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  • Jonathan H. Adler (a1)

The dominant approach to environmental policy endorsed by conservative and libertarian policy thinkers, so-called “free market environmentalism” (FME), is grounded in the recognition and protection of property rights in environmental resources. Despite this normative commitment to property rights, most self-described FME advocates adopt a utilitarian, welfare-maximization approach to climate change policy, arguing that the costs of mitigation measures could outweigh the costs of climate change itself. Yet even if anthropogenic climate change is decidedly less than catastrophic, human-induced climate change is likely to contribute to environmental changes that violate traditional conceptions of property rights. Viewed globally, the actions of some countries—primarily industrialized nations—are likely to increase environmental harms suffered by other countries—less developed nations that have not (as of yet) made any significant contribution to climate change. It may well be that aggregate human welfare would be maximized in a warmer, wealthier world, or that the gains from climate change will offset environmental losses. Yet such claims, even if demonstrated, would not address the normative concern that the consequences of anthropogenic global warming would infringe upon the rights of people in less-developed nations. As a consequence, this paper calls for a rethinking of FME approaches to climate change policy.

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1 See, for example, Spencer Roy W., Climate Confusion: How Global Warming Hysteria Leads to Bad Science, Pandering Politicians, and Misguided Policies That Hurt the Poor (New York: Encounter Books, 2008); Christy John R., “The Global Warming Fiasco,” in Bailey Ronald, ed., Global Warming and Other Eco-Myths: How the Environmental Movement Uses False Science to Scare Us to Death (New York: Prima, 2002); Michaels Patrick J. and Balling Robert C. Jr., The Satanic Gases: Clearing the Air about Global Warming (Washington, DC: Cato Institute, 2000); Lindzen Richard S., “Global Warming: The Origin and Nature of the Alleged Scientific Consensus,” Regulation 15, no. 2 (1992); and Michaels Patrick J., Sound and Fury: The Science and Politics of Global Warming (Washington, DC: Cato Institute, 1991).

Some skeptics argue that global warming is largely natural, and any human contribution to such warming is outweighed by natural variability. See, for example, Singer S. Fred and Avery Dennis T., Unstoppable Global Warming: Every 1,500 Years, updated and expanded edition (Lanham, MD: Rowman and Littlefield, 2008). Even among skeptics this appears to be a minority view.

2 On the problems caused by the reliance upon scientific argument to resolve normative policy disputes, see Pielke Roger A. Jr., The Honest Broker: Making Sense of Science in Policy and Politics (New York: Cambridge University Press, 2007).

3 For my own contribution to this literature, see The Costs of Kyoto: Climate Change Policy and Its Implications, ed. Jonathan H. Adler (Washington, DC: Competitive Enterprise Institute, 1997). The present essay represents a substantial evolution of my views on climate change policy.

4 “No regrets” policies are policy measures that may reduce the risks posed by climate change but that could be justified independent of the risks posed by climate change. For examples of such policies, see Adler Jonathan H., ed., Greenhouse Policy Without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change (Washington, DC: Competitive Enterprise Institute, 2000).

5 See, for example, Goklany Indur M., “What to Do about Climate Change,” Policy Analysis, no. 609 (Washington, DC: Cato Institute, February 5, 2008); and Lomborg Bjørn, Cool It: The Skeptical Environmentalist's Guide to Global Warming (New York: Alfred A. Knopf, 2007).

6 See, for instance, Anderson Terry L. and Leal Donald R., Free Market Environmentalism, revised edition (New York: Palgrave, 2001); Adler Jonathan H., ed., Ecology, Liberty, and Property: A Free Market Environmental Reader (Washington, DC: Competitive Enterprise Institute, 2000); and Smith Fred L. Jr., “A Free-Market Environmental Program,” Cato Journal 11, no. 3 (1992): 457–75.

