[MUSIC]. Welcome to our fourth hour of the first week in Environmental Law and Policy. And as promised, I've dressed up, because mostly today, we're going to talk about theory.

Just to differentiate what we are going to do today from what we did in the first three sessions. In the first three sessions, we learned about the law of nuisance, a doctrine. And we tried to figure out under what circumstances it will or will not intervene to stop the conduct of certain defendants.

Law professors like myself refer to this as the positive law, that is to say, we're just trying to figure out what is the law? Is it really a principle that you cannot do substantial unreasonable harm to neighboring properties. And we might look at the common law and see that it's mostly enforced, and conclude yes, that is the common law. Or we might conclude that even though maybe it's sometimes the common law, it's often not followed. For example, even though I told you that the principle of not doing harm to others was also reflected in some international law doctrine, like Principle 21 of the Stockholm Declaration, right now the country of Singapore is having a lot of trouble with serious smoke coming in from Indonesia, where they're burning fields. And yet despite this principle in the Stockholm Declaration, the country of Singapore is having a lot of trouble finding a legal forum in which they can have an enforceable right to have the air pollution stopped. A positive theorist would look at this and say, well, I'm not so sure internationally this is the norm.

That's what positive theory is. Just try to figure out what is the law and how does it work.

That's what we mean often when we say, thinking like a lawyer. A lawyer will look at all the evidence and try to figure out what is the law and will it apply in this situation? But for the rest of this session, I want to step back. Because the law isn't just a collection of commands, it also is institutions that implement these commands. And we introduced ourself to two of them in the first three sessions. Courts, on the one hand. And non-court institutions, like local city councils, or regional governments, or even national legislatures, using the police power, on the other.

In about three or four minutes, we're going to come back and look at these two alternative institutions and certain advantages and disadvantages each may have as a carrier of environmental law.

But first, I want to introduce for our consideration a third institution. And here's a prediction. I'm going to introduce it, and my, I predict you'll hate it.

Maybe I'm wrong. Let's see. Here is my third possible institution for environmental protection: the market. Neither courts nor other levels of government, just the market. And we treat the environment and environmental amenities like any other good. And we let the market determine how much of it we get. If people value it, they'll pay for it, and if they don't value it, they won't. And more importantly, that's a good thing, because if you're not willing to pay for it, you don't value it. And therefore the market gives us just what we value. So that's my proposition. We rely on the market.

I have posted, on our discussion forum, a few topics dealing with this. So by all means, you're going to have views on it. Feel free to talk about them in the discussion forum.

But when law professors like myself, or others who study environmental law, look at this possibility of using the market, we could, on the one hand, immediately see some disadvantages. I bet you see them too. What's the first obvious disadvantage to using the market? That is to say, we trust our ability and willingness to pay to be a true reflection of the environment we want.

Well, here's one problem. Our willingness to pay is totally dependent on our ability to pay. And if you don't have money, or enough extra money, to pay for environmental values, well then you won't buy them. because you're too busy using our resourc, your resources for food, and ap, rent, and all the other necessities of life. It doesn't mean you don't value environmental protection. It means you're poor. You just don't have any money. Now some economists that equate wealth with value would say that the best measure really in the end is willingness to pay.

On the other hand, we might have real doubts about it. Think back to the plaintiff we had in, in Madison vs Ducktown Sulphur. Those were the homesteaders whose land was utterly destroyed. And their families' health was severely impacted by that incredible air pollution from the copper mine next door. Let me ask you how you think one of those homesteaders would respond if a copper mine came to them said, knock, knock, knock, on their door. We're thinking of opening a copper mine. We're going to cause a huge amount of sulphuric gases that will make it hard for you to breathe. We know that your daughter has a serious respiratory illness, but we'll pay you several thousand dollars if you'll let us do our work, even though it will impact your daughter.

Well, one possibility is that the homesteader thinks about this and equates the two and says, well, no, I need another $500 to really capture the value of my daughter's health. Well, that's one possibility. Here's another possibility. The homesteader looks at the mining company and says, get out.

My daughter's health is not for sale. I don't equate my health, and perhaps I don't equate my environment, to bou, dollars and cents. There's some intuition to this, because after all, when people frequently describe nature, for example, or their health, they describe it by using the term priceless. And one way to look at that is it's outside the bounds of things we measure with normal dollars and cents. So that's one big assumption, and a big problem with the idea that we're going to use the market.

