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Free-market
environmentalism

What collapses is not what we exploit the most. It is what nobody owns.

Atlantic cod, held in open access, was fished to collapse. The elephant, stripped of any legal value, was slaughtered. Meanwhile the French forest — private, owned, traded — has doubled. What if nature did not need less market, but needed to finally become part of it: owned, valued, priced?

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EUROPEAN CARBON MARKET REAL TREND · APPROXIMATE VALUES
Emissions under the cap −51 %
2005 level maintained 100

Index 2005 = 100. Emissions from stationary installations covered by the EU ETS: −51% between 2005 and 2024 (European Environment Agency, 2025). Intermediate points approximated.

I Act I · The problem

What has neither price nor owner always ends up exhausted.

Many describe the environmental crisis as a case of too much market. In reality it is not an excess but an absence of market. Where nature belongs to no one and costs nothing, everyone has an interest in exploiting it before the next person does — precisely for lack of a market.

01 The tragedy of the commons

The mechanism

The fish belongs to no one while it swims. So everyone has an interest in taking it before the other. Restraint does not pay: what you spare, your neighbour catches. Multiplied by everyone, the result is collapse — even though nobody wanted it.

Northern cod (stock 2J3KL), north-west Atlantic. Collapse of more than 99% of the historical level · Canadian moratorium of July 1992 (~30,000 jobs lost) · stock still not recovered. The curve is an illustrative diagram: it renders the shape of the collapse, not measured annual values (reference data: DFO Canada, 2J3KL stock assessments). Concept: G. Hardin, "The Tragedy of the Commons", Science, 1968.

It was not greed that emptied the ocean — it was the absence of property rights and prices. A resource with neither owner nor price is a resource everyone has an interest in exhausting. The real environmental problem is "free".

02 The elephant worth more alive

Banning any use of the elephant made it disappear. Giving it a value brought it back.

REAL TREND · APPROXIMATE VALUES
🇰🇪 The "sanctuary" model

Kenya banned elephant hunting in 1973, then all hunting in 1977. The elephant no longer had any legal value for local people — it became a pest trampling crops. Nobody had an interest in protecting it; poaching, fuelled by the ivory trade, thrived. The population fell from about 167,000 to 16,000, i.e. −90% in sixteen years.

🇿🇼 🇧🇼 🇳🇦 The "property" model

Zimbabwe (the CAMPFIRE programme, 1989), Namibia and Botswana handed the elephant over to local communities, who draw revenue from it (tourism, regulated hunting). The animal becomes an asset worth protecting. Southern Africa is now home to the majority of the continent's elephants.

Kenya: ~167,000 elephants in 1973 → ~16,000 in 1989, i.e. −90.4% (Wildlife Research and Training Institute; Frontiers in Conservation Science, 2022). To be qualified honestly: since 1989 the Kenyan population has been recovering (~36,000 in 2021), driven by strict protection, anti-poaching enforcement and community conservancies that restore local value to the animal. Southern Africa (Zimbabwe, Botswana, Namibia, South Africa): stable or growing populations, the majority of the continent's savanna elephants (IUCN, 2016); CAMPFIRE programme in Zimbabwe since 1989. The chart relies on real counts at documented points — Kenya 167,000 (1973), 16,000 (1989), 36,280 (2021); Botswana and Zimbabwe ~50,000 (1970s) then 213,000 at the Great Elephant Census (2016) — intermediate values are interpolated. Case developed in T. Anderson & D. Leal, Enviro-Capitalists & Free Market Environmentalism.
03 Greenhouse gas emissions

The atmosphere is the perfect commons: nobody owns it, dumping into it costs nothing.

Cod and elephants were local cases. Here is the same mechanism on a planetary scale. Emitting CO₂ impoverishes no one in particular, cannot be seen, and above all: costs the emitter nothing. The result is exactly what the tragedy of the commons predicts.

GLOBAL FOSSIL CO₂ EMISSIONS — GtCO₂/YR REAL DATA —

Four times more emissions than in 1960. No collective decision willed this: it is the sum of individual trade-offs, each of them rational, for want of a price.