7 Anderson and Leal, Free Market Environmentalism, 4.

9 It is worth noting that Nobel laureate economist Ronald H. Coase, whose work on social costs has been very influential in environmental law and economics, takes a slightly different view, arguing that the mere existence of externalities, in and of itself, does not demonstrate any failure at all, as many externalities are too insignificant to address profitably. As Coase explained,

the existence of “externalities” does not imply that there is a prima facie case for governmental intervention, if by this statement is meant that, when we find “externalities,” there is a presumption that governmental intervention (taxation or regulation) is called for rather than the other courses of action which could be taken (including inaction, the abandonment of earlier governmental action, or the facilitating of market transactions)… .

The fact that governmental intervention also has its costs makes it very likely that most “externalities” should be allowed to continue if the value of production is to be maximized…. The ubiquitous nature of “externalities” suggests to me that there is a prima facie case against intervention.

Coase R. H., “The Firm, the Market, and the Law,” in Coase , The Firm, the Market, and the Law (Chicago: University of Chicago Press, 1988), 24, 26. See also Buchanan James M. and Stubblebine William Craig, “Externality,” Economica 29 (1962): 371–84 (noting that externalities are only relevant in a limited set of circumstances).

10 As economist Paul Heyne counsels, “Ardent environmentalists need to discover and acknowledge that the same limitations which made economic central planning impossible will make it impossible to establish a comprehensive system of central environmental planning.” Heyne , “Economics, Ethics, and Ecology,” in Taking the Environment Seriously, ed. Meiners Roger and Yandle Bruce (Lanham, MD: Rowman and Littlefield, 1993), 47.

11 Stewart Richard B., “United States Environmental Regulation: A Failing Paradigm,” Journal of Law and Commerce 15 (1996): 587.

12 Smith Fred L. Jr., “Conclusion: Environmental Policy at the Crossroads,” in Environmental Politics: Public Costs, Private Rewards, ed. Greve Michael S. and Smith Fred L. Jr. (New York: Praeger, 1992), 192.

13 Hardin Garrett, “The Tragedy of the Commons,” Science 162 (December 13, 1968): 1243. Two qualifications should be noted with regard to Hardin's essay. First, while Hardin was responsible for popularizing the notion of the commons problem, he was hardly the first to make these observations. The commons problem with regard to ocean fisheries was identified several years earlier in Gordon H. Scott, “The Economic Theory of a Common-Property Resource: The Fishery,” Journal of Political Economy 62 (1954): 124; and Scott Anthony, “The Fishery: The Objectives of Sole Ownership,” Journal of Political Economy 63 (1955): 116. The general phenomenon was also identified some time earlier by Aristotle in Politics 1261b32, ed. Saunders Trevor J., trans. Sinclair T. A. (New York: Penguin Books, 1981). Second, Hardin's analysis applies to open-access commons and should not be taken as a historical account of the actual conditions of commonly owned pastures, which were often protected by common property rules or social norms.

14 Hardin, “The Tragedy of the Commons,” 1244.

15 Ibid., 1245, 1247.

16 While all, or perhaps nearly all, environmental problems can be analyzed as variants of the commons problem, it is often useful to draw finer analytical distinctions among different types of environmental concerns, ranging from pollution spillovers to the provision of public goods, among others.

17 De Alessi Louis, “Gains from Private Property: The Empirical Evidence,” in Property Rights: Cooperation, Conflict, and Law, ed. Anderson Terry L. and McChesney Fred S. (Princeton, NJ: Princeton University Press, 2003), 108.

18 Smith R. J., “Resolving the Tragedy of the Commons by Creating Private Property Rights in Wildlife,” Cato Journal 1 (Fall 1981), 456–57.

19 This research is summarized in Adler Jonathan H., “Legal Obstacles to Private Ordering in Marine Fisheries,” Roger Williams University Law Review 8 (Fall 2002): 1922.

20 Jonathan H. Adler, “Poplar Front: The Rebirth of America's Forests,” in Adler, ed., Ecology, Liberty, and Property; see also Sedjo Roger A., “Forests: Conflicting Signals,” in Bailey Ronald, ed., The True State of the Planet (New York: The Free Press, 1995).

