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Economic Growth: The Path to a Cleaner Environment

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Published January 7, 2021

Although it may seem like free-market capitalism and environmentalism are at odds with one another, economic prosperity leads to more environmental protection, not less. Countries become wealthier when they have well-defined and enforceable property rights. Those same property rights lead to more environmental protection by both private individuals and the government.

Discussion Questions:

  1. How do property rights affect environmentalism?
  2. How can we preserve property rights?

Additional Resources:

  • To learn more, read “Environmental Markets vs. Environmental Socialism: Capturing Prosperity and Environmental Quality,” by Terry Anderson. Available here.
  • Watch “Free Market Environmentalism,” with Terry Anderson. Available here.
  • Watch “A Better Way to Preserve the Environment,” with Terry Anderson. Available here.
View Transcript

 

At first glance, free-market capitalism and environmentalism appear to be at odds with one another. 

Fossil fuels help economies expand, but they also pump emissions into the air. 

Urbanization replaces green land and forests. 

But a closer look at history makes one thing clear: Economic prosperity leads to more protection for the environment, not less. 

The wealthier a country gets, the more likely it is to act in an environmentally friendly way. 

It turns out that the institutions that lead to wealth and prosperity also promote a cleaner environment. 

One way for countries to become wealthier is to have well-defined and enforceable property rights. 

People are able to invest with more certainty when they know that they can keep their rewards from working. But the benefits of property rights don’t stop there. 

These rights also give people the incentive to conserve their property and protect against environmental degradation. 

In poorer countries, people prioritize the use of natural resources to increase their wealth. 

Moreover, those countries generally lack legal protections or norms that allow people to enforce their rights against environmental degradation. 

If we want more environmental progress, we should encourage wealth creation, including environmental goods and services through markets based on strong, tradeable, and enforceable property rights. 

In short, we need to create individual incentives for preserving precious resources for future generations.