Cato Journal

Cato Journal

Spring/Summer 2002


Review of "Free Market Environmentalism"
By Jonathan H. Adler



Free Market Environmentalism
Terry L. Anderson and Donald R. Leal
New York: Palgrave, 2001, revised ed., 241 pp.

In the first edition of Free Market Environmentalism, Terry Anderson and Donald Leal of the Political Economy Research Center sketched an environmental vision that eschewed government mandates in favor of markets, and replaced regulatory prohibitions with property rights. At the time, 1991, this was radical stuff. Ostensibly conservative policymakers had controlled federal environmental agencies for over a decade with little to show for it. Though the authors were reluctant to admit it, free market environmentalism (FME) was still a fringe idea. Environmentalists remained wedded to the use of government, and the federal government in particular, to achieve environmental goals. Some economists and policymakers used the language of economics in discussing environmental problems, or professed fealty to "market incentives," but few were prepared to unleash unfettered markets on the ecology. Genuine free market environmentalism—that is, the use of market institutions, particularly property rights, voluntary exchange, and common law liability rules to protect environmental resources—existed mostly in the minds of a handful of scholars and think tank researchers.

During the intervening decade, free market environmentalism has come of age. The failure of centralized regulatory systems has sent analysts searching for alternatives. Dissatisfaction with existing regulations has produced gradual experimentation with market approaches, while ecological entrepreneurs, what Anderson and Leal call "envirocapitalists," have sought ways to make environmental protection pay. In 1991, FME may have been "more theoretical than applied" (p. ix). Now there are models that illustrate the FME paradigm in practice. The authors take advantage of this fact, providing numerous examples of FME principles put to practice in the real world. The result is a blend of theory and implementation that provides a highly useful introduction to the power of market institutions to advance environmental protection.

Full Text (PDF, 7 pages, 49 KB)