21 Stroup Richard L., Eco-nomics: What Everyone Should Know about Economics and the Environment (Washington, DC: Cato Institute, 2003), 7475 (summarizing research showing the relationship between the protection of property rights and environmental performance).

22 Norton Seth W., “Property Rights, the Environment, and Economic Well-Being,” in Hill Peter J. and Meiners Roger E., eds., Who Owns the Environment? (Lanham, MD: Rowman and Littlefield, 1998), 51.

23 For instance, the excessive use of the eminent domain power could come at the expense of environmental conservation. See Somin Ilya and Adler Jonathan H., “The Green Costs of Kelo: Economic Development Takings and Environmental Protection,” Washington University Law Review 84, no. 3 (2006): 623–66.

24 On the early activities of the National Audubon Society, and its precursor, the National Committee of Audubon Societies, see Graham Frank Jr., The Audubon Ark: A History of the National Audubon Society (New York: Knopf, 1990). On early twentieth-century views of wetlands, and governmental efforts to make more “productive use” of such lands, see Adler Jonathan H., “Wetlands, Waterfowl, and the Menace of Mr. Wilson: Commerce Clause Jurisprudence and the Limits of Federal Wetland Regulation,” Environmental Law 29 (1999): 1920.

25 Sugg Ike C., “Where the Buffalo Roam, and Why,” Exotic Wildlife, January/February 1999. Sugg quotes wildlife conservationist Valerius Geist saying, “Bison were initially saved by six individuals who either saw business opportunities in the existence of bison or simply wanted to save a vanishing species.”

26 U.S. Council on Environmental Quality, “Special Report: The Public Benefits of Private Conservation,” in Environmental Quality, 1984 (Washington, DC: U.S. Government Printing Office, 1984), 387–94.

27 Anderson and Leal, Free Market Environmentalism, 132.

28 For FME accounts of the common law's capacity to protect private property rights, see Brubaker Elizabeth, Property Rights in the Defence of Nature (Toronto, Ontario: Earthscan Publications Ltd., 1995); Yandle Bruce, Common Sense and Common Law for the Environment: Creating Wealth in Hummingbird Economies (Lanham, MD: Rowman and Littlefield, 1997); Meiners Roger and Yandle Bruce, “Common Law Environmentalism,” Public Choice 94 (1998); Bate Roger, “Protecting English and Welsh Rivers: The Role of the Anglers' Conservation Association,” in Meiners Roger E. and Morriss Andrew P., eds., The Common Law and the Environment: Rethinking the Statutory Basis for Modern Environmental Law (Lanham, MD: Rowman and Littlefield, 2000); and Morris Julian, “Climbing Out of the Hole: Sunsets, Subjective Value, the Environment, and English Common Law,” Fordham Environmental Law Journal 14 (Spring 2003): 343–73.

29 Elizabeth Brubaker, “The Common Law and the Environment: The Canadian Experience,” in Hill and Meiners, eds., Who Owns the Environment?, 88–89.

30 Whalen v. Union Bag & Paper Co., 208 N.Y. 1 (1913).

31 Bruce Yandle, “Coase, Pigou, and Environmental Rights,” in Hill and Meiners, eds., Who Owns the Environment?, 138.

Typically, civil actions only require that the plaintiff show the existence of a tort by a preponderance of the evidence. Some theorists, however, such as the late libertarian economist Murray N. Rothbard, would go much further, requiring property owners to demonstrate the existence of harm from pollution “beyond a reasonable doubt,” even if that renders most forms of pollution nonactionable. See Rothbard , “Law, Property Rights, and Air Pollution,” Cato Journal 3, no. 1 (Spring 1982): 8788. Even though the imposition of a higher burden of proof would mean that fewer individuals harmed by pollution would be able to achieve recompense in court, Rothbard argued that such a high standard of proof is necessary because “it is far better to let an aggressive act slip through than to impose coercion and commit aggression ourselves.” Ibid., 70.

