Environmental Protection, the Strongest Method

If you are a strict environmentalist as I am, you may want to consider the following. Some of you may know that my entire career path is centered on environmental protection as an environmental engineer. However, I am going to advocate a political philosophy that many would view as an enemy to the environment: libertarianism. Libertarianism includes the concept of a very limited government role in the economy and personal affairs. Most people then think of libertarianism and environmentalism as incompatible since most environmental protection today is carried out through government micromanagement. I would like to get rid of this myth. Libertarianism is actually the strongest method of environmental protection. And, “progressive” and democratic ideas are the source of legalized environmental damage, as will be described.

There are many variants of libertarianism, and I can’t give any complete definition here for the sake of time. But, here is a common and approximate meaning that is mostly complete: the legal system where every individual has the right and freedom to do anything they want to as long as they are not being responsible for the a) harm of other people, b) violation of other people’s property rights (ex. stealing), and c) the inhibition of others from enjoying the same freedoms; and the government’s role and purpose is to enforce this system of natural individual rights.

Because, under libertarianism, one cannot harm another or their property, then any level of pollution that is harmful to people or their property would be outlawed. For the sake of brevity, I’ll just talk about pollution right now instead of other forms of environmental damage (such other forms also outlawed under libertarianism). There are two major libertarian ways of enforcing environmental protection.

Tort Law: One great way to do this is through tort law (lawsuits). Under this system, if a polluter damages someone’s health or property against their will, the victim can sue the polluter for damages and compensation, treating the violation as a trespass on property rights. This still happens some today, and is a traditional method of old. And, before the mid-1800s and the “progressive” era at the turn of the 20th century, this was very effective at strictly blocking industrial actors from damaging private property. In fact, it was so strict that industrial actors persuaded the government to end that largely libertarian system. Politicians abandoned the principles of strict property rights protection and instead favored the notion of the greater common public good at the expense of individual property rights. The mindset was that industrial activity was good for the public at large even if it violated the rights of some people through pollution, and all these tort law restrictions made it too difficult and costly for industries to make these goods. The “progressive era” mindset was to determine which system produced the most net happiness for people and then obtain that system through government force, regardless of moral rights. They weren’t doing this in an obviously corrupt way with evil intentions; politicians and the general public really thought this was good.

So, the government passed laws that crippled the tort system in the courts and transferred environmental protection matters to agency regulation by the government, determined by the public at large through democracy. Regulatory agencies were then in charge of determining how much pollution was considered socially optimal to the whole community. So, the environmental regulatory state was not created from environmental concerns, but from industrialists using government to grant them relief from the existing property rights system of tort law. The result was that many victims of pollution could no longer sue the polluters, and the government regulations were relatively lax (at least in the earlier periods) so that industries could continue polluting at large scales, protected by the state. They could do this in a democratic society because people didn’t care as much about pollution at that time. It was not until later that pollution via industrialization became politically unpopular, leading to the more strict environmental regulationss we have today. It was not libertarianism or “too much free markets” that caused wide scale legalized environmental damage in the industrial age, but the abandonment of libertarian principles. “Progressive democracy” ideas in the 19th century are what damaged the environment. Of course, the typical modern “progressive” statist environmentalist never realizes the root causes of the problems they see; they only see the last half century, instead of the last two centuries. Libertarians would like to see strict property rights protections in the form of tort law back in place.

Some of you may rightly be concerned about the ability of common people to sue, since it may be difficult to afford lawyers and go through a court system. And, it would probably be inefficient to make every single environmental violation, especially common ones of the same type, go through a law suit to get resolved. To address these concerns, I’ll point out that more ordinary laws against rights violations (via environmental damage) are also permissible in libertarianism, if not required. By analogy, we hopefully all agree that the victim of a robbery shouldn’t have to sue the robber to get restitution, but that there should be a general law against stealing (of course, there should be a trial for the robber to determine guilt, but that’s different from a tort law suit). Similarly, if there is a kind of environmental damage that is a rights violation, it may be appropriate to ban it through more ordinary means of general law. This may be especially useful for violations that are very common and of the same type.

