Assessing market-based environmental policy using a case study of North Pacific fisheries

This paper uses a case study to provide a critical assessment of arguments underlying market-based environmental policy. Market approaches, which rely on economic incentives and property rights to achieve environmental goals, have become increasingly popular in the past two decades. Proponents argue that market approaches should replace “command and control” regulation, which works by penalizing environmentally harmful behavior. Synthesizing results of previous research on political economy of the North Pacific pollock fishery, this paper provides evidence that contradicts hypotheses derived from the logic of market approaches. First, a lack of property rights is not the underlying cause of problems in this fishery, but instead problems were created by the institutional context of fishery development. Second, market and regulatory approaches to this fishery are not necessarily contradictory and inherently incompatible. Both markets and regulation create both economic opportunities and constraints, markets alone are not enough to protect the environment, and markets require regulation to function. Because the market approach is based on a general logic that is supposed to be universally applicable, results from this case reveal potential flaws in the market approach more generally.