Property Rights Should Be Invoked in Environmental Conflicts

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By FRED FOLDVARY

Los Angeles has long been famous for, even synonymous with, smog. But few people realize why L.A. has so much of it. The problem is not cars, but a disrespect for property rights. Car exhaust that enters our bodies and homes invades our property. Just as we don’t allow people to trespass into our homes, we have the right to be free of trespass by others’ pollution, and to be compensated for any damage.

Smog is not merely unpleasant. The air pollution in Los Angeles doubles the probability that children will get cancer. Despite reductions in car emissions, according to the American Lung Association, Los Angeles is still the most polluted city in the U.S.

Federal and state laws have handled pollution with prohibitions and regulations, which are generally ineffective. California’s smog test is a prime example. If smog tests were effective, Los Angeles would not have smog. Those with clean cars are imposed upon, while cars and trucks have a license to pollute at will after passing the test.

A more effective way to reduce pollution from cars is to measure the actual emissions on the road using remote sensors that shine infrared beams across a street. The technology is already here to measure the various pollutants as cars pass by, and then send a bill to those owners whose cars pollute the most.

Unfortunately, the state’s lawmakers seek to use the blunt instrument of prohibition rather than focus on the transgressors. Some wish to phase out incandescent light bulbs and replace them with compact fluorescent bulbs. South Coast Air Quality Management District officials have proposed prohibiting wood-burning fireplaces in new homes in some southern California counties. These kinds of requirements and restrictions disregard wide differences in the costs of compliance and the use of these goods.


Sue the polluter

Instead of prohibiting and regulating, there are several ways that property rights can be used to deal with pollution. Nobel Prize-winning economist Ronald Coase explained how parties can achieve an efficient solution by negotiating a payment either for the damage or to prevent the damage, whichever costs less. A polluting factory owner would either pay compensation for damages or stop polluting. It is basic economics: If we make it costly to pollute, we get less pollution.

If the factory owner refuses to pay, the neighbors should be able to sue the polluter in court to get restitution plus court costs. However, U.S. laws and judges have hindered the ability of injured parties to sue for pollution damages. Government officials have regarded pollution as a public rather than a private nuisance.

Unfortunately, instead of directly charging polluters for their damage, governments tax proxies activities and property that seem to be related to pollution. For example, some environmentalists propose “carbon taxes” on inputs that contain carbon, such as gasoline.

But taxing inputs is less effective than taxing the pollution itself, since cars and trucks differ in their amounts of pollution. Fireplaces don’t pollute if they are not used or if the smoke can be captured. The problem is the output, or pollution, not the carbon inputs or the property, such as a car or fireplace. It is both morally right and economically effective to focus the levies on the pollution from refineries, power plants, cars, and buildings, as doing so would cause the polluters to minimize the toxic emissions rather than the use of inputs.

Reducing smog does not have to restrict liberty or impose an economic cost on L.A.’s industry and consumers. We can have a win-win solution by using pollution levies to offset taxes on income and sales, so that the social costs of installing pollution-reducing equipment are offset by lower taxes on goods, wages and profits.

Many environmentalists confuse energy efficiency with pollution. It should be nobody else’s business if a person uses a lot of energy with his own money. The only problem occurs when somebody’s emissions trespass on others. Negotiation, lawsuits and pollution charges can handle this situation well. So there is no good reason to have costly regulations and taxes on things that do not directly harm others.


Fred E. Foldvary teaches economics at Santa Clara University, where he is an associate of the Civil Society Institute. A version of this essay appeared in the Libertarian Perspective.

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