CAT: A second way to protect the environment is “cap and trade” (CAT). The two methods of tort law and CAT can be used in various combinations depending on the nature of the environmental damage. We’ll focus on describing CAT here, and its advantages over conventional regulation. And, I’m not talking specifically about greenhouse gases, although those can apply here; I’m talking about CAT in general for any pollutant.

CAT is where an acceptable pollution cap would be determined, and private entities (polluters) would receive the limited pollution rights in the form of “permits” and be able to trade them freely in the market (note: a small amount of pollution is harmless). The total number of permits would match the cap, and each polluter’s emissions would not be allowed to exceed their individual permit limits. This would be a “cap and trade” system, which I advocate for many types of environmental damage. Many don’t realize this (especially Republicans), but CAT is actually a very libertarian, and therefore “limited government”, concept. A free market would “decide” how to reach the pollution reductions instead of micromanagement by politicians who usually bend law to favor big polluters. The goal of low pollution is accomplished by the government cap, but the means and method to get there would be handled by the efficient mechanism of the free market. In this way, “externalities” (harm/damage to others that is not paid for and is outside of the price system) become “internalized” to the market and price system so that pollution finally has a cost that becomes embedded in prices of products or services. And, the cap makes sure the total amount of pollution is not harmful or damaging.

To be clear, unlike what you may sometimes hear from Republicans, I am not saying that businesses will voluntarily or spontaneously stop polluting due to “capitalist” incentives or good will. Although free markets do sometimes spontaneously create incentives to reduce environmental damage, there are obvious cases where it is cheaper and beneficial for an industry to pollute. Now, what I am saying is that the government should use the force of law to cap pollution at a low level, to essentially stop harmful environmental damage. This is consistent with libertarianism because the government’s role is to enforce rights protections. So, this system is where the government firmly stops pollution, but what’s unique about CAT is that it allows the free market to determine the methodology of meeting the pollution cap set by government.

To illustrate with a general example, consider a city (or some other geographic area) and consider a particular air pollutant called X. This pollutant is present in air naturally at very low levels, but scientists discovered that if the concentration exceeds 100 ppm, then X starts to cause harm/damage to human health (or property). And, there are several entities (5 factories in this case) in the city that discharge this pollutant X into the air. These factories make different things and are of different sizes and pollute the air with X at different levels. From their combined pollution discharges, the air concentration of X is currently 300 ppm, so this level is causing harm and damage to people’s health and/or property and we want to know the most morally fair and efficient system of reducing total pollution to the allowable level of 100 ppm.

Before describing the different government systems of pollution reduction, let’s discuss pollution reduction at the emitter level, in this case the factory level. Let’s say that a certain factory has a certain emissions limit of 30 ppm. There may be many different ways for a factory to reduce its emissions to its required 30 ppm. It can add one or more treatment steps out of many different treatment techniques available on the market. It can increase efficiency in certain production steps. It can operate a certain process differently to achieve less X emissions. It can switch to different raw materials that contain less X. It can use a whole different production system that emits less X, although such a huge change would be very expensive. It can even decrease factory production. This decrease in production would obviously mean that it sells fewer products, but it’s still an option. There may be other options I haven’t listed. Any combination of these options might be used to reach the goal of only 30 ppm emitted. Each option or method will have different benefits and costs, and different effects on product quality. The determination of the most efficient and cost-effective options will likely be complicated, require intimate knowledge of the factory’s processes, and careful economic analyses. Keep in mind that we shouldn’t care about which combination of options the factory chooses, so long as it gets the job done and they don’t emit more than 30 ppm. We should only be concerned about the factory’s final output, as its internal choices and methods don’t matter to pollution levels (so long as the options themselves are also subject to any applicable cap and trade rules for other types of environmental damage).

