.. it is governments that suffer from myopic incentives. Unlike private owners, government officials are only temporary custodians of the natural resources under their control. They don’t have the same incentives to preserve the long-run value of such assets, but instead will have a tendency to dole out favors to their cronies while in power.
For example, take the problems of “overlogging” and “overfishing.” The culprit here is government-owned forests and bodies of water. You never hear of a farmer slaughtering all of his pigs because the price of pork is high; no, private owners know that to maintain a lifetime flow of revenue, they need to hold back current production and allow natural, reproducing resources (whether pigs, trees, or salmon) to flourish.
In contrast, look at the incentives facing a government official in charge of setting the price on, say, logging on state-controlled forest land. He may not be in charge past the next election, and doesn’t personally own the real estate under his control. Therefore, he has no personal financial interest in maximizing the long-run market value of the forest land, the way private owners would. Instead, he has the incentive to cut a sweetheart deal to a logging company, which will extract more timber in the present than might be optimal. Moreover, the general lack of markets and private property in other assets on the state-controlled lands, causes environmentalists to decry “capitalism” (and seek tighter regulations) when in fact the mismanagement is due to government control in the first place.
Contrary to most of today’s environmental activists, free-market capitalism has incentives for the preservation of the long-term value of natural resources. Both theory and history show that overriding private property rights in favor of government authority, will actually make nature less secure. After all, the same greedy impulses that infect private businessmen, will also be present in government officials. The crucial difference is that market prices show private owners the costs of their actions.
It’s true that proponents of government intervention can use sophisticated arguments concerning “negative externalities” to challenge the efficacy of market prices. (I have written elsewhere on the problems with this logic in the case of carbon taxes.) Even so, it’s important for the public to learn the general presumption in favor of private property, rather than government edict, as an important component of safeguarding natural resources and environmental quality.