Environment and economic prosperity: Do we really have to choose?

Free market environmentalism's principles are currently being used in a variety of inventive ways. Markets, agreements, and property rights are all being used by conservationists to protect the environment. Here is how.

Sindhuj Thapa

  • Read Time 4 min.

During the 1970s when environmentalism was getting started, the dominant belief was that markets are the cause of environmental degradation, not the solution. Furthermore, the notion that property rights could be used to enhance the environment ran opposed to the widely held belief that protecting natural landscapes required government regulation and management. But no longer. 

Free market environmentalism’s principles are currently being used in a variety of inventive ways. Markets, agreements, and property rights are all being increasingly used by conservationists to protect the environment.

How are these concepts being used now to alter how people view conservation? Here are a few illustrations.

First, this is supporting the cooperative resolution of disputes over the use of limited water resources.

The Nature Conservancy’s latest paper “Using water markets and impact investment to drive sustainability ” suggests that property rights in water resources might help address the world’s water shortage.

Water markets are those markets where water sellers offer short or long-term leases on their water rights and can even sell them.  Water rights authorize property owners to use, sell, divert or manage water from the source.

Water markets have the potential to be an effective tool for managing water resources sustainably, reducing water scarcity, and regenerating ecosystems. Water can be transferred from one user to other thanks to water markets which are based on water rights. A properly run water market offers financial flexibility, promotes water conservation efforts, and brings a range of stakeholders to the table to find a balance between human and natural water needs.

Second, private property rights contribute significantly to conservation of public resources.

The five most prominent animals in Nepal–the greater one-horned rhinoceros, Asian elephants, Bengal tigers, Gharials and Pangolins–are always in danger from poachers who sell their skins, horns, and body parts to criminal organizations involved in the illegal, global wildlife trade. The protected areas of Nepal have always been surrounded by populated areas. The majority of these groups have strong ties with nature, which serves as a sanctuary, a source of food, and a means of subsistence for them. According to the National Geography Reports, the number of rhinos in Chitwan decreased from 612 in 2000 to about 380 in 2006. Therefore to resolve this by 2008, Nepal’s government had provided the local communities with authority to over one-third (28 percent) of the nation’s forests as “Community Forest”. This aided in the preservation of the country’s forests and wildlife as well as the reduction of poverty as local people were the beneficiaries of the forest themselves. “What belongs to you, you take care of but what belongs to everyone or no one, no one takes care of.” This is called the “Tragedy of the Commons”. Tragedy of commons is one of the major contributing factors in the failure of Socialism. Hence, creating property rights within communal  property helps better conservation of resources and sense of belonging. In the case of community forest of Nepal, local communities were given management duties for the forest areas located within the buffer zones in order to support their daily requirements. The benefits also include employment and revenue sharing with locals, such as entrance fees and license fees for tour and lodging businesses. The government grants local communities 50 cents of every visitor cash, making them more valuable for rhinos alive than dead.

In order to lessen rhino and tiger poaching and to keep an eye on the trafficking of other wild plants and animals, “Community-based Anti Poaching Units” were established. More than 400 units are currently at work around the nation, patrolling crucial regions including wildlife corridors and serving as crucial information sources on unlawful activity.This has been one of the most successful schemes for wildlife protection till date.  In 2014, Nepal was the first country in the world to achieve zero poaching of its three flagship species: tigers, rhinos and elephants.

Markets and property rights do not provide an overnight solution. They won’t be able to resolve all environmental issues. But they provide practical and intriguing solutions for a lot of issues. 

Since 70 percent of buffer zone in Nepal is privately owned, conservation efforts must be financially viable for landowners. Thankfully, markets and property rights are assisting in creating the appropriate incentives in the conservation of resources in Nepal.

Third, markets and property rights are resolving the marine fisheries tragedies.

Since no one clearly benefits from protecting the ocean’s resources because it belongs to no one, overfishing is more likely to occur. Governments have implemented command-and-control legislation for decades to address overfishing, but these limitations are rarely effective. The emergence of a rights-based alternative called “catch shares” is one instance of how markets and property rights altered this situation. The quotas grant fishermen the permission to take a portion of a total catch limit that is determined each season by fishery managers at a sustainable level. Fishermen no longer have to compete for fishing space. Instead, they can purchase, sell, or lease quotas from one another. Fishers now earn more money thanks to rights-based fishing rules that have decreased overfishing and halted the global trend toward fisheries collapse. After catch sharing was established, the proportion of overfished species caught by fishers were reduced by 40 percent.

Fourth, environmental entrepreneurs and policymakers are finding ways to better define property rights.

Property rights are used by environment entrepreneurs and policymakers for environmental conservation, sometimes even by establishing new types of property rights. Short-term habitat leases, fishing quotas, access agreements, compensation and insurance plans for livestock damage, conservation easements, and payments for ecosystem services are essentially entrepreneurial attempts to create new property rights that protect the beneficiaries of the environmental market in the preservation of open spaces, or the expansion of recreational opportunities.

Free market environmentalism is attempting to prevent overfishing, enhance stream flows, rehabilitate species, and encourage resource preservation. The world is starting to realize it. This is far from being an understatement. Market strategies for environmental conservation are no longer frowned upon today. They are frequently the most feasible means to resolve increasing demands over natural resources and the environment, as the above-mentioned examples demonstrate.

Finally, free market environmentalism appears to be anything but an absurd idea.

Of course, markets and property rights do not provide an overnight solution. They won’t be able to resolve all environmental issues. But they provide practical and intriguing solutions for a lot of issues. Free market environmentalism may prosper when property rights can be clearly established and secured and when markets can run smoothly. A tried-and-true idea, free market environmentalism encourages conservation all across the world.  As Dennis Weaver said, “we don’t have to sacrifice a strong economy for a healthy environment.”

Sindhuj Thapa ​​is a researcher at Samriddhi Foundation, an economic policy think tank based in Kathmandu. The views expressed in this article are the author’s own and do not represent the views of the organization. 

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