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Morriss discusses free market environmentalism with UF law students

Published: February 1st, 2010

Category: Events, News

Where do environmental problems come from? How can they be fixed?

Free-market environmentalists argue that the answer is through creating markets and making better property rights.

“We get the problem of a lack of demand for environmental goods and services, we have poorly specified or absent property rights in common resources that allow misuse of it, we have the failure of the legal system to apply standard doctrines of property, tort and contract to solve these problems and we have an absence of market,” said Andrew Morriss, a professor at the University of Illinois College of Law. “If we correct those problems, we will in fact correct many environmental problems.”

Morriss is also a fellow with the Property and Environment Research Center (PERC), an institute dedicated to improving environmental quality through markets and property rights. The Federalist Society sponsored his presentation on Wednesday.

A main cause of environmental problems comes from people and businesses freely dumping waste into the air and the water and thus polluting a common resource, Morriss said. Fixing this problem through incentives would help improve the environment, Morriss argued.

“If you’re going to take a market approach, you have to somehow solve the problem of people using this common resource for free and somehow get their incentives lined up with the costs they impose,” he said.

Morriss told the story of the red-cockaded woodpecker as an example of how free markets can help the environment. The red-cockaded woodpecker has been endangered since the 1970s as its habitat changed around it. International Paper agreed to use some of its land for conserving this woodpecker, eventually selling woodpecker credits and importing them.

The conservation plan was wildly successful, and it led to International Paper being able to profit off of the land in other ways, including by selling hunting rights. According to Morriss, International Paper started making more money from the conservation land than they would have had it been used for paper.

Alyson Flournoy, UF director of UF Law’s Environmental & Land Use Law Program, said there are four things to keep in mind when discussing free market environmentalism.

First, property rights and markets are not magic, she said. They’re not a substitute for thought and judgment. Also, someone has to decide the structure of creating a new market, which leads us back to government, she said.

“As with any tool, if you don’t use a tool correctly, it can bite you,” Flournoy said. “You need to know where it’s appropriate to use, what its limitations and its strengths are.”

Second, markets can be seriously flawed, Flournoy said.

“It’s easy to think these models are a perfect explanation of the world and therefore if we adopt markets, the world will follow the models,” she said. “There are some cases where it does, and some of the empirical examples that Professor Morriss gave you are those. But beware generalizing and assuming that in every case the theory will work perfectly.”

Third, Flournoy argued that the choice isn’t simply government regulation or free markets. This is because markets and current regulatory schemes can have different goals.

“[Markets] are geared to achieve one goal and one goal only: efficiency. That is what we can achieve and that’s a really valuable goal, but existing environmental policies are designed to achieve a lot more than efficiency,” she said. “They may be achieving protection of public health notwithstanding if you are rich or poor. It may not be an efficient result but we may care about that.”

Finally, Flournoy said markets do not just spring up out of nowhere by magic. The government would have to make choices about which regulations to replace with markets and allocate rights which would be a difficult process, she said.

Morriss said he knows markets would not arise overnight but the process would be worth it for the environment.

“We think markets are an answer,” Morriss said. “We think markets are a process, they’re not an answer in the sense that they’ll tell you who gets what. It’s a process by which we think solutions will emerge. They’re not magic, but the term we use is spontaneous order…They do arise without any central planning; they do arise without central direction.”




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