We are well into 2016, which means that the Heritage Foundation’s much vaunted annual Index of Economic Freedom is up and running. The Index’s striking heat-map feature highlights the incredible economic disparities that exist between different countries. The inequality in international economic freedom is especially stark between Europe and North America, and the rest of the globe.
In explaining the project, the Heritage Foundation describes economic freedom as the “fundamental right of every human to control his or her own labor and property.” Despite the anthropocentric nature of economic freedom, the new Index can also teach quite a bit about how to tackle global environmental problems.
Property rights are important for environmental protection
Possibly the most important component of the free market environmental canon is the effectiveness of property rights to tackle environmental problems. Currently, the Index gives global property rights a dismal 42 out of 100 score. Take a look at the heat map and toggle over to Property Rights. The United States, Canada, Australia, and most of Europe are a lush green. By contrast, the entire rest of the world is blood red. Even countries thought to be established powers have weak property rights scores. Russia and Brazil are at the bottom of the barrel, and India, Italy, and South Africa are not much better. But don’t take Heritage’s word for it. The International Property Rights Index showcases the same trend.
It’s no coincidence that the places in the world with the least respect for property rights are also the places with the most environmental degradation and poverty. Air quality in Los Angeles might not be great by American standards, but it’s phenomenal by Chinese ones. In Africa, water pollution is such a problem that out of the 1 billion people on the continent, more than 340 million lack access to clean drinking water. The additional 589 million that have no access to adequate sanitation are not much better.
The takeaway is that property rights are essential for growth. If there is the constant threat that your land and belongings could be seized by your neighbors, the government, or multinational corporations then there is little incentive to invest in that property. A lack of private property breeds poverty. As the nations of the world jettison property rights in their quest for economic prosperity, they have found themselves not getting very far, and harming the environment in the process. This is where the economic principle known as the Environmental Kuznets Curve is instructive. As nations move from poverty to prosperity there is an uptick in environmental degradation. However, there comes a tipping point where a nation has sufficient prosperity to redirect focus from necessities like shelter and infrastructure to concerns such as air quality and forest conservation. As the building blocks of economic growth, property rights are critical at shepherding the countries of the world through the environmentally tough climb of the Kuznet’s Curve to the wealthy, green-minded perspective on the curve’s downward slope.
Free trade is good for the Earth
While the world struggles in a property rights abyss, things actually look good for the global state of free trade. Toggle over to the Trade Freedom tab and you’ll find reasons to be optimistic about the state of the environment. Most of the planet is a loud green. Only a handful of countries are a frightening red or cautionary orange. Some maps paint a slightly bleaker picture, but the general principles hold true: trade is becoming easier and easier, as evidenced by the sheer number of trade agreements throughout much of the world.
The traditional narrative is that free trade hurts the environment by creating a “race to the bottom” whereby the production of goods and services will move to wherever environmental standards are most lax. But as research at the National Bureau of Economic Research has pointed out, that’s not totally true. Trade openness appears to actually foster a reduction in air pollution, for example.
The principle behind this is not new. A more effective flow of goods and services worldwide means that technology and innovation can be adopted more widely. This is significant because technological improvements are major drivers of pollution reduction, not regulation alone. The catalytic converter, for example, was invented because of concerns about smog in Los Angeles and it worked remarkably well on factory smokestacks before coming into vogue as an auto part. The same can be said about efforts to close the ozone hole. The Montreal Protocol , the international agreement designed to tackle the problem, was successful, but only because chlorofluorocarbon substitutes were being introduced. In an isolationist world these improvements would have been confined to their countries of origin, but free trade has meant that these and other environmentally beneficial technologies have been shared and implemented across the globe.
Sometimes it may seem like economic freedom and a safeguarded natural environment are at odds. However, as the 2016 Index for Economic Freedom and other sources show, a lot of the same prerequisites for prosperity, like property rights and free trade, are also vital building blocks for environmental protection as well. Despite perceptions of humans as environmental villains, it is important to remember that human interactions, like commerce, also hold the solution to our planetary woes.
Sam Mulopulos is an Energy and Environment Fellow at Young Professionals in Foreign Policy, and a legislative staffer in the United States Senate. He has a degree in political science, and a concentration in environmental studies from Grinnell College. The views expressed herein belong to the author alone in no way reflect the views of the U.S. Senate or any of its members.
Originally published in The Huffington Post.
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