Nature and Markets: The Case for Enviropreneurs

18.12.2019

The following paper by Terry L. Anderson* was presented at the IV. ECAEF/CEPROM Conference on ‘Towards a Viable Alternative: Markets and Entrepreneurship to Protect the Environment’, 10 December 2019. Initiated by the European Center for Austrian Economics Foundation based in the Principality of Liechtenstein, this academic conference series is dedicated to the eminent late French scholar Jacques Rueff. The co-operation with CEPROM (Le Centre d’Etudes Prospectives pour Monaco) was highly appreciated.

Nature and Markets:
The Case for Enviropreneurs

by Terry L. Anderson

For much of the twentieth century, ecologists and economists tended to study the world as if it were an equilibrium system. That is, the models used to understand nature and markets were based on the assumption that each system achieves or exists in balance. Ecologists, for example, historically relied on models that assumed an inherent balance of nature when undisturbed by humans. Likewise, economists traditionally studied markets as if they were in a state of equilibrium, largely ignoring the market processes and entrepreneurial activities that guide markets toward such conditions. Although equilibrium models are analytically appealing, as we will see later, they are inconsistent with how nature and markets work in reality. Moreover, by focusing on equilibrium conditions, economists and ecologists overlook the dynamic human and natural processes that shape markets and ecosystems.

Though theoretically appealing, equilibrium models are naïve because they fail to incorporate the nexus between nature and humans, especially the natural and human responses to changes in ecosystems and in markets. The argument here is that markets, buttressed by secure and tradeable property rights, can harmonize diverse human demands in an ever-changing environment. The idea of free market environmentalism provides a way to link people and nature by connecting dynamic human institutions with dynamic processes in nature

Free market environmentalism can be defined as the voluntary exchanges of ownership claims to labor, physical capital, and natural capital for the purpose of reallocating those productive inputs to produce environmental goods and services valued by humans …

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Nature and Markets (.docx)

* Terry L. Anderson has been a senior fellow at the Hoover Institution since 1998 and is currently the John and Jean De Nault Senior Fellow. He is the past president of the Property and Environment Research Center in Bozeman, MT, and a Professor Emeritus at Montana State University where he won many teaching awards during his 25 year career. Anderson is one of the founders of “Free Market Environmentalism,” the idea of using markets and property rights to solve environmental problems, and in 2015 published the third edition of his co-authored book by that title.