70 % of global emissions cost the emitter strictly nothing

For those seven tenths, burning is not paid for. Whoever invests to emit less bears the cost alone and shares the benefit with eight billion people; whoever does not invest keeps the money and suffers nothing. The rational calculation is to change nothing — and that is exactly what everyone does.

The mechanism, again

Every polluter individually has every interest in dumping CO₂ into the atmosphere: it is free. Restraint earns nothing: if one refrains, competitors will not. The same mechanism as the cod, at the scale of the atmosphere.

Fossil CO₂ emissions: Global Carbon Project / Global Carbon Budget 2024 (~37.4 GtCO₂ in 2023, against ~9.4 in 1960) — real data. Coverage by a direct carbon price, taxes and markets combined: nearly 30% of global emissions, 87 instruments, average price ~$21/t (World Bank, State and Trends of Carbon Pricing 2026; 24% in the 2024 edition). Less than 1% of global emissions face a price within the range recommended by the High-Level Commission on Carbon Prices to stay well below 2°C (World Bank, 2024).
II Act II · The false solutions

Ban, plan, degrow: why it does not work.

Faced with this diagnosis, the usual answers are to repress or to impose rigid rules — but the incentive to pollute is never corrected. Bans are circumvented, plans get it wrong, and voluntary impoverishment destroys what it claims to save.

04 The solutions that do not work

Three answers that all miss their target.

Banning, planning and degrowth are the three answers most commonly offered in politics whenever the environment comes up. Yet all three have shown their ineffectiveness in theory and in practice.

01

Ban

"We must ban harvesting, hunting, trade."

Why it fails

Because a ban does not remove demand — it moves it into illegality, where there are no rules, no traceability, and nobody to hold to account.

In practice

The total ivory ban (CITES, 1989) did not end poaching: it created a highly profitable black market. Conversely the Nile crocodile and the vicuña, once threatened, recovered once their use was legalised and regulated: they finally earned something for the people living beside them.

Banning does not make demand disappear, it pushes it into the shadows — where nobody is accountable.

02

Plan

"We need standards, technical quotas, industries picked by the State."

Why it fails

Because the planner must guess the right technology in advance, for everyone, without the signal that would say which cuts the most emissions per euro spent. They get it wrong, and the mistake becomes compulsory.

In practice

Germany shut down its nuclear plants while subsidising renewables: coal made up the difference, and emissions stagnated for years. European biofuel mandates drove deforestation for palm oil. Two policies written in the name of the climate, two contrary results.

Planning means asking a small group of people to guess what the market discovers every day through the actions of millions.

03

Degrow

"We must produce less, consume less, leave growth behind."

Why it fails

Because poverty protects nothing. A family without energy burns wood; a country without money cuts down forest to feed itself. It is rich countries that can afford filters, protect land, and let their forests grow back.

In practice

After the Korean War, South Korea was one of the most deforested countries on earth: people too poor to heat their homes otherwise cut down the forest to survive. Once electrification and household coal became available, logging stopped by itself — and South Korea now shows one of the fastest reforestation rates ever recorded. The contrast is visible from space: North Korea, which stayed poor, keeps clearing its hills for heating and farming — the border between the two countries is visible to the naked eye on satellite imagery.

Poverty does not protect nature, it consumes it — a cold household burns whatever it can find.

● What the three failures share

Ban, plan, degrow: three ways of dodging the same question — who has an interest in protecting the resource, and who has an interest in destroying it? None of these policies answers it. They make destruction illegal, regulated or shameful — never less profitable for whoever commits it. The result: the poacher gets round the ban, the industrialist gets round the standard, the poor get round the deprivation. In all three cases, polluting remains the logical choice.

This is not a problem of willpower or sincerity. It is a problem of who pays the cost and who pockets the gain.

Ivory: CITES ban 1989; persistence of poaching and illegal markets (CITES/IUCN reports). Legal use and species recovery: Nile crocodile, vicuña (CITES sustainable-use programmes). Germany: nuclear phase-out (2011-2023), coal share and plateau in power-sector emissions (AGEB, Agora Energiewende). Biofuels and palm oil: European Commission, RED directive. Air-quality improvement as income rises: Our World in Data; environmental Kuznets curve literature (Grossman & Krueger, 1995). South Korea: national reforestation launched from the 1960s-1970s, one of the fastest ever documented (FAO; Korea Forest Service); contrast with North Korea visible on satellite imagery (NASA Earth Observatory).
05 How forests evolve: the two regimes

Where we ban and plan, forests retreat. Where they are owned, they grow back.

