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Key Facts

Economic Growth: The Path to a Cleaner Environment
An Unlikely Pair
At first glance, free-market capitalism and environmentalism appear to be at odds with one another. Fossil fuels help economies expand, but they also pump emissions into the air. Urbanization replaces green land and forests. But a closer look at history makes one thing clear: economic prosperity leads to more protection for the environment, not less.
A Matter of Property
The wealthier a country gets, the more likely it is to act in an environmentally friendly way. Institutions that lead to wealth and prosperity also promote a cleaner environment. Countries become wealthier when they have well-defined and enforceable property rights. People are able to invest with more certainty when they know that they can keep their rewards as a result of working.
The Other Side
Property rights also give people incentive to conserve their property and protect against environmental degradation. In poorer countries, people prioritize the use of natural resources to increase their wealth. Moreover, those countries generally lack legal protections or norms that allow people to enforce their rights against environmental degradation.
Encouraging Property Rights
If we want more environmental progress, we should encourage wealth creation, including markets for environmental goods and services based on strong, tradeable, and enforceable property rights. In short, we need to create individual incentives for preserving precious resources for future generations.