Is Privacy Regulation the Environmental Law of the Information Age?

Abstract

This book chapter argues that just as smokestack industry causes harm to the environment, so information-based businesses create injuries to personal privacy. This analogy can teach us much about how to protect privacy in the information age.

The chapter begins by identifying the information economy's impacts on privacy. It discusses the ways in which an individual's personal information gets used or shared without her knowledge or full consent, thereby damaging her informational privacy. It further explains how spam invades personal (virtual) space and so constitutes another form of privacy harm.

Having identified these injuries to privacy, the chapter then shows that they are conceptually related to environmental damage. It argues that two of the theoretical constructs that have been used to understand environmental harm - the negative externality, and the tragedy of the commons - can also shed light on the impairment of personal privacy. In both contexts, the offending business often does not have to bear the cost of the harm that it is creating. The injuries accordingly qualify as "negative externalities." In both, this can ultimately result in the industry destroying the very resource on which it itself depends - a classic "tragedy of the commons." Environmental damage may arise primarily from smokestack industry, and privacy injuries from information-based businesses, but they share a common conceptual structure.

If privacy injuries are analogous to environmental harm might the solutions, too, be related? Can environmental law and policy, with its decades of experience, serve as a model for the nascent field of privacy regulation? The second part of the chapter explores these questions. It focuses on three, cutting-edge environmental policy tools: environmental covenants, environmental management systems and emission fees. It argues that environmental covenants and environmental management systems could be employed to protect personal information. An emission fee approach could be used to change the incentives, and so the behavior, of those who emit spam. These environmental regulatory strategies can provide constructive models for privacy protection.

Keywords: Privacy, spam, information, data, environment, environmental law, environmental policy, externality, tragedy of the commons, environmental covenant, environmental management system, emission fee

JEL Classification: I18, K00, K23, K32, K39, K40, L51