The comparison is direct: put side by side the regions that bet on bans and production constraints, and those where the forest belongs to someone. The result contradicts intuition — and degrowth.

We picture forests under threat everywhere. That is false wherever they have an owner. In France — where three quarters of the forest, 13.2 Mha, is private — woodland area has grown steadily since the nineteenth century.

Why? Because an owner who cuts a tree replants: their forest is capital they pass on. Cutting without replanting would destroy their own wealth. Sustainable management is not imposed from above — it follows from the owner's own interest.

The same pattern holds in the United States, where forest area has been stable for a century. Deforestation, meanwhile, concentrates where the forest belongs to no one: pioneer frontiers, poorly defended public land, open access.

8,5 million hectares of woodland (vs ~8.5 in 1850)
~16 % of mainland territory (vs ~16% in the mid-1800s)
WOODLAND COVER ~16 %
each square ≈ 1% of the territory — wooded
NET CHANGE IN FOREST AREA, 2010-2020 (MHA/YR) REAL DATA

Forests advance where people are rich and own land. They retreat where people are poor and the land belongs to no one.

This is the exact opposite of what degrowth predicts — and it is explained neither by bans nor by plans, but by secure property rights and by the wealth that lets you wait for a tree to grow.

Mainland France: forest area ~8.5 Mha in 1850 → 17.5 Mha in 2023-2024, i.e. 32% of the territory (IGN national forest inventory; France Bois Forêt). Three quarters, 13.2 Mha, belong to private owners (IGN). The expansion is due to rural exodus, reforestation and silvicultural management — not to coercive policy. "Forest transition": A. Mather, 1992. Net change by region: FAO, Global Forest Resources Assessment 2020 (annual average 2010-2020), real data.
06 The State is not green

We expect the State to protect nature. It first subsidises its destruction.

0 billion dollars

That is the amount of global fossil-fuel subsidies in 2022, hidden costs included (IMF, 2023) — nearly 7% of world GDP. Before we even talk about the environment, States are paying for more carbon to be burned, not less.

This reality is no accident. Politicians — they too — act in their own interest.

Short-termism

A minister thinks about the next election. Nature is managed over decades — exactly the horizon a five-year term does not have.

Capture

Fishermen, farmers, industry: every lobby wins quotas, exemptions, subsidies. Public decisions are pulled towards whoever shouts loudest, not towards the resource.

The price-free

As long as polluting is free, the State can ban, lecture and plan — the underlying incentive is unchanged. The missing signal is a price.

Real environmentalism is not about picking whoever promises the most drastic measures to win an election. Real environmentalism is about choosing the solutions that work in reality and have proven themselves.

Fossil-fuel subsidies: $7,000bn in 2022, i.e. 7.1% of world GDP — of which $1,300bn explicit (18%) and $5,700bn implicit (82%), that is unbilled climate and health damage. Source: IMF, IMF Working Paper 2023 (a working paper, which does not commit the Fund's official position). To say it plainly: this method counts unpriced externalities as subsidies, which is contested — and it is also this feature's central argument, since the price is not telling the truth. IMF estimates for 2024: $730bn explicit and $6,700bn implicit.
III Act III · The liberal solution

Nature lacks an owner and a price. It remains to give it both.

Free-market environmentalism is the reasonable choice for combining a thriving economy with the preservation of nature. Doing the right thing for nature and for your wallet finally becomes possible, and even logical. And it has already been proven.

07 The liberal proposal

Bring nature into the market — an owner or a price.

The principle

Human beings act first in their own interest. Rather than ignoring this, liberalism seeks to harness it: to design rules of the game — property, competition, liability — that align personal and collective interest. The result: pursuing your own interest amounts, almost mechanically, to making the right choice for the environment.

