Free market environmentalism: Friend or foe?

Abstract

‘Free market environmentalism’ proposes that environmental problems can be solved by creating and enforcing tradeable property rights in respect of common environmental assets. But while the market can allocate resources efficiently, it cannot by itself perform the task of setting an optimal (in the sense of just) distribution of income nor an optimal (in the sense of sustainable scale) of the economy relative to the ecosystem. There are certain specific environmental problems where ‘free market environmentalism’ may prove to be the most appropriate solution (it can, for example, promote energy efficiency through market mechanisms), but it is inappropriate as a blanket solution to the ecological crisis. This calls for economic policies concerned with three broad goals ‐economic efficiency, social justice and ecological sustainability.