Front’ (ELF).
Mertig and Dunlap in their paper described environmentalism as ‘one of the most successful movements in the US and Western Europe’. Meanwhile in Global South (environmentalism in the Global South is often viewed from the framework of Third World Approaches to International Law [T.W.A.I.L.] in International Environmental Law), lot can be discussed about when it originally started; nature and its conservation being an important part of people’s lives in countries such as India and Japan. Specifically for India, Ramchandra Guha mentions in one of his articles that it was ‘environmentalism of the poor’, initiated by communities that were dependant on these natural resources, depletion of which would cause not only environmental damage but social injustice. Across the globe there was also seen emergence of several ‘Green Parties’ in the political sphere, many of which have successfully evolved to prominence. However, global climate action was and continues to be largely dominated by the governmental sphere. Conference of Parties (COP), Kyoto Protocol, UNFCCC (even though it is a UN Organization, it depends on international governmental cooperation) and all the prominent names in environmental discussions are being steered by a global government collaboration.
In the early stages of the acknowledgment of climate change (arguably already materializing in late 1960s) the focus was on how environmental changes affected human health. Consequently, the world saw designing of several principle, treaties, and laws by the government for regulating related detrimental activities. Montreal Protocol regarding effects of CFCs on the ozone layer came into action all over the world in late 80s, Sweden became the first country to impose a carbon tax, the notable Agenda 21 came into being – we have plethora of such examples of international governments collaborating on global forums and then implementing (effectiveness of which is a discussion for another day) on each country level. Governmental regulation is the most prevalent method for climate action, and even though global collaborations have demonstrated some significant results, one is tempted to think if this is the only option, and more importantly, the most effective option we have. For one, libertarians sure aren’t happy with the state of the art.
Major critique of government dominated environmentalism
An easily observable issue with environmental protection purely via government regulations is recognising that climate change, pollution and environmental degradation are largely concomitant of undefined property rights. In case your neighbourhood is getting contaminated by the hazardous fumes by the nearby factory, or your city river which is frequented by significant number of citizens for its aesthetic value is being choked by the plastic litter, or the dam which powers you hometown is leading to a decrease in the number of fish on which your livelihood is based, the actors responsible for bringing these disruptions can always argue that the responsible company stood there even before your neighbourhood came about, there is no solely responsible source of plastic pollution in the river that can be tracked and nipped, and powering entire town is more important than one person’s livelihood, respectively. Rivers, air, nature; these aren’t owned by anyone privately and hence no one person has enough incentive for their maintenance. Everyone continues with the mindset that since it’s not their property and therefore not their job, their individual action is not going to change anything anyway and hence the pollution continues. Environmental degradation employs the classic ‘Tragedy of the Commons’ by Hardin, and can be supplemented with understanding of human behaviour via behavioural economics (V. Raghunathan provides the behavioural economics explanation for such behaviour with respect to India in his book ‘Games Indians Play’, which can be also extended for the case of environmental degradation).
Litigation in such cases becomes especially difficult due to the same reason; arriving at a ‘fair’ decision within a clearly marked system boundary is just too convoluted. Complications increase when there are multiple states involved, like in cases of transboundary water disputes. Some sort of resolution has been brought about by assigning boundaries to such resources (essentially establishing property rights) in cases such as fishing in international waters by forming associations, defining water boundaries, and allotting quotas. The process remains tricky, however a significant improvement has been observed over the earlier condition of having no boundaries defined and continuing with unsustainable fishing which often led to high fluctuation of fish prices.
Extending the same property rights rationale, public property being ill-maintained is quite a notoriously true observation majority of people will concur with. The plight of public parks, buses, monuments (frequently seen in India) raise a big question mark on the efficacy of government regulations and supervision on unclear property rights. Critics have also talked about high costs of environmental regulation along with its weak implementation. One can also argue that since such laws are a consequence of transnational decisions which then are implemented through the central government of the country, such broader decisions might not work effectively while getting implemented at the local level. Many critics suggest that since property rights lie under market institutions, cultivating a ‘new’ environmentalism taking in view characteristic of a market and an individual’s liberty would be a better pathway.
