Environmental conditions are obviously improving in the United States, and have done so for much of the recent past. Generally the same is true in other parts of the rich world--water quality has improved enormously in my home country of Great Britain in the past fifty years.  A key part of this green performance is wealth and the institutions that underpin wealth generation. We take this for granted in the West and often forget it in our advice to poor countries.

Wealth is important for at least two reasons. The first is that without wealth--for perhaps a billion people on the planet who are so poor that naturally their only concern is about the source of the next meal--for those people the wider environment is less important (and subsistence farming is often not socially or economically sustainable, even if it is sometimes environmentally friendly). Secondly, wealth is obviously important in that to pay to clean up environmental damage can be expensive (the lesson of history is that as country’s have grown richer they have polluted more for a while but then cleaned up their acts, once wealth improved and they had time to care about their wider environment). These two points are relatively well known.

But there is a third and far more direct connection between wealth and improved environmental performance, and that is ownership. Without ownership, and alienable ownership preferably, there is rarely wealth (the association between freedom and wealth is well established in the various freedom indices), but without ownership there is very little incentive to act responsibly--the old economist joke about no one ever cleaning a rental car springs to mind. 

I spend a lot of time in developing nations (frankly I don’t like the term developing, or us in the west as developed--it implies we’ve stopped developing, so I prefer aspiring nations), but anyway, I spend time in countries that are currently a lot poorer than the United States. The main reason that so many are poor and have ravaged environments is a lack of ownership. Ownership drove environmental performance in Britain in the late nineteenth century and especially during mid-twentieth century, as I explored in Saving Our Streams (2001).

Hernando de Soto in his book The Mystery of Capital articulated this very well. Without title to land, there is little borrowing except from neighbors who trust you, no functioning capital markets, and little wealth generation.  Although de Soto doesn’t dwell on the environmental impact of this problem, the problems are very obvious in myriad locations that I see.

Take Zimbabwe. The collapse of the country only really sped up in 2001 when protection of land rights became uncertain, the entire banking system collapsed as all property rights and contracts became uncertain as well, the economy halved in value over the last five years, and life-expectancy went for fifty-five years to thirty-three. While that is the most important story--with the property right collapse so did the incentive to look after the tourist and hunting businesses that the country ran so well.

When I visited the Zimbabwean campfire tourism and hunting program in 1996, it was working remarkably well. Alongside the normal eco-tourism, Northern hunters were killing elephants and rhinos in less viewing friendly locations at many thousands of dollars a time, with a lot of the money being re-invested in environmental protection, because the “owners” of the land and wildlife knew it was worth re-investing since their title was secure. And unlike eastern and western Africa the charismatic megafauna (as they’re known in the business) flourished. Alas the communal/tribal and occasionally private property systems are struggling along with property rights in the rest of economy (poaching is up as is unsustainable hunting).

Zimbabwe is an extreme in every sense, but at the extremes you see what institutions matter, what rules and incentives really are important. Without ownership (and I mean useful ownership, not where someone owns seven farms and doesn’t farm any of them as in Zimbabwe. But ownership doesn’t have to be private property rights, although I think evidence shows it’s the best systems, common pool resources have been sustainable in some circumstances for decades)--without ownership of land and other resources sustainable development is unlikely.

Take water resources. Many aspiring nations, including China, are exploiting their resources for agriculture and are following the approach we in the West took--hydrological supply augmentation, or for you non-experts, dam building, piping, irrigation equipment, boom sprays, etc.

We (the worlds’ aid and environmental agencies) offer money and technical solutions. But without local incentive structures based on ownership, our money and stuff fail to change things, or nearly always do--drip irrigation systems save water, but few will use them if water remains unpriced. The World Bank has led brilliantly on this issue, trying to get countries to price their water sustainability--most do not. Even in United States and Europe, farming receives environmentally painful covert subsidies in water pricing.

But even higher water prices for farming are not a true incentive system that comes with ownership. (Pricing remains arbitrary without knowing its real value, and for that water markets provide signals, often imperfect signals, but better than any alternative). At least markets for water have developed in U.S. western states, although stifled by EPA, which ignores the elephant in the corner, inefficient use of water by farming sector, while worrying about the localized temporary harms that may (not will) occur from any trading--water politics is run by hydrologists and engineers, who know little about markets and care even less about them.

In other nations, with exceptions of Chile, Australia and a few others the situation is far worse. Massive overuse occurs because of appalling pricing and no markets. I expect to see water become even more of a limiting factor in growth in China and possibly India over the coming decade, but its misuse will become an environmental problem before it truly limits growth.

The same story can be applied to many other resources--national fisheries and polluted waterways spring to mind, where access is largely open. There are resources where establishing markets is very hard such as air sheds and the oceans. But even here technologies can be provided to bring market signals: pollutant markets such as those for Sox/Nox in the United States and ITQs for fisheries New Zealand, Chile, Iceland are particularly good. And why--they control their property rights of course. We need to see more of this.

As to the issues that others have mentioned today:

I have yet to be convinced that human-induced climate change is something to worry about, and it is certainly not something that poor countries should be concerned with--any measurement of priorities would place climate action near or at the bottom. And the notion that carbon dioxide should be classed as a pollutant is insane--it is one of the three inputs to photosynthesis.

As to Tina Rosenberg and DDT, I am very pleased she has already been mentioned. For me the fact that she could convince the New York Times editorial board to run this and other pieces is an incentive signal to me, like those provided by property rights. Even the world’s most detested chemical can make a comeback when facts replace fiction--although my enthusiasm is tempered by the knowledge that every single multilateral lending agency  still tries to scupper the use of this chemical, but that’s another story.

For the developing world, environmental performance will worsen in many places before it gets better, and aid and technological transfers will do very little without helping the governments in those countries improve their property right and incentive structures. And that is where advice is most warranted for those who care about economies, health and ultimately the environments of these countries.

Roger Bate is a resident fellow at AEI.