MARKETS AND THE ENVIRONMENT - A CRITICAL REAPPRAISAL

The environmental problem is no different from any other economic prob lem. The basic problem is scarcity. Wants are unlimited while resource s are limited. Once we recognize our inability to satisfy all of our e cological wants, how do we decide which wants we will satisfy? Most ef forts to address environmental concerns have used political institutio ns to answer this question and to devise policy responses. Environment al concerns have been addressed in the same manner that socialist nati ons sought to address broader economic concerns. This paper argues tha t such policies cannot succeed in the environmental realm any better t han they did in the broader economic realm. Whether the political appr oach chosen relies on command-and-control or ''market-based'' mechanis ms (eco-taxes or eco-quotas) matters little in resolving government's inability to prioritize. The dispersred nature and enormity of informa tion needed to prioritize risks and the inability of government to cre ate the rich system of incentives necessary to mobilize human ingenuit y renders effective government controls infeasible. This paper argues for greater attention to environmental problems but concludes that we can better address environmental quality by integrating ecological res ources into the economy via ecological privatization. This property ri ghts approach to environmental policy - ''free market environmentalism '' - may entice more economists to address the important environmental questions and devise more appropriate solutions.