Libertarianism sees an individual as the fundamental unit of the society, individuals having the right to choose and make decisions while respecting the same values for other individuals. The rights of an individual are not provided by anyone else like the government but are inherent in human nature. This is not to say that no order or outright anarchy is the way of libertarians; this school of thought recognizes the importance of societal order (they recognise the existence of a libertarian paradox – the idea that to protect individual liberty we need the state to protect individual liberty which in turn will involve some violation of liberty) but believe that imposition of such order is not necessary since over the years the institutions we have developed came about spontaneously and not forcibly or as per some other-worldly plan.
Expanding this to environmentalism, the next line of thought would be then, if libertarians allow the right to choose and hence the corporation has the right to pollute, doesn’t that make libertarians climate change deniers or to say the least incompatible with science? Libertarians have been often accused of their apathy towards climate change with enough libertarian luminaries of the day contributing towards reinforcement of the allegation. Interestingly, many libertarians have argued that the popular axiom of pollution economics – that pollution is an externality and therefore leads to market failure – is in fact flawed, their version being that pollution is rather a by-product of absence of markets. Government with its profound power levels is more susceptible to corruption and succumbing to optics where it tends to focus on the more visible matters rather than long term issues such as climate, whereas free markets operate voluntarily without any powerful central entity to bribe in the first place.
The proposed libertarian version of environmentalism
Although not wholly representative of this side of argument, a major concept often discussed in the libertarian take of things is ‘Free Market Environmentalism’ (FME). FME is largely attributed to Anderson and Leal who wrote a book by the same name in 1991 which gave shape to this chain of thoughts. Market failures like pollution are often corrected through government regulation, but the libertarian way points out to the additional failure of the government. FME hence argues that defining property rights clearly and therefore allowing markets to come into play on their own without governmental intervention can circumvent the flaws with governmental regulation. Once the property rights are clarified (or should we even say the property is ‘privatized’), the stakes for the owner/ actor responsible are much higher and hence is a direct incentive for resource preservation. Such a system promotes the owners to optimize the property use and keep away or punish the ‘trespassers’. Since these property rights are also transferrable, the potential that it might be sold to some other way of resource use makes the actors more accountable towards preserving the property in question. One argument also says that since the philosophy of libertarianism stresses on the values such as responsibility and accountability, these can be used well in relation to environment protection.
Governmental institutions, according to certain economists, don’t have the appropriate incentive or even information for climate action. Context of environmental preservation can vary highly over geographies and demographics; hence decentralization becomes an important tool in implementing the regulations, absence of which can render huge shortcomings to the goal. Some popular methods proposed, some of which have already been employed in various parts of the world, are taxes (pollution/carbon taxes), tradeable permits (Cap and trade schemes) and quotas.
On the other hand, some have commented, notably Mark Sagoff in his 1992 critical essay ‘Free-market versus libertarian environmentalism’ that FME is not representative of the entire libertarian take but possesses quite some differences with libertarian environmentalism. Taking reference of Anderson and Leal’s work on FME, he notices that their version of FME considers economic efficiency as the supposed main goal of environment policy and disagrees with their observation that environment protection and markets do not go hand in hand (Anderson and Leal claim depletion of resources is necessary for economic progress) which clearly, like Sagoff points out, should not be considered as a principle. He discusses how libertarian environmentalism actually works on the same basis of the philosophy of libertarianism; pollution essentially is violating other’s individual rights and hence should be punishable. He suggests that environmentalists should adopt the libertarian way of treating pollution as a tort rather than as an externality.
Challenges to libertarian environmentalism
Continuing from Sagoff’s critique, the argument that market and hence economic progress mandates resource degradation is not necessarily true, especially today where we have well developed concepts already being talked about, for instance ‘doughnut economics’ and ‘circular economy’. Libertarians also need to argue against the allegation of their practices leading to only damage to the environment, when the truth is that free markets have enabled great innovations in several sectors such as food, energy, and water.
