Juridical and economic approaches of liberalism in this domain

Traditional liberal philosophy on environmental policies is supported by two main principles:

a) Ecology does not target human relations with the environment, but also the relationships between people and their use of goods belonging to the environment;

b) Liberal state possesses only one tool at disposal for regulating relations between people, including their relations with environment: private property. The existence of private property implies responsibility, as “property does not mean “the right to do whatever you want with what you have”, but the right to decide freely the use of resources, providing you do not infringe the similar rights of others”.

It is indisputable understood, using these two hypotheses as starting point, that to pollute, from a liberal point of view, does not mean, bluntly, to “soil” the nature, but to “commit” an aggression, an interference into others rights, to enjoy the satisfaction derived from the use of their property. If pollution is understood in these terms, anyone committing such an act must provide reparations in order to bring it into its initial state. Such a measure is mandatory as in the liberal vision, industrial waste, emissions of carbon dioxide or lead, etc. represent a “property infringement”. Waste is not thrown away in a no-man territory but within an owned territory, an area with a certain owner, whose rights were violated.

Liberals do not imply, in any case, that the state should provide reparation. On the contrary, any state intervention is considered to be void, in two ways:

  • Even in the considered cases that are public by their very nature, the state has no place. Liberals claim that collective assets are as such not due to imposed circumstances, but due to the legal pattern provided and imposed by the interventionist state; this pattern prevented them from being privatized, being considered natural monopolies. Liberals claim practice demonstrated that there are no natural monopolies; telephone network, railway, extractive industry, etc. can be privatized as any other asset.
  • Secondly, the state intervention is void even when externalities exist. The optimal solutions to remove the externalities are offered by the market and not by the state. The interventionist measures promoters claim that only the state is able to act, through environmental taxes, subsidies offered to polluters to steer them in using clean energy, establishing public ran natural parks, etc.; liberals propose their own arguments, namely that any intervention strikes certain limits; limits connected to the mercurial state caused in the externality dimensions by the absence of a market. It is universally known that only the market emphasizes the real measure of values. In a market economy, externalities can only follow the same pattern and subjected to the market logic in order to determine their dimension. As a result, some “all-powerful” public servants establish (according to which criteria?) the dimension of external costs and based on these “measurements” make decisions; decisions that can, under these circumstances, only be arbitrary. There are also limits connected to economic and juridical procedure. Pursuing “reparation” caused by pollution through restitution justice means, according to the liberal vision, to answer problematic, even unanswerable questions, such as:
  • Can a clear-cut causality relation be established between the damage and the individual’s behavior?
  • What happens when the culpable is insolvent or not to be found?
  • When the damage concerns people’s health or even their death, financial reparation holds any relevance?
  • Etc.

If any competence in this field is to be acknowledged to the liberal state the solutions should consist in adopting regulations aimed at respecting the property rights of those that suffered damages as result of pollution instead of adopting regulations against the pollution sources.

In supporting their arguments that private property represents nature’s best defender, liberals analyze certain circumstances.

Former socialist countries, where property was overwhelmingly public or state oriented, failed to encourage a rational resources management. Degradation, various spills, predatory exploitation of the land, forests, waters, etc. were not restricted in any way precisely because there was no direct interest in rationally exploiting those resources; such an interest is anchored in a definite property law.

The sea, a representative example of a free asset, is frequently afflicted by a reckless exploitation of its fauna when international legislation does not establishes with accuracy the skills and competences needed in order to exploit and also when the continental plateaus are not clearly and exactly determined.

Dissociating ownership rights of the forests from the hunting rights often leads to a reckless approach to the wild life reserve. The disappearance of certain breeds of wild animals only confirms this pattern. The same situation applies to certain stretches of water. In other words, if only the owner of that specific piece of land or someone that paid to obtain that right under strictly determined conditions would hunt and fish, the consequences on fauna would be totally different.

Traditional liberalism detests the overall approach of the environmental issues. The somber image sketched by the threats resulted from the thinning of the ozone layer, the melting of the polar ice sheet, etc. can inspire and sustain a gloomy feeling of finitude of the world; opposing such a view of the world can be made only using adequate policies. These policies in which the state or states are bound to be involved in can only be globalist and collectivist. The liberal alternative to the Promethean syndrome results translates in awareness of ecological phenomena and policies, in a diffusion of decisions within closed collectives and among individuals that are actually involved in determining, evaluating and fighting pollution phenomena.

