Can the free market solve climate change?
November 26, 2019
If there is any idea that is despised most when debating climate change and environmental protection, it is free market environmentalism. The idea of solving climate change by reducing regulations and taxes doesn’t sound like a viable solution. However, it is the best path for rich and poor nations alike. The reason to adopt free market environmentalism can be condensed into a twofold argument: adoptability and long-term productivity. It is important to note that free market environmentalism can include minor government policies that protect areas of land and ocean, historical sites, and natural resources. Many advocates of free market environmentalism believe that some regulations are required to offset externalities. However, the primary policy that should be prioritized is the protection of property rights and deregulation of industries.
The first argument revolves around adoptability and sustainability for both rich and poor nations. To put it bluntly, it is a fact that climate change and environmental protection is a luxury of the rich. Refugees and inhabitants of poor countries don’t worry about climate change and carbon emissions when they are struggling to survive. Instead, basic needs like food, water, healthcare, and shelter are prioritized. If their actions result in an increase in CO2 emissions, it is the least of their concerns.
In direct contrast, rich nations like the United States and most European countries have established a stable economy which provides its citizens the ability to achieve a high standard of living. It is easy for environmental advocates and politicians of these countries to propose radical solutions to climate change and CO2 emissions. But these conclusions tend to overlook the poverty and stunted upward mobility residents of poor nations endure.
This establishes a fundamental framework that must be applied when proposing policies that limit climate change and CO2 emissions: the policy must consider poverty and economic development. Developing countries have no change at reaching first world status if they are forced to abide by overreaching regulations. Policies such as a carbon tax or a cap-and-trade plan instituted on the global stage would disproportionately affect the poor and minorities. Therefore, if developing countries are to lower emissions and act against climate change, the desired policy must be adoptable in every form of government and society.
The best solution when accounting for poverty and economic development is prioritizing free markets and economic specialization. Developing countries would not only cripple their economies by taxing and regulating their citizens and businesses, but they would also have a difficult time enforcing the policy. However, free markets, open trade, and defined property rights are feasible and enforceable in every form and condition of government. It would also assist in growing the standard of living and advancing conditions of poverty.
Though the first argument is vital to free market environmentalism, it doesn’t directly answer how CO2 emissions will be reduced. This leads to the second argument for free market environmentalism, long term benefits and sustainability. According to the Property and Environmental Research Center, “economic growth is fundamental to improving environmental quality. Markets and the process of exchange give people who have different ideas and values regarding natural resources a way to cooperate rather than fight. When cooperation supplants conflict, gains from trade emerge.” These gains from trade create cleaner and safer alternatives to modern technology. Creating new technology and products will inevitably decrease toxic emissions. The free market is more flexible and adaptive than government bureaucracies.
Despite its long-term viability, it is still widely opposed due to a lack of public trust in the market. Yet the market has continuously proved its flexibility and sustainability. A prime example is the Paradigm Project which has created cleaner energy sources for people in developing countries. Their projects include manufacturing a stove which cuts CO2 emissions to a fraction of its normal impact and distributing water filters. According to Paradigm’s website, “Paradigm clean energy products reduce household income expended on fuel and clean water provision by 40 to 60% saving families up to 15% of their household income for school fees, food, farm inputs and other vital needs.” This is achieved while cutting CO2 emissions in developing countries. There are countless examples of similar projects and businesses worldwide that are using the free market to revolutionize industries and increase the standard of living. Companies like tentree plant thousands of trees a year. Some are used for lumber while others are meant to help the environment. Greenpeace, a non-profit from the United States, has brought awareness to the Amazon rainforest and replanted thousands of trees. All these companies and projects have been created by people who want a sustainable future, not through government action.
But these examples are not the only way climate change will be resolved. In rich nations like the United States, solving climate change is contingent upon new products. Products like transportation, industrial manufacturing, and energy sources must become environmentally friendly. Placing heavy regulations and taxes on businesses limits production and prolongs the timeline for new inventions. Free market environmentalism takes into account the paramount long-term solution of innovation and prioritizes it. Closing the externality gap doesn’t require an economic draining policy. To reap the benefits of capitalism while lowering emissions in the long run, allowing fluctuation in the market to occur is the best plan. The Foundation of Economic Education puts it best, “If the world is to stave off climate change, then capitalism and the free market will be among its chief allies.”
Despite its minimal public support, free market environmentalism is the long-term answer to climate change. It allows for poorer nations to expand their economy while richer nations innovate products that minimize CO2 outputs. It is important to understand that most conservatives and liberals have very similar end goals on climate change. Both sides want a healthy earth where poverty is reduced. The means to that goal are vastly different. However, ideas are not created equal. The future of our environment depends on our ability to use our resources to fend off climate change. To destroy our resources by overregulation and taxation is a plan for failure and economic decline that risks the lives of millions of people.