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ECONOMICS OF ENVIRONMENTAL DESTRUCTION text book by Baumol and Blinder observes ''When a firm pollutes a river, it uses some of society's resources just as surely as when it burns coal. However, if the firm pays for coal but not for the use of clean water, it is expected that management will be economical in its use of coal and wasteful in its use of water.'' A conventional strategy to address negative externalities is by governmental regulation to proscribe polluting activities. This approach has been criticized by PROPERTY RIGHTS Some Hahnel voices similar reservations: "ambiguity over who has the property right, polluters or pollution victims, free-rider problems among multiple victims, and the transaction costs of forming and maintaining an effective coalition of pollution victims- each of whom is affected to a small but unequal degree- all combine to render market systems incapable of eliciting accurate information from pollution victims about the damages they suffer, or acting upon that information if it were known. " ''Economic Justice And Democracy: From Competition To Cooperation'' pp. 201, Hahnel, Routledge, 2005 A number of libertarians, such as ) Proponents of free market environmentalism use the example of the recent destruction of the once prosperous It is contended that if the fishery had been owned by a corporation it would have had an engrained interest in keeping a renewable supply of fish to maintain profits over the long term. They would thus have charged high fees to fish in the area, sharply reducing how many fish were caught. They also would have closely enforced rules on not catching young fish. Instead commercial ships from around the world raced to get the fish out of the water before competitors could, including catching fish that had not yet reproduced. Another example is in the 19th Century early gold miners in California developed a trade in rights to draw from water courses based on the doctrine of Prior Appropriation . This was curtailed in 1902 by the Newlands Reclamation Act which introduced subsidies for Irrigation projects. This had the effect of sending a signal to Farmers that water was inexpensive and abundant, leading to uneconomic use of a scarce resource. Increasing difficulties in meeting demand for water in the western United States have been blamed on the continuing establishment of governmental control and a return to tradable Property Right s has been proposed. In contrast REGULATOR CAPTURE Many free market environmentalists argue that the problem of Regulator Capture whereby large companies play a large role in setting regulations has created a system where things are far too biased in favor of large companies. For instance, in the United States lands that could be more valuably used for Tourism are often used for resource extraction because the many disorganized tourists cannot have the same impact on government as the few organized corporations. If the land was privately held the land owner would realize that tourism would make more of a profit than logging and nature would be preserved. TAXATION The implementation of Property Right s provides governments with an opportunity to raise revenues. This has been illustrated by recent Auction s of bands of the Electromagnetic Spectrum for telephony, another example of an attempt to manage a scarce resource through Property Right s rather than regulation. Such auctions offer an alternative to conventional taxation for funding public spending. Some economists, most notably Henry George in the 1870 s, have argued that taxes on income and profits represent taxes on productivity, innovation and creativity and that we should rather tax ''bads'' such as pollution, consumption of fossil fuels and road congestion. Environmental Property Rights offer a means to shift taxation from ''goods'' to ''bads''. NATURE PRESERVES One example of free market attempt to protect the environment is The Nature Conservancy organization. It has been successful in protecting many sensitive, ecologically important places by simply purchasing them, although this practice has met with controversy in some areas. In some cases the lands are donated or sold to government agencies for management, while in others the Nature Conservancy itself manages these preserves. Billionaire Ted Turner has a similar private program that has seen him buy up ten of thousands of acres of wilderness around the United States. OBJECTIONS There are a number of arguments against free market environmentalism:
FREE-MARKET ENVIRONMENTALISTS Economists who have written on free-market environmentalism include:
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