The Environment is a Luxury Good

by Iain Murray on August 3, 2010

in Blog

One of the central insights of Free-Market Environmentalism is that people treat the environment as a luxury good.  They are willing to pay for it when they have spare money, but not when they don’t.  That’s why treating the environment as a tax, which is how statist environmentalism works, arouses resentment, while treating it as a privately-owned asset, like FME does, promotes stewardship and conservation.

There’s more evidence for this view from a new study, Environmental Concern and the Business Cycle: The Chilling Effect of Recession.  Here’s the abstract:

This paper uses three different sources of data to investigate the association between the business cycle—measured with unemployment rates—and environmental concern. Building on recent research that finds internet search terms to be useful predictors of health epidemics and economic activity, we find that an increase in a state’s unemployment rate decreases Google searches for “global warming” and increases searches for “unemployment,” and that the effect differs according to a state’s political ideology. From national surveys, we find that an increase in a state’s unemployment rate is associated with a decrease in the probability that residents think global warming is happening and reduced support for the U.S to target policies intended to mitigate global warming. Finally, in California, we find that an increase in a county’s unemployment rate is associated with a significant decrease in county residents choosing the environment as the most important policy issue. Beyond providing the first empirical estimates of macroeconomic effects on environmental concern, we discuss the results in terms of the potential impact on environmental policy and understanding the full cost of recessions.

The paper’s authors are obviously concerned that the recession means that statist environmental policies are less likely to be enacted.  It would be helpful if, instead of thinking so linearly, environmental academics could think what opportunities this gives to advance free-market environmentalism.  It is clear that low-cost environmentalism is much more likely to be supported during a recession than high-cost environmentalism.  because free-market environmentalism shifts the burdens of environmental protection from the masses to those who are willing to pay, it should be much more attractive to people during a recession.  It is indicative of the ideological blinkers of the environmental establishment that this possibility does not occur to the authors.

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