Nobel Laureate Vernon Smith has a splendid little essay in the new issue of PERC Reports on Free-Market Environmentalism. This is very important:
Traditional thinking about environmental issues tends to emphasize incentive problems inherent in markets but ignores them in the context of political processes. Many economists and policy analysts assume that an e%uFB03cient allocation of resources will be reached when government correctly accounts for the costs and bene%uFB01ts. Free Market Environmentalism challenged this presumption and provided a more realistic way of thinking about environmental policy—a way that emphasized the important role of incentives, transaction costs, and well-de%uFB01ned property rights to natural resources. These rights, whether held by individuals or a group, create inherent incentives on resource users because the wealth of the property owner is at stake if bad decisions are made.
By placing property rights at the heart of the system rather than government control, FME offers a better way to solve genuine environmental problems like overfishing, where government command-and-control systems have failed disastrously. More on this to come.