ECR Party’s multilingual hub for Centre-Right ideas and commentaryEnglishThe state is in many cases the problem and private enterprise the solution to environmental challenges....
Most prominent environmentalists lean to the Left, which means that they like government and dislike individual initiative or private enterprise (the opposite of what the Left believed two centuries ago, incidentally). In trying to save species, habitats, clean water and air, or the climate, they therefore see the task as one of regulation and prohibition by the state. In this they are sometimes justified, but very often mistaken. The state is in many cases the problem and private enterprise the solution to environmental challenges.
Consider, for example, pollution in the Soviet empire versus pollution in the West. By the time the Berlin wall came down in 1989, the capitalist West had largely cleaned up its rivers and its air, expanded its protections of species and habitats and drastically reduced its demand for land to support a given human life, through improvements in farm yields.
The impact of human beings on the planet’s natural resources does not correlate with wealth; in many ways the reverse. Wildlife populations are doing better in rich than poor countries. It was poor hunter-gatherers who wiped out most large mammals in North and South America and Australia over 10,000 years ago.
Soviet rivers were treated as sewers, with frequent fish kills; the Volga had so much oil in it that ferry passengers were warned not to throw cigarettes overboard; the Aral Sea was turned into a desert; the beaches of the Black Sea were mined for gravel, causing even hospitals to fall into the sea; Lake Baikal was horribly polluted. The United Nations said of Eastern Europe that “pollution in that region is among the worst on the Earth’s surface”. North Korea is an ecological disaster zone to this day.
In the West, it was private pressure from neighbours, expressed through the courts or through parliament, that forced polluters to stop dumping sewage and effluent in rivers. The clean-water acts in Britain were actually designed to protect polluters from increasingly expensive private lawsuits, even while limiting their rights to pollute. Likewise the astonishing decline – by over 90 per cent since 1970 – in the amount of oil spilled in the oceans by tankers has been driven by private enterprise seeking technological relief from the cost and reputational risk attached to spills: double-hulled ships, better navigation aids and so forth.
Next, consider the state of the world’s fisheries. Like all free-access, common-pool resources, fisheries all too easily collapse from overexploitation. But, as the Nobel prize-winning economist Elinor Ostrom showed, government control is often not the best way to solve such tragedies of the commons. The worst-managed fisheries are those under strict command-and-control by governments, such as the European Union’s common fisheries policy; the best-managed fisheries, such as those of Iceland, the Falklands, South Georgia and New Zealand, are managed by “transferable quotas”: market mechanisms in which each fishing vessel acquires a share of a quota, which it can sell, and so has “skin in the game”, incentivized to enhance the value of his stake by increasing the stock of fish.
Commerce also encourages innovation, and new technologies have proved vital to the saving of habitats and species. Nineteenth-century whaling collapsed before it had wiped out whales because of the invention of kerosene, derived from petroleum. Twentieth-century whaling fleets likewise disappeared just in time because of the falling costs of oil-derived products and things made (with oil) from crops, such as margarine.
Overfishing in South China; Photo credit: Adam Dean, National Geographic
In general, the replacement of natural with synthetic materials has drastically reduced the demand for animal products, resulting in a resurgence in the populations of fur seals and other polar species. Ivory and rhino horn are lamentable exceptions, but even here the option of farming rhinos for their horns (which can be painlessly removed) and flooding the market to suppress the demand for wild horn might work better than today’s ever less effective prohibitions. It worked for salmon, after all: farmed fish undercut wild fish.
This illustrates a much more general point. The impact of human beings on the planet’s natural resources does not correlate with wealth; in many ways the reverse. Wildlife populations are doing better in rich than poor countries. It was poor hunter-gatherers who wiped out most large mammals in North and South America and Australia over 10,000 years ago.
Likewise, the trebling of global average farm yields since the 1960s – more in rich countries – as a result of the application of synthetic fertiliser and other manufactured products has made it possible to cut the amount of land needed to produce a given quantity of food by 68 per cent since 1960: which has saved land from the plough on a grand scale. Reforestation is occurring all across the wealthy, technologically advanced, private-enterprise-dominated countries, Deforestation still rules in the poorest countries and those with the most intrusive governments. Wolves are increasing (they live in rich countries) while lions are decreasing.
Private conservation initiatives abound, all around the world, from the hunting preserves of Zimbabwe, with their resurgent populations of buffalo, lion and giraffe, to the grouse moors of northern England with their booming populations of rare species such as curlew and golden plover.
The idea that all environmental problems stem from “market failure” is still popular among environmental lobbyists, but has long been exploded among economists. Many of them stem from government failure instead. Governments can help to solve green problems, for sure, but their best way of doing so is not by command and control, but by nudging private sector actors to come up with technological solutions, through the use of incentives.
As for climate change, the country that has done most to cut its carbon dioxide emissions in recent years has been the United States. It has achieved this by replacing coal-fired power with gas-fired power stations on a massive scale. This switch was driven by commercial imperatives, not government policy. The great abundance of gas, and its low price, as a result of the revolution in hydraulic fracturing and horizontal drilling, has incentivized power plants to switch to gas.
The government, meanwhile, has been incentivising renewable energy such as wind power, which has actually hampered decarbonisation, by ruining the economics of nuclear power – since the unreliable and intermittent dumping of cheap electricity on the grid makes it impossible for nuclear plants, which must run continuously, to recover their costs. New York state is reduced to subsidising a nuclear plant to keep it open. In Britain and Germany, the unreliable subsidy system has actually prevented the replacement of coal by gas.
The idea that all environmental problems stem from “market failure” is still popular among environmental lobbyists, but has long been exploded among economists. Many of them stem from government failure instead. Governments can help to solve green problems, for sure, but their best way of doing so is not by command and control, but by nudging private sector actors to come up with technological solutions, through the use of incentives.
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