by Timothy Moreland

Created on: December 01, 2007

"We have to shift our emphasis from economic efficiency and materialism towards a sustainable quality of life and to healing our society, of our people and our ecological systems" (Global Investment Institute). These words of a prominent Australian businesswoman, Janet Holmes Court, have good intentions, but fail to see the whole picture. It is indeed possible for "our ecological systems to be healed" while still promoting "economic efficiency". In fact, free markets and economic efficiency are the solutions to protecting the environment.

I. The Tragedy of the Commons
In an ideal world, people would share the land and everyone would have an equal right to the environment. No one would be allowed to claim a certain forest or pasture as his or her own. Mankind would live by the Socialist theory, "From each according to his ability, to each according to his needs" ("Nineteenth-century Ideologies). Unfortunately, such an ideology works against the effort to protect the environment.
In 1974, satellites took pictures of the earth's surface in northern Africa, revealing an "irregular dark patch, 390 square miles in area" ("The Tragedy of the Commons"). After further investigation, it was revealed this dark patch of land was ruined terrain. Within this devastated land, a plot of healthy growth thrived. This area was fenced in and deemed private property. The owners of the private land rotated their animals to different sections of the property, to prevent the grass from being entirely eaten. In the land outside of the fenced area, animals were allowed to eat at will, leading to devastation as the animal population increased. This anecdote displays the "tragedy of the commons".
Over a century earlier, an economist figured out the rationale behind this calamity. William Forster Lloyd witnessed how the common pastures in England had been ravished, much like the northern African land. His answer to this phenomenon dealt with incentives. Every person who used the common was "guided by self interest" ("The Tragedy of the Commons"). If one person allows his own animals to eat, then only his animals benefit. The loss, however, would be shared amongst everyone who wanted his own animals to graze in the common. If all herdsmen thought similarly, then none of them would stop adding more and more animals to eat from the common. Clearly, nature cannot permit this to occur for long until the entire pasture reaches depletion.
As Harvard Professor Mankiw states, "When one person uses

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