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TFS (Part 5) - Environmental Protection - 03/04/2009

As the world's largest polluter, it's interesting that government is seen as the only way to protect the environment. By what reasoning can we think that government, who by sovereign immunity is not subject to even its own laws, is going to hold a clean, safe, and healthy environment as some sort of objective standard?

The system that exists now is one of arbitrary regulations created by bureaucracies such as the EPA.  Such a regulation might say that an organization must stay under a specific threshold of pollution or be subject to fines.  In other words, certain levels of pollution are acceptable without the polluter paying any restitution to the owners of the property being damaged.

The answer to this is very simple -- We must uphold property rights.  You cannot dump garbage on to your neighbor's property.  If you do, you are responsible for the costs of cleaning it up, plus any  costs (such as court fees) your neighbor incurs by enforcing his rights.  While most forms of pollution are more complex than this, the same basic rules apply.  If a company dumps waste into a river, they are responsible for the costs involved in clean up, including consequential damage such as seepage into nearby land.  Under our current system, a company acting in this manner is not held responsible so long as they act in accordance with EPA regulations.  And courts will uphold the polluters actions, negating rights to your property.  But in a society where property rights were held to higher standards, companies would dispose of waste in a more responsible manner, not because they feel some sense of social justice -- we need not rely on the good intentions of others -- but because they'll find that it's far cheaper than dumping waste where it doesn't belong, and subsequently having to pay the costs of clean up.

But the most common problems are air pollution, whether by vehicle exhaust or industrial factories, or any number of other sources.  And this implies far more complexity because it's difficult to ascertain exactly who's exhaust you're breathing, or who's soot is layering up on your property.  Some "green" activists have proposed a tax system, such that certain polluting activities would require the payment of a tax as a method of internalizing costs and encouraging people to engage in environmentally cleaner activities.  On the surface, this seems as though it would be a fairly ideal solution.  There are two primary problems with this solution:

1. The amount charged to anyone engaging in polluting activities is arbitrary and determined by political interests instead of true market values.
2. The amount charged is given to the government instead of to those that are damaged and are the rightful recipients of such restitution.

If someone pollutes the air, they are likely causing a minute amount of damage to the property in their vicinity.  Regardless of the amount of damage, this opens the polluter up to a class action lawsuit among property owners in the area.  Neither plaintiffs nor defendants would much enjoy such frequent lawsuits.  Plaintiffs, because their reward would be almost insignificant compared to how frequently they'd be suing; and defendants, because everyone driving a gasoline vehicle is a target.  An entrepreneurial-minded individual would likely come along and create a sort clearing house where polluters can pay into a pool to be distributed out among property owners in their vicinity.  Paying into the pool an amount to cover the cost of cleaning up one's pollution indemnifies them from a lawsuit, because a requirement of receiving regular and periodic restitution (perhaps as a monthly or annual check) from the pool as a property owner would be that you're not allowed to sue someone paying in.  This way, those causing pollution pay into the pool voluntarily as a means of avoiding the hassles of lawsuits, yet the costs they pay may encourage them to engage in cleaner and less costly activities; and those damaged by pollution receive restitution, again without the hassles of filing lawsuits.

As the rules exist today, a market-based voluntary system described above would be impossible in the face of EPA regulations.  The EPA, whose supposed existence is intended to protect the environment, prevents those damaged by pollution from collecting from those causing the damage, and it indemnifies polluters so long as they stay within the arbitrary regulations.  The system described above is but one way the market could handle the problem of pollution better than government.