All Commentary
Saturday, August 1, 1998

Common Sense and Common Law for the Environment: Creating Wealth in Hummingbird Economies

An Excellent Book Grounded in the Real World

Peter Hill is a senior associate of the Political Economy Research Center in Bozeman, Montana, and professor of economics at Wheaton College, Wheaton, Illinois.

Surely one of the more problematic issues for people with a principled commitment to free markets is the environment. Such people generally have a deep respect for individual rights, and environmental problems do seem to represent rights violations. But, in the modern political framework, saying that tends to put one in league with the denizens of the left: central planners, people who hate modern technology, anti-capitalists, and other socialist fellow travelers. Is there a way of approaching environmental problems that both recognizes the primacy of individual rights and the importance of limited government? Bruce Yandle, professor of economics at Clemson University, provides the best answer that I know of in his most recent book, Common Sense and Common Law for the Environment.

Yandle begins his book with a description of a common-access resource—a hummingbird feeder in his backyard. He argues that environmental problems are essentially common-property problems and the important issue is whether institutions can evolve to successfully manage these commons. Yandle classifies the social institutions for managing common-access resources as two types: the process approach and the systems approach. The process approach uses constitutional constraints that evolve from community standards and provide an overall framework for markets. This approach allows for the gradual evolution of rules in response to bottom-up pressure from individuals and groups. The process approach is generally conducive to voluntary transactions and uses property rights as the fundamental organizing principle for a society.

In contrast, the systems approach is much more centralized and uses top-down rules for solving the open-access problem. In the words of Yandle: “voting, politics, statutes, and regulations are dominant themes found in the systems approach. Markets, property rights, and the rule of law are dominant characteristics for the process approach.”

The common law is the most fully developed aspect of the process approach and the author does an excellent job of explaining how certain features of the common law are well suited to dealing with pollution and other environmental problems. The doctrines of trespass and nuisance have great relevance for situations in which property rights are violated. The use of those doctrines to resolve environmental problems has several advantages over alternative approaches.

First, under the traditional interpretation of common law, actual harm must be shown. Second, the bringing of a common-law suit depends on initiative by one who thinks he is harmed and thus only people with direct involvement in the issue have reason to bring suits. This is because the common-law remedy is either to pay damages to the one harmed or to secure an injunction to stop the harmful activity. Therefore, outsiders have no incentive to engage in frivolous activity, a situation quite different from statute solutions. Finally, the common law does not attempt to engage in social engineering by deciding if the benefits from some particular activity outweigh the harms caused. Rather, the common-law approach provides for the definition and enforcement of property rights, and if some particular activity generates more benefits than harms, the parties can contract to resolve the dispute ahead of time. For instance, in the early part of this century, paper-mill owners in Wisconsin compensated downstream owners of riparian rights before they put in their mills in order to avoid common-law suits.

However, since the advent of the modern regulatory state, the common law has not been allowed to evolve and has even been pre-empted in most cases by statute. Yandle provides an insightful discussion of the process of the pre-emption of common law, and also lays out a path by which we could return to more of a common-law framework. He does not avoid the hard cases, where common-law solutions appear difficult because of a large number of people being harmed; he presents practical suggestions as to how the regulatory state can be minimized and how the common-law approach can be used in most cases.

This is an excellent book grounded in the real world. It neither ignores environmental problems nor assumes that mandated, centralized solutions will work simply because we want them to. Yandle is an informed, careful analyst who brings years of experience in teaching and researching to bear on these issues. Our present environmental approach is crude, heavyhanded, highly politicized, and in many cases we pay a great deal for minimal results. Common Sense and Common Law for the Environment provides a realistic alternative to our present morass of rules and regulations. It is hard to think of a better book for gaining useful insights into practical solutions to our environmental problems.

  • Bruce Yandle is dean emeritus of Clemson University's College of Business & Behavioral Science and alumni distinguished professor of economics emeritus at Clemson. He is a distinguished adjunct professor of economics at the Mercatus Center, a faculty member with George Mason University's Capitol Hill Campus, and a senior fellow emeritus with the Property and Environment Research Center (PERC).

  • Peter J. Hill is George F. Bennett Professor of Economics at Wheaton College (Illinois) and a Senior Associate of the Political Economy Research Center (PERC) in Bozeman, Montana.