When Terry Anderson and Donald Leal published the first edition of their book Free Market Environmentalism in 1991, the idea was met with mixed reviews. “Free market environmentalism is an oxymoron,” wrote one reviewer, “and the authors are the moron part.”
The dominant belief at the time was that markets are the cause of environmental degradation, not the solution. And the idea that property rights could be harnessed to improve environmental quality was counter to the popular notion that conserving natural landscapes required regulation and management by government agencies.
But not anymore. Today, the ideas of free market environmentalism are being applied in a variety of creative ways. Conservationists are increasingly using markets, contracts, and property rights to turn environmental resources into assets instead of liabilities. And policymakers are recognizing that markets are not the enemy of the environment but instead can provide strong incentives for resource stewardship.
So how are these ideas being applied today to change the way people approach conservation? Here are a few examples.
Markets and Property Rights Are Solving the Tragedy of the Commons in Marine Fisheries…
Ocean fisheries are a classic example of the tragedy of the commons. Since no one owns the ocean, no one has a clear incentive to conserve its resources, making the oceans prone to overfishing.
For decades, governments have imposed command-and-control regulations to combat overfishing, but such restrictions have rarely worked. Shortened seasons and early closures created a dangerous, zero-sum “race to fish.” The outcome was a wasteful—and often deadly—derby that was bad for both fish and fishermen, who tried to catch as much as possible before the closures set in. Despite these regulations, overfishing persisted, and many fish stocks were at risk of collapsing.
That changed with the development of a rights-based alternative known as individual transferable quotas, sometimes called “catch shares.” The quotas give fishermen the right to catch a share of a total catch limit, set at a sustainable level each season by fishery managers. Fishermen can buy, sell, or lease quotas to each other, and they no longer have to race to fish. There is also more accountability for harvests and an incentive for stewardship.
The results have been impressive. Rights-based fishing reforms have reduced overfishing, helped stem the global trend toward fisheries collapse, and led to higher incomes for fishers. According to one study that examined data on more than 11,000 fisheries around the world, catch shares have helped halt and even reverse the collapse of fisheries. They have also slowed the “race to fish,” improving fishing safety and allowing consumers to buy fresh seafood throughout the year. Today, there are nearly 200 catch-share programs worldwide, including more than a dozen in the United States.
Catch shares are also being used to reduce “bycatch,” which are species that fishermen unintentionally catch in their trawlers. After previous efforts to regulate bycatch failed, managers of a fishery off the West Coast of the United States demonstrated how markets and property rights can help tackle the problem.
In 2011, the West Coast groundfish fishery instituted a program that gave each fisherman a portfolio of rights to catch various species, including those caught as bycatch. If a fisherman exceeded his allotment for a given type of fish, he had to purchase more quota—and when it came to overfished species, the price was steep. This gave each vessel in the fleet ample incentive to avoid overfished species that previously ended up as bycatch, a crucial aspect of the program that former regulations on fishing seasons lacked.
After catch shares were introduced, the proportion of overfished species caught by trawlers fell by about half. “Before catch shares, large proportions of the catch of many non-target species were discarded as bycatch,” reads a 2015 government report. “Now, whether in a fishing net or in the ocean, they are treated as the valuable resource they are.” As a result, populations of overfished species have begun to rebound thanks to clearly defined property rights and markets that overcome the tragedy of the commons.
Hellbound and Down 