There's another problem, though, which is, environmental values frequently are not private goods. They're not like private goods that we buy and sell at a market. They are public goods, and this is what I mean by that. It's what economists call public goods. Think of the air pollution example once again. The air pollution, and the surrounding air that it affects, affects everybody in the area. All the homesteaders, for example. So when the air is destroyed by the copper mine, it doesn't just affect one person, it affects maybe hundreds of people. The question is, why would any one of them, for example, step forward and be willing to pay the copper company, even if they could, to stop the pollution? Because it will soon dawn on them that if they pay, and the pollution is stopped, everybody else gets the benefit of clean air without having paid for it. The other people, in other words, would have a free ride on my efforts to stop the pollution.

Because of that, working backwards, I'll be hesitant before I step forward, and so will everyone else. Why should I put up my money, even if I had it, to get a benefit that will fall on others, a positive externality. The end result is that public goods are almost always underproduced in the market to what people actually value, which is another reason we might not want to use the market.

Having said that, I dare add that there are some circumstances where it might make sense. Sometimes the market can give us environmental protection, especially where the law does not go, or has not gone. Do you remember I gave you the example of Scott, the boy with the loud muffler in my neighborhood? And I asked you whether or not I could sue him in nuisance, and you told me no. Okay, I agree with you. The law doesn't go there.

Could I, nonetheless, ask, get Scott to stop the loud muffler? Well, one way is for me to go outside, and next time he comes down my street, go up to him and stop him and say, Scott, Scott, listen. I don't like this loud noise. I'll buy you a new quieter muffler, and I'll give you $300 if you'll just put it on. What do you think? Is it a deal? What do you think? Would you take the deal? Would you consider the deal?

If the answer to that is maybe, or yes, then we have an illustration that the market could give some environmental protection, a quieter neighborhood, when in fact the law wouldn't go. And just so you know, that this isn't entirely theoretical. You should realize that in international climate negotiations, we have yet to produce a very vibrant international climate legal regime. Yet even though the law doesn't really go there now, there are successful efforts to make side payments to some countries overseas to preserve their tropical forests for their climate change benefits. That's an example of exactly the sort of bribe that I offered Scott. And it can in fact give us an effective legal regime in the absence of law, and therefore could be a good institution. Let's leave the market for now, and just briefly look at the two other institutions that we introduced ourself to, courts and other entities through the police power.

Think of some of the possible problems that courts may have, as institutions, even if we understand, say, the doctrine of nuisance law. Here's one problem. First of all, there's a public-goods problem on a lot of environmental issues that courts will face too. Why would I bring a lawsuit to stop the neighborhood copper company if the benefits, if I'm successful, will go to everybody? The same reason I wouldn't step forward and pay for a public good might stop me from paying for a lawyer and all the trouble it would take to go to court. The result is, courts won't even see as many cases as they should, because of this public-goods free-riding problem. That's one problem. The other is an informational problem. The examples we gave, Madison vs Ducktown Sulphur Tennessee Copper. Those were obvious nuisances, giant roast piles and copper that turned everything into a moonscape. Lots of environmental problems are more insidious, even invisible. Toxic chemicals we don't even know are in the groundwater in amounts that are tiny, except to the extent our bodies may be registering them, perhaps in cancers that we won't get for 20 years later. Well, if we don't know this is happening, even if we're motivated, we won't bring lawsuits. And what happens when there's multiple defendants, not just one obvious one, each of which contributes to the problem? Suddenly using the courts becomes a lot more problematic. Plus, of course, courts are not experts, either on pollution, for example, or, if they issue an injunction on remedies, how are they to tell this industry what to do?

To that extent, courts have certain disadvantages, although obviously they have certain advantages too. They're relatively open to people. They're relatively non-corrupt. And we can get some measure of justice from them. But they're not perfect.

Quickly, let me say the same thing about police-power institutions, even in democracies. They have a free-riding problem, which is, especially in democracies, and especially with public goods like environmental issues, many of us will not be all that motivated to become involved politically or to vote for political reasons, because when we do so, the benefit occurs to everyone.

In contrast, the relatively few people who might do a lot of the polluting are smaller in number. The benefits to them of affecting the rules are greater, and the result is the special interests will be motivated to be especially involved in politics. That's the special interests concern. That politics might reflect special interests, not the public interests, in their police-power regulations. An entire school of economics, known as public choice economics, is incredibly suspicious of public institutions because of that insight.

Well, I'm not saying any one of these institutions are perfect. That is, either the market, courts, or police-power entities like legislatures or regulatory bodies. You want a closing insight? We don't really have to choose one or the other for the best one. If you step back and simply want to know what environmental law is, I'll tell you right now, it is a mix. We have found it beneficial to use instruments from police-power institutions, courts, and the market, and together they describe a lot of environmental law.

That's enough for now. I'll see you next time, when we start looking at property. [MUSIC]

1.4 Lecture Video

Introduction to Environmental Law and Policy

Meet the Instructors