Thursday, November 16, 2017

Pollution and Property Rights

The capital of India New Delhi is once again engulfed in toxic smog. The usual blame games by politicians have begun about the cause of this pollution. The Delhi chief minister Arvind Kejriwal is blaming the burning of crops in the adjacent states of Haryana and Punjab for this pollution. Other major causes cited by authorities and activists are vehicle exhaust and dust and industrial emissions. Delhi government has tried every measure like spraying water or the famous odd-even scheme for vehicles etc., that it had in its policy portfolio to combat this pollution but failed. Now the authorities are hoping for rains to come and naturally clean this pollution!

Most people discussing this issue are of opinion that only government can tackle this problem of (air) pollution. But is it so? The usual problem with such opinions is that they ignore the alternatives available. For example, in the field of environmental sciences there is a school of thought known as free market environmentalism. No one is looking at the ideas of this school of thought for solving this issue of (air) pollution in New Delhi and elsewhere in India.

What Is Free Market Environmentalism?
The Property and Environment Research Center defines free market environmentalism as an approach to environmental problems that focuses on improving environmental quality using property rights and markets. It emphasizes three important points: 
  • Markets, property rights, and the rule of law are fundamental to economic growth, and economic growth is fundamental to improving environmental quality. There is a strong correlation between treatment of the environment and standards of living.
  • Property rights make the environment an asset rather than a liability by giving owners an incentive for stewardship.
  • Markets and the process of exchange give people who have different ideas and values regarding natural resources a way to cooperate rather than fight. When cooperation supplants conflict, gains from trade emerge.
The causes cited by authorities and activists are only proximate causes of (air) pollution. They are not root causes. The root cause of the problem of pollution is the absence of private property rights and its corollaries free markets and the rule of law in India.
If the absence of private property rights is the root cause of pollution in India then the only solution is to establish the institution of private property rights and enforce it strictly via private judiciary system. There is no other better solution of this problem. Hacking at the proximate causes like the burning of crops or vehicle exhaust and dust will never permanently solve the pollution problem.

How Private Property Rights will work?
What precise solution private property free market system will find for the problem of pollution is impossible to know in advance, but we can elaborate few things using theory and history. One thing is for sure that entrepreneurs guided by the price and profit & loss system of the free market capitalist system will find more efficient and ethical solutions compared to the present statist inefficient and unethical solutions. In the case of New Delhi, authorities and activists are citing three major proximate causes of air pollution: 1) burning of crops in the adjacent state villages 2) vehicle exhaust and dust and 3) industrial emissions. Private property right regime means an individual is the owner of his bodily property and all other physical property that he/she has appropriated legitimately using that body. No one, not even the state (aka government), is allowed to aggress upon these properties and violate them. Any violation of these properties is a crime and punishable appropriately. Right now, because private property rights regime is absent, the villagers are burning their crop in the open and harming others via air pollution. In the regime of private property such harmful actions will strictly be banned and that ban will be properly enforced by private institutions like private police and courts. Same is true for industrial emissions too. Industries will not be allowed to violate others’ property rights. They will have to take private city owners’ permission first to locate nearby or amidst them and pollute environment, and such permission will simply be not coming. In such situation they will have to locate their factories in some remote area where their activities do not affect the lives of private property owners. What is happening today is the exact opposite of this. In the name of “development” government itself is giving licenses to these industries to operate within or nearby cities and pollute environment! Also, in the absence of government taxes entrepreneurs will have extra funds available to invest in R&D activities and invent better anti-pollution clean technologies. In the present statist system, even if entrepreneurs want, government’s restrictive policies prevent them from investing and inventing such clean technologies.

And, one big cause of vehicle emission is the cheap money policy followed by the Indian central bank, RBI. In the absence of low interest cheap loan availability, there would be fewer cars running on Indian roads, which will reduce air pollution drastically. Most of the people who buy cars buy by using bank provided artificial cheap credit. Governments, via RBI, by providing cheap money to Indian buyers artificially increases demand for cars in India, which results into more vehicles on Indian roads and more air pollution. This also leads to problems of traffic congestion and high frequency of road accidents. A truly free market in banking sector will have no central bank and the credit will be regulated naturally by the consumption and saving habits of people. Also, private road companies will simply not allow high pollution cars on their roads, which will cut vehicle exhausts drastically. And as in the case of industries discussed above, private car companies too will have every incentive to invent new low or zero pollution technologies.

Conclusion
The real cause of air pollution in Delhi (or India or elsewhere) is not crop burning or vehicle or industrial emissions. It is the absence of private property rights regime in India. As long as this regime is not established, New Delhi or Ahmadabad or any other city of India will continue to get engulfed in toxic smog. Any measure like odd-even scheme or spraying water will simply not work.

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