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Free market environmentalism is an ideology that argues the free market is the best tool to preserve the health and sustainability of the environment. This is in sharp contrast to the most common modern approach of looking to government intervention to help prevent excessive destruction of the environment.

Economics of environmental destruction


Economists tend to view many environmental problems as arising from the negative externalities of industrial production and excessive depletion of non-renewable resources. With respect to externalities, a firm may receive the full benefit of producing a pollutant but, in general, they do not pay the full social costs of polluting the environment. This leads to a situation analogous to the free rider problem where the firm keeps all the benefits of an activity itself but shifts responsibility for the costs to all citizens and future generations. In such a situation it is rational, because it is profitable, for a firm to pollute, while letting others absorb the costs of its effects and cleanup. In other words, a market mechanism, left to its own devices, contains in-built incentives for destruction of the environment. Ecological economist Robin Hahnel has enumerated the four basic defects of a market economy with respect to the environment as:Hahnel (2005), pp66-72

  1. overexploitation of common property resources
  2. overpollution
  3. too little pollution cleanup, and
  4. overconsumption.

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Thu, 02 Jul 2009 00:00:00 -0700
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