The path of coercion

Making nature respected not out of self-interest but out of fear of the police. The State sets quotas, imposes standards, punishes polluters. It can work as long as the rule is not completely disconnected from reality and the penalty is credible — but nobody protects a resource out of conviction, only out of obligation. Environmentalism is seen as a painful punishment, not as a good deed for the planet.

The liberal path

Making nature respected not out of moral goodness but out of pure self-interest. An owner takes care of what belongs to them — a forest, a lake, a stock of fish — because its degradation becomes their cost, and its preservation their gain. No need to police or moralise: the resource protects itself. Environmentalism then becomes synonymous with profitability and can finally hold a positive place in the collective imagination, instead of being a constraint.

The diagnosis fits in one sentence: what has neither owner nor price is treated as free — and the free gets destroyed. The answers of Act II fail because they leave that mechanism intact.

The answer is therefore not "more bans" against the market, but more market: plugging nature into the two mechanisms that align everyone's interest with its preservation.

When we can assign ownership (a forest, a herd, a fish stock), we hand it to an owner who has every interest in making it last. When we cannot (the atmosphere), we put a price on the damage: the polluter pays, and the market finds the cheapest reductions.

This is the whole point of the books Free Market Environmentalism and Enviro-Capitalists: nature does not need less market economy, it needs to finally become part of it.

01
An owner For what can be owned

Forests, fisheries, land, wildlife: as soon as a resource has an owner — private or communal — someone has an interest in preserving it. Transferable fishing quotas, for instance, create a form of "ownership" over fish without privatising the ocean.

complement each other
02
A price For what cannot be

You cannot carve the air or the climate into properties. You can, however, put a price on the damage caused. For instance, set an annual emissions cap and make the emission rights tradable: that is the carbon market. The polluter pays, and emission cuts happen where they are cheapest, thanks to the market.

08 Making protection a profitable activity

A destroyed wetland now costs a repaired wetland.

Banning the filling of a wetland never stopped anyone filling it: it slows the developer down, it does not stop them. The United States changed lever — no longer permission, but the bill.

The one who destroys The developer

Their interest: to encroach as little as possible. Every hectare of wetland now costs them the price of a hectare repaired elsewhere.

they pay
~1 900 approved banks in the United States REAL DATA
living hectares
The one who repairs The restorer

Their interest: to repair solidly. They buy damaged land, turn it back into wetland, have it inspected — and sell the result as credits. The better the repair, the dearer the credit.

Paid upfront The repair must be finished and verified before the destruction begins.
Sold at market price The scarcer wetlands become, the dearer the credit, the fewer are destroyed.
Protected forever The restored area passes into permanent stewardship: it finally has an owner.

Nobody in this chain acts out of virtue. The developer wants their land, the firm wants its margin, the inspector wants their mandate. The wetland is saved because saving it has become profitable — not because anyone was convinced.

United States: Clean Water Act, section 404 (1972); federal "no net loss" goal since 1989; 2008 federal rule giving preference to mitigation banks. About 1,900 approved banks, a market estimated at several billion dollars a year (US Army Corps of Engineers, RIBITS database; Environmental Protection Agency) — real data. Principle developed by T. Anderson & D. Leal, Enviro-Capitalists (1997) and Free Market Environmentalism (1991, rev. 2001).
09 The carbon market, hands on

Why use a market? See for yourself.

Four plants each emit 100 tonnes of CO₂. Cleaning up is expensive for some, cheap for others. The State sets a target: cut emissions. How do you hit that target at the lowest cost?

−200 t CO₂
light (−40 t) tight cap (−360 t)

The carbon price that emerges 0 €/t = the cost of the last tonne that must be cut

Nobody set this price: it emerges from the permit market. The tighter the cap, the more you must clean up in expensive plants — and the higher the price climbs.

Uniform quota

Every plant cuts the same

The State orders the same cut for everyone — including where cleaning up costs a fortune.

