The Fraser Institute

The Fraser Institute

April 22, 2014 06:15 ET

Fraser Institute: Air Pollution Declines as Economic Freedom Rises

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 22, 2014) - As the world celebrates Earth Day, a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank, finds that higher levels of economic freedom lead to cleaner air.

"The level of economic freedom in a country affects the ability of citizens to produce and sell in the marketplace, and own private property. It's a simple concept that drives prosperity and ultimately benefits the environment," said Joel Wood, associate director of the Centre for Environmental Studies at the Fraser Institute and co-author of Economic Freedom and Air Quality.

The study examines the relationship between economic freedom and concentrations of fine particulate matter (PM10) air pollution in more than 100 countries (from 2000 to 2010) using the Fraser Institute's Economic Freedom of the World Index, which measures economic freedom worldwide.

In 2010, for example, the 20 highest ranked countries (including Canada) have PM10 levels almost 40 per cent lower than the 20 lowest ranked countries.

And for a one point increase in the economic freedom index (when controlling for other factors such as national income, political institutions, and other country-specific characteristics), the study finds a 7.15 per cent reduction in PM10 concentrations, on average.

"Anyone interested in the environment, be they policy makers, activists or ordinary citizens, should understand that people who live in the world's freest countries generally breathe cleaner air than people in countries with less economic freedom," Wood said.

So how does economic freedom improve air quality?

By ensuring private property rights, rule of law, and limiting the size of government.

"While property rights incentivize people to protect their investments, they also provide protection from polluters. If you own land or a home that's being damaged by pollution, you're better able to negotiate with the polluter, within a contract or in a courtroom, and mitigate or eliminate the effects of that pollution," Wood said.

However, while private property rights can help keep polluters in check, government regulation can alter incentives and hinder the ability of citizens to act.

For example, an overly large government may spawn bureaucratic inefficiency, heavy influence from special interest groups, and a prevalence of state-owned enterprises that are immune to citizen action.

In the Ukraine, for example, home to a current conflict based in part on individual rights and freedoms, the so-called Orange Revolution in 2004 prompted political and economic liberalization. During a four-year post-reform period, Ukraine's PM10 levels dropped by 41 per cent.

Moreover, free trade, a common trait of countries with high levels of economic freedom, allows new cleaner technologies to cross borders and benefit the environment.

"Economic freedom, founded on individual property rights, rule of law, and free markets, is vital to sustainable development in Canada and around the world," Wood said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research.

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