Going back to our example of the city, let’s consider two systems in which we attempt to reduce the total pollution to 100 ppm, the acceptable level. First, let’s consider government micromanagement, or what some people call “command and control regulation” (CACR) under a typical democratic style of legislation. This is common today. This involves picking and choosing, under democratic processes, which industries will have to reduce pollution and choosing a limit for each one (often without an overall cap) and telling each emitter which methods and technologies have to be used to reach the emissions limits. This will probably be heavily influenced by the industry’s popularity to the general public, or which ones have the closest friends in the government. Unfairly, some of the factories may have no limits, where as other factories could get very strict limits to compensate for the other factories who have no limits. And, the politicians will probably have some deals made where the factories are forced to use a certain treatment technology, and this technology happens to be sold by a certain company that is close and friendly with the writers of the legislation. But, I’ll be generous. Let’s assume that there’s no corruption, favoritism, or public popularity dynamics involved (unlikely). Then, the government would probably set the same percentage reduction for each of the 5 factories. The current X level is 300 ppm, the target cap is 100 ppm, so a total reduction of 67% is needed, so a decent government would tell each factory to reduce their emissions by 67%, meaning that each factory would get permits to emit 33% of what they were emitting originally, and the total number of permits would be 100 ppm of X, matching the cap. Note that CACR will sometimes also use an overall cap method, so “cap and trade” (CAT) is not necessarily unique in that sense.

This initial allocation of permits (or “allowances”) is a fair and equitable way to initially distribute the burden and cost of pollution reduction. However, the problem in CACR is that the initial permit distribution will often be rigidly fixed so that polluters can’t trade permits with each other if they want to. Let’s say that Factory A has a permit of 10 ppm of X and Factory B has a permit of 40 ppm of X. Combined, they are allowed to emit a total of 50 ppm of X. However, what if Factory B wishes to sell 20 ppm permits to Factory A? This should be allowed because it doesn’t do any harm or increase pollution. If it occurred, then Factory A would have 30 permits and Factory B would have 20 permits. The total would still be 50 permits to allow 50 ppm emissions, so there’s nothing harmful about this. The pollution reduction is still just as good as before. This is what CAT allows. Instead of CACR’s rigidity in maintaining initial permit allocation, CAT allows the buying and selling of permits on the free market.

CAT’s ability to trade permits greatly increases efficiency and reduces the overall cost of pollution reduction to society. With our example, each of the 5 factories have different strengths and weaknesses, different ratios of goods produced per emission of X, and different complexities of consumer preferences for their products. It might be very difficult and expensive for Factory A to reduce pollution, but very easy and cheap for Factory B to reduce pollution. If we had rigid CACR, then the total costs of meeting pollution reduction would be high because of the high costs for Factory A, which then get passed on as high costs to consumers. But, under CAT, it could be cheaper for Factory A to simply buy 20 permits from Factory B so that it could avoid the even higher costs of reducing its own emissions. And, Factory B can also reduce net costs if their cost of an extra 20 ppm pollution reduction is smaller than the money they could earn by selling the 20 permits to Factory A, who needs them more desperately. So, Factory B would reduce emissions more than they were required to, and sell the surplus permits. This trade benefits both factories financially. The net effect of CAT is that those who can reduce pollution most cheaply will do so. As CAT is a free market based system, the pollution reductions will tend to occur where the least expensive solutions exist, while allowing emissions where it’s very costly to reduce. This results in lower total costs to the factories and the final consumers, all while still keeping the total emissions under the total cap.

Besides the above consequentialist focus on the practical benefits of trading permits, the trading of permits should be permitted on the moral grounds that companies should be able to voluntarily trade with each other as long as they are not violating anyone else’s rights.

Another negative aspect of the CACR is that the government will often micromanage how the industry will achieve its pollution reductions. It might force them to use certain types of treatment techniques, and set certain performance requirements for individual unit processes within the overall treatment train. This is unnecessary because the ultimate goal should be to achieve the lower final emission, regardless of the particular methods to get there. Under a CACR cap, let’s say that one factory is allowed to emit 30 ppm of X. It currently emits 90 ppm, so it has to reduce by 67%. It shouldn’t matter exactly which method it uses to get to 30 ppm. So long as it only emits 30 ppm and no more, that’s all that matters to the protection of health and property. As discussed earlier, there may be many ways of achieving this: different treatment techniques, reducing production, switching raw materials, etc. The factory will generally know the best and most cost-effective way to meet the 30 ppm limit because it has the strongest incentive of reducing costs. When some government bureaucrat walks into a factory and tries to mandate exactly how the factory should reach its emissions limits, the bureaucrat will usually not have the intimate knowledge of the complexities of the factory, and he has no incentive to choose an efficient and cost-effective solution. It’s not his money he’s wasting. The market incentives are always more efficient than government planning. Also, under the free market incentive to always reduce costs, the factories (and the companies who sell treatment technologies to the factories) have the strongest incentives to innovate with new technologies.

