Green Capitalism How to Protect the Environment by Defining Private Property Rights

GREEN CAPITALISM HOW TO PROTECT THE ENVIRONMENT BY DEFINING PRIVATE PROPERTY RIGHTS HANNES H. GISSURARSON www.europeanreform.org @europeanreform Established by Margaret Thatcher, New Direction is Europe’s leading free market political foundation & publisher with offices in Brussels, London, Rome & Warsaw. New Direction is registered in Belgium as a not-for-profit organisation and is partly funded by the European Parliament. REGISTERED OFFICE: Rue du Trône, 4, 1000 Brussels, Belgium. EXECUTIVE DIRECTOR: Naweed Khan. www.europeanreform.org @europeanreform The European Parliament and New Direction assume no responsibility for the opinions expressed in this publication. Sole liability rests with the author. AUTHOR TABLE OF CONTENTS 1 INTRODUCTION 6 2 THE NOT-SO-SILENT SPRING 8 3 DIRE PREDICTIONS 11 4 NOBLE SAVAGES? 15 5 A DIGRESSION ON RAINFORESTS 19 6 WISE USE ENVIRONMENTALISM 22 7 GOOD FENCES MAKE GOOD NEIGHBOURS 26 8 LAND AND THE GEORGIST ILLUSION 31 Hannes Holmsteinn Gissurarson 9 TWO ICELANDIC CASES: SHEEP AND SALMON 38 10 FISH STOCKS 41 Born in 1953, he holds a D.Phil. in Politics from 11 THE ICELANDIC ITQ SYSTEM 45 Oxford University and is Professor of Politics at 12 POLITICAL ISSUES IN DEVELOPING ITQs 50 the University of Iceland. The author of more than a dozen books on political philosophy, 13 WHALES 57 history and current affairs, he is the research 14 ELEPHANTS 62 director of RNH, the Icelandic Research Centre for Innovation and Economic Growth. 15 RHINOS 66 16 CONCLUDING REMARKS 69 New Direction - The Foundation for European Reform www.europeanreform.org @europeanreform Green Capitalism: How to Protect the Environment by Defining Private Property Rights Hannes H. Gissurarson much, if any, government intervention? It had long and Bruce Yandle at PERC and Roger Bate and Julian 1 been recognised, for example, that land is utilised Morris, formerly at IEA. I also have been influenced more carefully and properly when privately owned, by books on some of these issues by Bjørn Lomborg, whereas attempts in Russia and China to create Matthew Ridley, Rognvaldur Hannesson and Johan collective ownership to it in the 20th century ended Norberg. INTRODUCTION in disasters.4 Most livestock is also privately owned. The methods of fencing and branding are used to This report is divided into four main parts. In the first define the owners. For example, with barbed wire part I discuss the common claim that our environment private property rights, land became more feasible is being destroyed and recall dire predictions about very day we are told by newscasters, teachers fish stocks roaming around in the Icelandic waters or than before in the American West.5 But what about the future, trying to explain their emotional roots. In in classrooms and scholars at conferences to particular fishing grounds in them? other natural resources, such as rivers with salmon or the second part I describe the main tenets of ‘wise E that our environment is being destroyed mountain pastures with sheep? Or about endangered use environmentalism’ and the economic and political by unbridled capitalism and that we need some When I innocently asked this question at the species, ‘charismatic megafauna’ like whales, case for private property rights. In the third part I kind of central economic planning to save it. We conference, I was met with laughter and derision elephants and rhinos? When such environmental analyse solutions that have been developed in Iceland are told that we also as consumers have to reduce and mocked in a newspaper a few days later. 2 problems are analysed, fascinating practical and to the problem of common-pool or non-exclusive significantly our needs that are now being so The idea was regarded as absurd. But in the next moral issues arise on technical and political feasibility resources, such as mountain pastures, salmon rivers efficiently satisfied for warm houses, fast cars, couple of years when I started reading more about and initial allocation. Some of them have been dealt and, most importantly, offshore fisheries.7 In the electrical appliances and various industrial products. natural resource economics and also observing with in detail by economists Ronald Coase, Harold fourth part I turn to exotic wildlife, whales, elephants, Is this so? It was in the autumn of 1980 when I first the development of the Icelandic fisheries, I saw Demsetz and Paul Samuelson to mention a few, others and rhinos and argue that the best way to conserve seriously began to think about all these claims. that this idea was not only feasible but that it was by philosophers, such as John Locke, Jean-Jacques these valuable species is by defining some kind of use Then a university student in my twenties, I had already being implemented in Iceland. So-called Rousseau and Henry George. rights to them, akin to private property rights, and been invited to a conference at Thingvellir, the old individual quotas had been allocated in pelagic to allow trade in their products. Finally, I offer some parliamentary site