The Invisible Green Hand
Mercatus Policy Series, Policy Primer No. 7
26 Pages Posted: 13 Mar 2009 Last revised: 11 Jun 2014
Date Written: October 24, 2008
As environmental concerns receive heightened public attention, lawmakers are increasingly using regulations to ensure that private businesses adopt environmentally friendly practices. But when it comes to the "greening" of industries, well-intentioned government regulations frequently have unintended consequences, which can actually do more to harm the environment than protect it. While it may seem necessary to regulate industry to achieve certain environmental goals, less-regulated industries actually have a good record of creating innovative ways to deal with their waste.
This Policy Primer argues that corporate self-interest and environmental stewardship are compatible. In the right institutional environment - characterized by the protection of property rights - businesses acting in their own self-interest improve both their bottom line and environmental performance by selling and recycling their harmful waste. Current environmental policy, however, limits green innovation and effectively legalizes pollution.
Keywords: Free-market environmentalism, environmental regulations, property rights
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