32 Such bargaining over the allocation of property rights is often referred to as “Coasean bargaining,” after the economist Ronald H. Coase, who argued that, in the absence of transaction costs, property rights will be transferred to their highest and best use through voluntary transactions among property owners. See Coase R. H., “The Problem of Social Cost,” Journal of Law and Economics 3, no. 1 (1960): 144.

33 For examples of such negotiation in the context of stream pollution, see Bate, “Protecting English and Welsh Rivers.”

34 Brubaker, Property Rights in the Defence of Nature, 127–70; Morris, “Climbing Out of the Hole,” 359–61.

35 For example, Competitive Enterprise Institute president Fred Smith argues that progressive thought undermined classical liberal principles that had been embodied in the common law and had the potential to provide greater environmental protection:

Progressives believed that markets and private property slowed progress, and that collective management of resources would more surely advance the public interest. Thus they blocked the extension of private property to resources that had not yet been privatized (indeed, in the case of the electromagnetic spectrum and some arid western lands, rolling back fledgling homesteading efforts). Progressives also transformed the rule of law, making it more utilitarian, more willing to ignore individual values to advance the “common good.” Social concerns trumped individual rights. Earlier common-law defenses of individual property rights that might have encouraged economic development along more environmentally sensitive paths were weakened or abandoned… .

The gradual emergence of the environment as a valued aspect of life occurred in a world bereft of classical-liberal institutions. Older property-rights defenses were slowly eroded, and their newer adaptations were blocked. The result was that when environmental values became majority values, few realized that they might better be protected privately via a creative program of ecological privatization.

Smith Fred L. Jr., “The Progressive Era's Derailment of Classical-Liberal Evolution,” The Freeman: Ideas on Liberty (June 2004): 28, 30.

36 For example, in an essay on property rights and air pollution, Murray N. Rothbard explained:

If the law is a set of normative principles, it follows that whatever positive or customary law has emerged cannot simply be recorded and blindly followed. All such law must be subject to a thorough critique grounded on such principles. Then, if there are discrepancies between actual law and just principles, as there almost always are, steps must be taken to make the law conform with correct legal principles.

Rothbard, “Law, Property Rights, and Air Pollution,” 60. Similarly, economist Paul Heyne argues that the protection of private property rights is as much about justice as efficiency. See Heyne, “Economics, Ethics, and Ecology,” 34.

37 For a brief and accessible summary of the science of global climate change, see Collins William et al. , “The Physical Science behind Climate Change,” Scientific American (August 2007).

38 Overall, global mean surface temperatures have risen over the past century, but not consistently. Surface temperatures warmed from 1911 to 1944, cooled from 1944 to 1976, and have warmed again since. The mid-century cooling is generally attributed to the emission of sulfates and other industrial pollutants.

39 See Solomon S. et al. , eds., Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (New York: Cambridge University Press, 2007). The IPCC is an international body created by the United Nations Environmental Programme and World Meteorological Organization “to provide an authoritative international statement of scientific understanding of climate change.”

40 For example, climatologists Patrick J. Michaels and Robert C. Balling, Jr., two prominent warming skeptics, have predicted that there will be 0.65–0.75 degrees Celsius warming by 2050. Michaels and Balling, The Satanic Gases, 210–11. They have also predicted a warming-induced sea-level rise of five to eleven inches over the next century. Ibid., 162.

41 Solomon et al., Climate Change 2007. There is some controversy and uncertainty surrounding the IPCC's estimates of projected sea-level rise due to the failure to include the potential effects of rapid ice sheet collapse. See Oppenheimer Michael et al. , “The Limits of Consensus,” Science 317 (2007): 1505; and Solomon Susan et al. , “A Closer Look at the IPCC Report,” Science 319 (2008): 409.