Total cost 0 €
Permit market

The cheapest cut and sell

Total cost 0 €
Uniform quota
0 €
Market
0 €
÷ 1,0

A teaching model with fictional figures and constant marginal costs. The values are chosen to make the mechanism legible; they describe no real industry. 4 plants (100 t each), abatement cost €20 / 50 / 90 / 150 per tonne. Uniform quota: each cuts target ÷ 4. Market: the cheapest cuts first; the price = marginal cost of the last tonne required. The environmental result (tonnes avoided) is identical in both cases. Principle: R. Coase, "The Problem of Social Cost", 1960. Real application: the US acid-rain programme (SO₂, 1990) — next section.
10 The SO₂ example in the United States

This is not a theory. The United States did it in 1990.

To stop acid rain, the United States created a permit market for sulphur dioxide (SO₂). A national cap, tradable rights: exactly the mechanism of the slider you just pushed. The result was a textbook case.

Power-plant SO₂ emissions — index 100 = 1990 ILLUSTRATIVE DIAGRAM

Emissions halved, target reached ahead of schedule.

−75 % actual cost vs forecasts observed compliance costs were about 75% below the EPA's initial forecasts (~$1 to 1.7bn/yr according to EPRI and RFF)
~40× benefits / costs a benefit-cost ratio of about 40 to 1, driven by health gains (Chestnut & Mills, 2005)
1st large pollution market a model later reused for carbon

American SO₂ is not an isolated case. Wherever a resource has been made appropriable, or its use made payable, the same effects repeat. Here are three more, among many.

½ Fisheries under quotas (ITQ)

less risk of collapse when fisheries move to transferable quotas (Costello et al., Science, 2008). Iceland, New Zealand.

+50 % Southern African elephants

of the continent's elephants live where they have a value and an owner (vs collapse under strict bans).

↗ Forests in countries with secure rights

France, United States: forest area stable or growing for a century, wherever property is guaranteed.

11 The imperfect European CO₂ example

Europe started badly, then corrected. And the lesson is precious.

Launched in 2005, the European carbon market (EU ETS) has been a genuine full-scale laboratory. At the start, free allowances handed out by politicians under lobby pressure made it useless. But little by little, as the damage was repaired, the price came to reflect the true value of carbon, finally pushing effective decarbonisation (−51% emissions in the covered sectors since 2005) — yet another example that a well-designed market works, as long as political dealing and lobbies are kept out of it.

COVERED EMISSIONS (INDEX 2005 = 100) & PERMIT PRICE (€/t)
REAL TREND · APPROXIMATE VALUES emissions price

Both curves tell the same story: as long as the price stays on the floor (2007-2017), emissions stagnate. As soon as the cap bites and the price rises, they fall away. A necessary caveat: correlation alone is not proof of causation, and other factors were at work in the same period.

2005 Launch

The European Union creates the first large carbon market in the world. Emissions cap, tradable permits: the principle is sound.

2007 The failure

Too many permits were handed out free by politicians under lobby pressure. The carbon price collapses to nearly €0. That interference makes the market useless.

2013 The fixes

Rather than letting politicians and lobbies decide how permits are allocated, they are auctioned. That measure, along with a tighter cap among others, revives the scheme.

2019 The stability reserve

The 2007 failure is now nothing but a bad memory.

2024 The result

Emissions in the sectors covered by the carbon market are down 51% on 2005. Other measures certainly helped reach that result — but the carbon market is a resounding success.

● The European carbon market: lessons learned

A carbon market is not magic. Badly designed and badly run, it can fail. But free of political interference, the carbon market proves its effectiveness.

  • Causality is not total. The EEA attributes the fall to the carbon price, but also to the switch from coal to gas, renewables policy, efficiency gains, the 2008 crisis and the pandemic. The carbon market contributed to the result; it does not explain it on its own.
  • The initial over-allocation — the product of deals between politicians and lobbies — cost a decade. Initial allocation must be based on hard data through a transparent, automatic process, with no need for politicians to intervene.
  • Offset credits gave rise to fraud and phantom projects. A serious market caps real emissions; it does not pay itself in unverifiable promises.
  • Unlike many policies claiming the green label, the carbon market coupled effectiveness and profitability, since it generated revenue for the European Union.
  • Carbon leakage: if only some countries apply the system, production can relocate. That gap can nonetheless be easily corrected by an import duty indexed on the carbon price, making relocation pointless, without lapsing into protectionism.