However, just as a dominant solution for libertarians for environmental preservation is property rights, a dominant problem for this argument is – you guessed it – property rights. Property rights allocation works great in case of certain resources such as land, however defining property rights in case of resources such as water and air still doesn’t work effectively. These resources simply cannot be assigned to actors as their ‘private property’ for them to preserve it. Another important aspect to note is market failure related to the nature of consumption and if appropriate rivalry of the goods is present for the markets to function efficiently. As Kolstad describes in his article, consumption of air, for instance, in a particular area by me doesn’t hinder the intake of air by you, such open source or ‘commons’ don’t make good rivals and hence even though markets trading these goods will function, it won’t happen effectively. Litigation of such cases – identifying definite culprits and providing ‘justice’ to the victims – will entail huge transaction costs, and hence polluting is the cheaper way out. Quotas, for instance trading schemes and fishing quotas, also run the risk of too much complicacy for the target audience to understand before compliance, since different states (e.g., multiple federal states of a country, or multiple countries involved in an international system) can adopt different approaches and regulations. For such an instrument to work successfully, as has been often suggested in case of emission trading schemes, there needs to be one common framework globally. Uneven standards over geographies can cause carbon prices to fluctuate frequently and set per unit carbon prices which are too low as compared to the social cost of carbon, therefore, making it uninteresting for the parties to participate in the trading.
Carbon taxes have been another prominent solution offered by this pathway. Based on the polluter pays principle, carbon taxes take care of the additional social costs generated by the respective source. The tax eliminates the conundrum of preserving the commons and provides an incentive to minimize pollution in order to save business expenses. The revenue raised can be further used for developing more mitigation efforts. Even though many countries in the world have successfully implemented it, a common critique that such taxes face are development of tax havens and subsequent shifting of industries to these havens thus affecting the economy of the taxed region. Not to forget such taxes are especially difficult to monitor and might also invite tax evasion. Another argument offered against such taxes is it allows the ‘right to pollute’ as long as you are able to pay for the damage you induce, which defeats the fundamental purpose of such a tax.
Quite some critics call out libertarians citing their fundamental philosophy, that they are hostile to market instruments where state is the authority assigning property rights (case in question being emission trading; however it is questionable if emissions trading really can be called property rights), hence contradicting their belief of rights preceding the state; and they of course have issues with the method of government regulation, so libertarians might as well declare climate change as a hoax. However, one can argue that this might not be a legitimate argument; if libertarians don’t have problems with state assisting with property assignment (e.g., when you have to buy an apartment), why would they specifically have a problem while assigning rights in this case?
Sagoff in his essay also discusses how the ‘libertarian assumption’ that state will always be inefficient, corrupt, inadequate and underinformed might not be true as we have examples where country governments have enabled environmental regulations effectively and impactfully. If the libertarian argument is how free markets are the remedies to everything and rely on pointing out flaws in the governmental method, the other side can also use the same blame game logic and start pointing out flaws in the market system; such argumentation doesn’t do any service to the cause.
While some call libertarianism the ‘natural home to environment protection’, there are plenty of arguments available suggesting libertarian ideology doesn’t go hand in hand with environmentalism. Viewing past the libertarians’ painted picture of ‘propertarians’ and economic development maniacs, one cannot deny the benefits of free market environmentalism and the relevance of libertarian ideologies of respecting all individual rights and therefore not polluting the commons (which is a result of an individual’s ‘right to pollute’ but leads to infringement of right to breathe fresh air by many others, which isn’t acceptable under the school of thought). There are multiple ways suggested, especially by Sagoff, how libertarian ideology could be useful to environmentalists. Government regulation has been the dominant pathway of climate action, even as it manifests extremely slowly since international environment law works entirely on consensus, which as one can guess is quite a herculean task to achieve. Free markets and the libertarian ways might be faster and more efficient; however, the fact of the matter remains that the main basis of the libertarian solution, the process of defining property rights, is not straightforward in case of open-access resources. Even if we manage to succeed in the endeavour somehow, suggested market instruments come with their own bunch of caveats. Pollution still remains a social cost which someone needs to take care of – and pushing this blame onto each other by calling other’s ideas intellectually inferior might consume the critical time that we have left to generate action.
(This article received valuable inputs from Divyanshu Dembi. Find his writings here.)