42 Lomborg, Cool It, 15.

43 Ibid., 39.

44 Mendelsohn Robert, The Greening of Global Warming (Washington, DC: The AEI Press, 1999), 1213; see also Mendelsohn Robert, Dinar Ariel, and Williams Larry, “The Distributional Impact of Climate Change on Rich and Poor Countries,” Environment and Development Economics 11 (2006): 159.

45 For an exchange on this question among self-professed FME advocates, see “Global Warming: A Dialogue—Should Victims Receive Compensation?” PERC Reports (March 2005).

46 Anderson and Leal, Free Market Environmentalism, 160.

47 Taylor Jerry, “Clouds Over Kyoto: The Debate Over Global Warming,” Regulation, 21, no. 1 (1998).

48 Mendelsohn, The Greening of Global Warming, 1, 2.

49 Goklany Indur M., “What to Do about Climate Change,” Policy Analysis, no. 609 (Washington, DC: Cato Institute, February 5, 2008).

50 Goklany Indur M., The Precautionary Principle: A Critical Appraisal of Environmental Risk Assessment (Washington, DC: Cato Institute, 2001).

51 Lomborg, Cool It, 42.

52 Mendelsohn, Dinar, and Williams, “The Distributional Impact of Climate Change on Rich and Poor Countries,” 161.

53 Michaels and Balling, The Satanic Gases, 162.

55 Anderson and Leal, Free Market Environmentalism, 160.

56 Farber Daniel A., “Basic Compensation for Victims of Climate Change,” University of Pennsylvania Law Review 155 (2007): 1644–45.

57 For the purposes of this thought experiment, intranational effects of climate change are being ignored. In actuality, however, such intranational effects could be significant. In the United States, for example, sea-level rise might impose substantial costs on coastal states, whereas states with substantial agricultural production may benefit significantly from a modest warming and a consequent expansion of growing seasons.

58 Morris reports on cases in which “multiple sources have been held jointly liable for harms,” even in cases where “individually their actions would not have constituted a nuisance.” See Morris, “Climbing Out of the Hole,” 358. Farber also discusses precedents for apportioning liability among multiple defendants who may all have contributed to a given harm. See Farber, “Basic Compensation,” 1639–40.

59 This assumption may be particularly unrealistic insofar as some apparent sea-level rise may actually be due to subsidence of coastal areas, and because some subsidence may be due to various human activities in affected nations. Nonetheless, there is little disagreement that anthropogenic climate change should produce some increase in mean global sea level.

60 As Eric Posner and Cass Sunstein point out, “emission reductions are an in-kind benefit,” and poor people in less-developed nations would almost certainly prefer a “cash transfer” or other compensation in lieu of emission reductions. Posner Eric A. and Sunstein Cass R., “Global Warming and Social Justice,” Regulation 31, no. 1 (2008): 17.

61 There are precedents for such Coasean bargains under international law. As part of the Montreal Protocol, the international agreement to phase out the use and production of substances that deplete the stratospheric ozone layer that took effect in 1989, those nations most at risk from ozone depletion agreed to compensate other nations for giving up their right to produce and use such substances in the future. This exchange shows that such bargains are possible, even on an international scale, but that does not mean that this bargain was consistent with FME principles.

62 This is a reasonable assumption, since the contemporary customary international law of transboundary pollution disputes is largely based upon the law of interstate pollution disputes in the United States, which, in turn, is based upon traditional common law principles.

63 As Farber notes, effects such as sea-level rise “are readily identifiable, do not raise the complicated causation issues that plague other potential forms of damages, and can be measured (at least roughly) in a fairly straightforward way.” Farber, “Basic Compensation,” 1606–7.

The author would like to thank Lloyd Gerson, Indur Goklany, Andrew Morriss, Dale Nance, Ellen Frankel Paul, and Roger Pielke, Jr., for comments on various drafts of this essay, and Tai Antoine for her research assistance. Any error or inanities are the fault of the author alone.

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