A well-designed market is a market with simple, transparent, fair rules — and as far as possible out of reach of political dealing.

EU ETS (since 2005). Emissions from covered stationary installations: −51% between 2005 and 2024, European Environment Agency (2025) — real figure. The EEA attributes this fall to the carbon price, but also to the switch from coal to gas, renewables policy, efficiency gains, the 2008 crisis and the pandemic. The system now covers 37% of greenhouse gas emissions in the European Economic Area. Permit price: collapse to ~€0-1 in 2007 (phase I over-allocation), a low plateau until the mid-2010s, ~€60-90/t since 2021 — approximate market values; the chart's intermediate points are reconstructed. Reforms: auctioning and cap tightening (phase III, 2013), backloading (2014), Market Stability Reserve (operational in 2019).
12 The objections

Five serious objections — and the liberal answer.

Free-market environmentalism raises strong objections. Here are the five most solid ones — and then what the facts answer.

●  Conclusion

Nature does not vanish because there is too much market. It vanishes where there is not yet any.

A single rule runs through this whole feature:

The real question is therefore not "market versus nature".

It is: how much longer will we go on treating nature as free, and be surprised that it runs out?

Read other features→ Pay-as-you-go pensions
Sources & methodology
  • T. Anderson & D. Leal — Free Market Environmentalism (1991, rev. 2001) and Enviro-Capitalists: Doing Good While Doing Well (1997). Theoretical framework of this feature.
  • G. Hardin — "The Tragedy of the Commons", Science, 1968. R. Coase — "The Problem of Social Cost", 1960 (externalities as a property-rights problem).
  • North-west Atlantic cod (stock 2J3KL): collapse > 99%, Canadian moratorium of July 1992; stock not recovered. Quota fisheries: C. Costello, S. Gaines & J. Lynham, "Can Catch Shares Prevent Fisheries Collapse?", Science, 2008.
  • Elephants: Kenya, elephant hunting banned in 1973 then all hunting in 1977; decline from ~167,000 (1973) to ~16,000 (1989), i.e. −90%, then recovery to ~36,000 in 2021. Southern Africa and the CAMPFIRE programme (Zimbabwe, 1989). Sources: Wildlife Research and Training Institute, Frontiers in Conservation Science (2022), IUCN, CITES.
  • Forest: mainland France ~8.5 Mha (1850) → 17.5 Mha (2023), 32% of the territory, of which 13.2 Mha private (IGN, France Bois Forêt). Net change by region: FAO, Global Forest Resources Assessment 2020. A. Mather, "The forest transition", 1992.
  • Fossil-fuel subsidies: $7,000bn in 2022, 7.1% of world GDP, of which 18% explicit and 82% implicit (unbilled damage). IMF, IMF Working Paper 2023 — a working paper, methodology debated.
  • Carbon pricing worldwide: nearly 30% of global emissions covered by a direct price, 87 instruments in force, average price ~$21/t (World Bank, State and Trends of Carbon Pricing 2026). Less than 1% of global emissions face a price within the range judged compatible with the Paris Agreement (World Bank, 2024).
  • European carbon market: emissions from stationary installations down 51% between 2005 and 2024 (European Environment Agency, 2025). The EEA attributes this fall to the carbon price, but also to the coal-to-gas switch, renewables policy, efficiency gains, the 2008 crisis and the pandemic.
  • SO₂ market: Clean Air Act Amendments of 1990 (Title IV, Acid Rain Program). A fall of more than 5 Mt of emissions since 1990 and the target reached ahead of schedule; compliance costs about 75% below the EPA's initial forecasts; benefit-cost ratio ~40:1 (Chestnut & Mills, 2005). The curve shown is an illustrative diagram.
  • The curves in this feature marked "illustrative diagram" render a shape and an order of magnitude, not a measured series. The carbon-market simulator uses fictional figures, chosen to make the mechanism legible.

The charts are to-scale illustrations (orders of magnitude), not exact records. The carbon-market simulator is a teaching model with constant costs: it demonstrates the least-cost principle, not real amounts. Check the assumptions, redo the calculations.