What Are the Two Theories of Environmental Regulation?

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Environmental problems are difficult to solve: Because we share the environment, we exploit resources without fear of costs. This is the “tragedy of the commons,” which leads to depleted forests, polluted water, and endangered species.

In his June 2020 Summer Seminar lecture, John Hasnas, professor at Georgetown’s McDonough School of Business, described two ways of approaching environmental issues.

“One is through legislation,” Hasnas said. “That’s a mechanism for restricting access.” For example, legislation can make a parcel of land public and control individuals’ access and use of it.

Common law is the alternative. Common law—law that comes not through legislation but through judicial precedent and custom—is “the mechanism by which human beings privatize common resources,” Hasnas said. “And it does that that by aligning the individual incentives of the people who are using the resource with the preservation of the resource.”

For example, water rights are managed through common law, which is why water rights evolved differently in different parts of the U.S. In eastern states, where rivers were valued for their flow in the 18th and 19th centuries, conflicts arose over how upstream use affected those downstream. “The common law evolutionary process worked its way out: What you had was a system of rights that protected the river’s flow but not the water itself, because what was needed was something that would resolve the conflict.”

But in the west, where land is dry and farmers desperately needed water, conflicts arose over access to the water itself.

There you needed rights that would protect not the flow, but the actual amount of water. So the water rights that evolved in the western United States are not the same as the rights that evolve in the eastern United States.

-Professor John Hasnas

Which is the better way of approaching environmental issues? “I think that the common law privatization method is the superior way to go,” Hasnas said, “unless there’s some kind of crucial emergency where there’s no time.” While the legislative method restricts access to environmental resources and punishes those who abuse those resources, “the common law mechanism align the interests of the people using the resource with its preservation so that you are privatizing the resource.”

Watch Prof. John Hasnas’s full lecture, “Two Theories of Environmental Regulation.” You can find additional, details on Summer Seminars and previous lecture videosgraduate and faculty programs, and funding opportunities, at TheIHS.org.

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