An example of micromanagement CACR is at a drinking water treatment plant that I’m actually doing design work for right now (remember, I’m an environmental engineer). It’s not a factory, but the principle of CACR is the same. Their current settling basin has a settling time of about 30 minutes, but government regulations say it has to have a 2 hour settling time at minimum. But, the final water leaving the plant is already sufficiently clean and meets regulations on water quality at the 30 minute settling time. The only thing we should care about is the final water quality, not the particulars of one of the treatment units. Their settling basin is somewhat unique (I won’t get into it), which is why they can achieve good results even at a relatively short settling time. But, because of some regulation that micromanages the methods used to treat the water, the plant will have to spend roughly a million dollars to expand their settling basin. The money spent will be a complete waste because it’s not needed in the first place. Such is government.

Another example of CACR is when the government banned incandescent light bulbs because they were less efficient than CFLs. Again, this isn’t a factory example, but the concept is the same. Let’s say that greenhouse gases (GHG) must be reduced to some safe level. The government should not micromanage the method of reducing GHG by forcing everyone to use CFLs. Instead, a CAT would cap the GHG at energy plants at the safe level, and that’s it. Whichever type of light bulb we buy is up to us, although we would probably start buying CFLs voluntarily because energy would be much more expensive and consumers would want to reduce energy bills. As long as the cap is met, that’s all that matters. (By the way, this post isn’t the place to discuss climate change in detail and these arguments don’t rely on any climate change truths one way or the other. But, since I’m not a climatologist, I find it most reasonable to accept the conclusions from the consensus of experts in that field, so I personally believe in climate change and that humans are driving it and that negative consequences will result. However, if you happen to not believe that stuff, I’ll ask the following: IF climate change was being driven by human activity and property damage would be a result, THEN would you agree with CAT on GHGs to solve it? This way, regardless of the scientific debate, I am narrowing the discussion to political philosophy).

Besides the above consequentialist focus on the practical benefits of letting each emitter decide how to meet their individual emissions limit, this ability is also their moral right. In choosing their own method of how to meet their limits, they are not harming anyone else or violating anyone’s rights. So, this freedom must be granted to them, and any forceful micromanagement of their methods by the government is a violation of their freedom rights.

In CAT, there is no need for politicians and activists to try and figure out the most cost-effective way to reduce pollution while also accounting for consumer preferences. In CAT, cost-effectiveness already happens spontaneously in the market because emitters try to reduce their own costs by whatever combination of cheapest reduction strategies and buying and selling permits as needed. There’s no need for government to fund research for “green” technologies, because the industries already have the requirement to not pollute above the cap and they already have the incentive to determine the best technologies so that they can reduce costs and still make money selling what they want to sell to satisfy consumers. In CAT, there’s no need for some overarching governmentally planned set of technologies. Another benefit of CAT is that the burden and cost of pollution prevention and cleanup is on polluters, instead of on all citizens through taxation to fund government programs, including research programs.

Best of all, I didn’t have to justify tort law or CAT law by using the usual leftist arguments that government should be able to make any regulation law as long as a majority of people favor it. I instead was able to justify these purely on libertarian (small government, individual rights) grounds that nobody has the right to harm others or their property.

The “progressive” concept of the “greater good” at the expense of individual liberty and property rights actually led to legalized environmental damage. Adherents thought: environmental damage may violate some people’s rights, but the economic activity, jobs, and cheaper products are generally better for the whole of society. A democratic ideal is also detrimental to the environment, as a majority of people often don’t understand science and will usually favor polluting others for the sake of their own convenience, jobs, and cheaper products and energy. But, I don’t think that our natural rights should be up for a vote by others, do you?

I hope readers no longer think that they have to believe in a large government role in order to achieve environmental protection. I couldn’t get into all of the nuances of the issue, but I tried to highlight the major concepts. A government only needs to enforce a few basic rights and overall limits, the rest efficiently falls into place.

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