Agrarian Entrepreneurs! Innovating Our Way to Environmental Solutions.

Entrepreneurial activity is the motive force behind innovation (Smith, Hayek, et. al.).  If we accept innovation as the prime factor underlying the rapid, almost miraculous improvement in the material conditions of humanity--the mechanism by which we have escaped the proverbial “Malthusian Trap”--then we must pay especial attention to the conditions that lead to the promotion and proliferation of entrepreneurial activity.  Likewise, we ought to use extreme caution when implementing policy with the potential to inhibit or frustrate innovation.

Curiously, environmental innovation and entrepreneurial innovation are often seen as antagonistic: gains in one often appear to come at a cost to the other.  This premise is demonstrably untrue, and begets a pernicious fallacy that central, (usually agency) management is the best way to ensure the provision of environmental goods.  The problem with this paradigm is that it not only fails to deliver the “goods” as promised, but also literally smothers the very flower of innovation needed to generate those “goods” in the first place.

Property, particularly land ownership, is a crucial component in a thriving entrepreneurial milieu, and a key ingredient to innovative behavior.  We address a number of examples of public/private resource management (public-lands grazing in the American West, the EU Common Agricultural Policy, and the development of water markets in semi-arid zones ) in order to gain a greater understanding of the implications of institutional policies upon innovation.

We conclude that the majority (perhaps all) of prescriptive public environmental policies have a dampening effect upon innovation, and very often lead to a net decrease in absolute provision of environmental goods.  In contrast, those environments which are allowed to function under the effect of price-signaling markets tend to produce the greatest environmental returns by encouraging innovation.