Historically, it is known that the better state is the one that governs the least. Generally speaking, when managing natural and environmental resources, this remains true. Classical liberals never accepted any interference of the government within the anti pollution policies. Today’s liberals cannot ignore the fact that the environmental market is not an entirely free market and there are goods that by their inherent nature are fated to remain public and nobody can privatize the air or the sea. Therefore they admit that the state holds certain responsibility and can intervene in offering incentive policies in fighting pollution. The state intervention does not mean implementing restrictive mechanisms, but boosting the market. Trusting a responsible behavior from the polluters can be achieved by price alternative approach.

Promoting the market as a self-regulating mechanism regarding environmental issues, moderate liberals cannot conceive an ecologic market outside the private property. On the contrary, this is their basic assumption in their approach.

The existence of private property is linked, mainly, with the responsibility in management of goods. It is considered that only its existence provides clear landmarks on:

  • The subjects with access to resources.
  • The level to which the resources can be exploited.
  • The advantages resulted from the use of resources but also the responsibility in supporting the costs.

The attempts to demonstrate that the state must, objectively, intervene in managing public goods are obstructed by:

  • One deals and attends well only something one owns in a direct manner;
  • State cannot involve a police presence so numerous that each individual can be guarded and sanctioned when it pollutes the air or throws the wastes in inappropriate places;
  • The efficiency of legislation in ecology is seriously challenged outside the private property sphere. What kind of responsibility can be established if the state is, concurrently, the owner, the polluter and the financial authority?

The existence of free goods (air, water, hunting reserve, etc.) is, in itself an example that pleads in favor of private property. Why? Because the access to such goods is made according to the “first-come, first-served” principle. As the price to access this type of goods is small or non-existent, it will always be a highly demand for that resource, which finally will lead to its exhaustion. The direct and immediate interest to protect that resource is insignificant or non-existent. There is no correlation between users regarding its exploitation. Each one of the users will simply stop when the equivalent equation between the marginal profit and the marginal cost dictates. The exploitation costs are usually small therefore it can mean also the degradation or total exhaustion of the resource in the process.

Taking into account all the above remarks, it might be tempting to remove the environmental goods from the public goods category, in order to strengthen a more responsible management.

An additional argument is provided by the fact that the non-rivalrous and non-excludable features (specific features of the public goods) do not entirely cover the case of environmental goods or assets. It is a fact that public goods are goods that can be offered to all consumers, without restrictions (national defense, public safety, social protection, etc.). Regarding these goods, non-rivalrous feature states that if a good is available to an individual, it is equally available to another or others. In a similar frame of argumentation, non-excludable feature concerns the situation in which if A is accepted to use it, then B should also be allowed, under same conditions. In the case of environmental assets, these two features of public assets do not properly function, as each firm and individual is tempted, according to the “first-come, first-served” principle to contribute less to supporting costs (or not at all). In the same time, if A uses it and pollutes, B is not excluded from consuming, but cannot profit at the same parameters. Profiting and throwing waste in the environment without contributing to “correct” the environmental assets shows an irresponsible behavior and social inefficiency from a firm.

In the same time, polluting environmental assets raises problems in achieving the correlation between individual and social optimum. Access to a collective asset must be direct and free. Pollution is a negative externality. Pollution prevents us to state without a doubt that polluted air or water is collective assets. The polluter can be satisfied with the profit resulted from the polluting production (or consume), but cannot be satisfied dealing with access to a polluted public good. For the polluted party, the damage is absolute. Through internalization, pollution related costs are supported by the polluters, but if the costs include also parts of the realized products, the party at the end of the spectrum (polluter or polluted) supports the externalities. In other words, the internalization solves only apparently the contradiction between individual optimal and the Pareto optimal. In reality, once is produced pollution irremediably affects this relation.

Taking into account all these shortcomings, the courage to go all the way and remove the environmental assets from the public category is lacking. Only the promoters of property rights and especially Ronals Coase and Douglas North decided to act; they were impressed negatively by the fraudulently management of the environment in the former socialist system but believed that their argument, namely the general evolution of property rights from a collective, rather chaotic pattern to an individualistic pattern will be implemented, providing with the support offered by a clear and flexible legislation.