In our last post, we explored how capitalism and environmental protection aren’t opposing forces but natural allies. Today, let’s dive deeper into one of the most powerful yet counterintuitive tools for environmental protection that also happens to be a key feature of capitalism: private property rights.

“But wait,” you might be thinking, “doesn’t private ownership lead to exploitation? Aren’t greedy corporations the ones polluting our rivers and clear-cutting our forests?”

It’s a reasonable concern, but it misses a crucial economic principle that explains why the opposite is often true. To understand this, we need to start with a concept that has shaped environmental thinking for decades: the tragedy of the commons.

The phrase “tragedy of the commons” comes from ecologist Garrett Hardin’s influential 1968 essay, but the concept is much older. Hardin described a medieval English village where shepherds shared a common pasture. Each shepherd, acting rationally in his own self-interest, would graze as many sheep on as much free grass as possible. After all, if he didn’t, he had no way to guarantee the grass would still be there tomorrow.

Thus, the tragedy: The pasture became overgrazed and destroyed, leaving everyone worse off. But no individual shepherd had an incentive to hold back—any grass he left ungrazed would simply be consumed by his neighbors’ sheep.

This wasn’t a failure of human character or intelligence. Each shepherd was making the perfectly rational choice given the circumstances. The problem was the system’s structure itself. When everyone owns something, nobody really owns it. And when nobody owns something, nobody takes responsibility for preserving it, nor could they.

This same dynamic plays out in environmental contexts around the globe today. The world’s most depleted fisheries aren’t privately owned waters. They’re international waters where fishing fleets from dozens of countries race to catch as many fish as possible before their competitors do. The Atlantic bluefin tuna population has crashed by more than 80% since the 1970s, not because anyone wanted to drive the species to near-extinction, but because no one owned the fish swimming in international waters.

Compare this to Iceland’s approach. In the 1980s, facing the collapse of their own cod fishery, Iceland implemented a system of Individual Transferable Quotas—essentially privatizing fishing rights. Fishermen now own specific shares of the total allowable catch. The result? Iceland’s fisheries have recovered and remain sustainable because fishermen have a direct financial interest in maintaining fish populations for the long term.

The same pattern emerges on land. Some of the world’s most rapid deforestation occurs on government-owned or unowned land where local communities cut trees for short-term survival without any stake in the forest’s future. Meanwhile, private timber companies—despite the popular image of them as environmental villains—routinely replant and manage their forests sustainably. A timber company that clear-cuts without replanting is essentially destroying its own future business.

Consider private game reserves in Africa. Countries like South Africa, Namibia, and Zimbabwe have allowed private ownership of wildlife on large ranches. The results have been remarkable: wildlife populations have exploded, habitat has been restored, and local communities have found profitable employment in conservation and eco-tourism. Private landowners don’t just tolerate wildlife—they actively work to increase animal populations because the animals are literally worth more alive than dead.

Contrast this with many government-managed parks where poaching remains a constant threat. When nobody owns the elephants or rhinos, protecting them requires expensive enforcement with limited success. When someone owns them and profits from their existence, protection becomes profitable rather than costly.

Perhaps nowhere is this principle clearer than in forest management. Private forests in the United States are growing faster than they’re being harvested, and have been for decades. Tree farmers plant new seedlings not out of environmental consciousness (though many certainly care about the environment) but because their livelihood depends on having trees to harvest in the future.

Government-managed forests, by contrast, often suffer from what economists call the “agency problem.” Forest Service bureaucrats don’t personally benefit from good forest management or suffer from poor management. They respond to political pressures and bureaucratic incentives rather than market signals about the forest’s actual value and health.

This isn’t to say government foresters are incompetent or don’t care—many are dedicated professionals. But the incentive structure they operate within makes it difficult to balance competing demands and think long-term in the way that ownership naturally encourages.

Water management provides another compelling example. In Australia, water rights were privatized and made tradable during severe droughts in the early 2000s. Farmers who previously had little incentive to conserve water (use it or lose it) suddenly had strong reasons to maximize efficiency. Water-saving technologies and practices spread rapidly as farmers could sell their conserved water to others willing to pay more for it.

The result wasn’t just more efficient water use. It was innovation. Farmers developed new irrigation techniques, drought-resistant crops, and water recycling systems because conservation became profitable rather than just virtuous.

When you own something, you bear both the costs and benefits of how you treat it. This simple fact creates powerful incentives for responsible stewardship that no amount of environmental education or moral exhortation can match.

Of course, it can get complicated. Some resources—like the atmosphere or migratory species—are inherently difficult to own and manage privately. And establishing clear property rights requires legal institutions and enforcement mechanisms that aren’t always present.

The key insight is this: when people own something, they take care of it. When they don’t, they don’t. This isn’t cynicism about human nature. It’s realism about human incentives. And it suggests that the path to better environmental outcomes often runs through stronger property rights, not weaker ones.

Rather than viewing capitalism and property ownership as the enemy of environmental protection, we should recognize them as one of our most powerful tools for ensuring that the people making decisions about natural resources are the same people who will bear the consequences, both good and bad, of those decisions.

Learn more about capitalism here.