of Iceland, about what Iceland fisheries for herring and capelin and were being It was therefore with pleasure that I accepted the recommendations on the basis of the report. would look like in the year 2000. From the podium made transferable. In the more economically more invitation of Naweed Khan of the Brussels think-tank one speaker after another observed that the problem important demersal fisheries for cod, saithe, haddock, New Direction to write a report on ‘green capitalism’, Rio de Janeiro, 29 December 2017. of overfishing could not be solved by capitalism. redfish and halibut, individual transferable quotas or how the mechanisms of the free market can Hannes H. Gissurarson. Overfishing was a particularly serious problem were first allocated in 1984, and a comprehensive be used to solve or at least reduce environmental for the Icelanders, a nation of hardy fishermen system of individual transferable quotas, ITQs as they problems, such as depletion of natural resources, supporting themselves mainly by harvesting fish are called, was introduced in the Icelandic fisheries in pollution and possible extinction of valuable species. in the fertile fishing grounds off the island and 1990. The ITQs were use rights held by the owners of My argument in this report is that we certainly, not exporting it to Europe and North America. fishing boats: each owner had a right (which he could least in our own interest, should strive to take care sell to other fishermen) to harvest over the season of nature and protect the environment. Such an I had been studying works by the Austrian a given proportion of the total allowable catch set approach could be called ‘wise use environmentalism’ economists, Ludwig von Mises and Friedrich A. on the advice of marine biologists by the Fisheries in contrast to ‘ecofundamentalism’, which puts Hayek, staunch supporters of the free market order Directorate. These use rights could be interpreted to nature above man and replaces conservation with (although they disliked the term capitalism invented be emergent private property rights to the fish stocks preservation at any cost.6 In making my argument, by socialist critics).1 They basically taught that the roaming around in the Icelandic waters. I draw on my own research about the Icelandic fish best remedy for freedom was more freedom. If a stocks, on the ‘free market environmentalism’, which flaw was identified in capitalism, then on closer My more general interest in environmental issues is often associated with the Property and Environment analysis it usually turned out to be derived either was awakened by the problem of overfishing and Research Center (PERC) in Bozeman, Montana, and from misguided government intervention, such as its solution in Iceland (and New Zealand, which on a series of papers on the environment published protecting monopolies or limiting competition, or at the other side of the globe developed a similar by the Institute of Economic Affairs (IEA) in London. from the lack of recognised rules that would enable system).3 Could some environmental problems not be In particular I have benefited from the writings of, individuals to resolve their problems by mutual solved by defining property rights to them, enabling and discussions with, Terry Anderson, Gary Libecap, agreement. The question which, therefore, crossed my individuals to resolve these problems without mind while listening to the speakers at the conference worrying about overfishing was: could the problem 4 Robert Conquest, Harvest of Sorrow: Soviet collectivization and the not be solved by defining property rights either to the terror-famine (London: Hutchinson, 1987); Frank H. Dikötter, Mao’s Great 2 Arni Bergmann, Thadan hafa their ljosid [Thence They Have the Light], Famine (London: Bloomsbury, 2010). Thjodviljinn 14 November 1980. 5 Terry Anderson and Peter J. Hill, The Not So Wild, Wild West (Palo Alto 3 Philip J. Major, The Evolution of ITQs in New Zealand, eds. Ragnar CA: Stanford University Press, 2004). 1 Ludwig von Mises, Socialism (London: Jonathan Cape, 1969); Friedrich Arnason and Hannes H. Gissurarson, Individual Transferable Quotas in A. Hayek, The Road to Serfdom (London: Routledge & Kegan Paul, 1944), Theory and Practice (Reykjavik: University of Iceland Press, 1999), pp. 6 Rognvaldur Hannesson, Ecofundamentalism: A Critique of Extreme 7 I there draw on my book, The Icelandic Fisheries: Sustainable and and The Constitution of Liberty (London: Routledge & Kegan Paul, 1960). 81–102. Environmentalism (Lanham : Lexington Books, 2014). Profitable (Reykjavik: University of Iceland Press, 2015). 6 New Direction - The Foundation for European Reform www.europeanreform.org @europeanreform 7 Green Capitalism: How to Protect the Environment by Defining Private Property Rights Hannes H. Gissurarson DDT is the most effective chemical man has developed to kill mosquitos which infect human 2 beings with malaria. In the last quarter of the 20th century malaria may have cost the lives of fifty million people, mostly children in poor countries.

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