Property rights and tort law as coordinating mechanisms
Austrians identify one mechanism in particular as the key to promoting environmental coordination. Roy Cordato puts it this way: “It is logical that both the origin and the solution of the problem is to be found in a lack of clearly defined or enforced property rights.”
Cordato and other recent Austrian writers draw heavily on a seminal 1982 paper by Murray Rothbard. Rothbard sees air pollution is an invasion of the rights of downwind property owners—in legal terms, a tort of trespass or nuisance. Pollution victims, he says, have the right to seek redress under common law.
That characterization of the problem might seem to place Rothbard firmly on the side of pollution victims, but not so fast. As he goes on, he enumerates a daunting list of procedural hurdles that plaintiffs would have to overcome to prevail in court.
The first is that, in Rothbard’s view, not all emissions violate property rights. Specifically, people have a right to emit quantities of pollution that are small enough to do no perceptible harm, especially when the surrounding airspace is empty or sparsely populated. Once a person or company establishes a level of emissions, continuing that level becomes a permanent right under the principle of “first use” or “homesteading.” People who later move to the area have no right to object to the first user’s emissions, since they have “come to the nuisance.” The price they pay for their property will reflect the existing level of pollution, so they have no grounds to claim further damages.
- See more at: http://www.economonitor.com/dolanecon/2014/03/31/austrian-environmental-economics-air-pollution-as-a-coordination-problem/#sthash.7slwQPc9.dpuf