Free-market solutions to saving the environment?

The new Republican flavor of the week is Ron Paul, and since he looks like a contender to win the Iowa caucuses, I’ve been reading up on libertarianism and its proposed solutions on several issues that critics historically identify as failings of the free market.

I think that Ron Paul has not properly addressed the issue of climate change and environmental protection. He claims to have approached the problem “the same way [he] look[s] at all other serious issues: as objectively and open-minded as possible.” His interpretation of climate data, although a step up from his fellow party members, is still wishy-washy. Maybe, considering the results of the recent Berkeley Earth Surface Temperature Study might warrant a second look from Mr. Paul.

However, many libertarian solutions to saving the environment are intriguing, and they might end up saving us. While most Western countries’ governments debate the best ways to combat climate change, Congress seems to spend its time arguing about whether it’s even real.

And what if it isn’t? I remember a quote from somewhere a few years ago, which went something like, “Maybe one day, when we’re independent of foreign energy and our environment is clean and well-preserved, it’ll turn out that global warming was a hoax after all. Then we’ll say, ‘Man, those liberals really got us, huh?'” There are a lot of free-market incentives to searching for sustainable and environmentally friendly energy sources. Solar power can be cheap, abundant, clean, and non-political. Much of the turmoil in the Middle East would effectively end, and corrupt and repressive dictatorships from Venezuela to Russia would collapse.

Solar power doesn’t even have to be a cute little thing that wealthy liberal Western European countries such as Germany or Denmark subsidize – according to this article, solar power could be, in terms of efficiency and cost, a better alternative to hydrocarbons in just a few years. Cost of solar energy has been decreasing exponentially, or approximately halving every two years (a similar trend as Moore’s law regarding the number of transistors on a computer chip). Meanwhile, oil isn’t getting any cheaper or tech-savvier.

This is still largely speculative. Free-market environmentalism doesn’t properly address many topics such as protecting endangered species (there may not be strong incentives for the majority of individuals to do so),  or negative externalities in general. A lot of environmental protection involves solutions that are realized over a long period of time, or don’t allow a do-over – two situations which historically have not been the free market’s strong points. However, maybe it’s not too naive to hope that the world may be saved by those who would profit immensely from doing so.

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