My point is that he libertarian approach is non-sense.
You have a market failure: pollution creates negative externalities and are over-produced in a free market.
You use one common solution to market failures: create property rights that can be protected by litigation.
You now run into another economic problem: Coase's theorem only guarantees efficient outcomes if transaction costs are low. The cost of litigation to enforce injuries as diffuse as environmental injuries would be huge.
You also run into another problem: it's nearly impossible to track injury resulting from pollution to a source once it's out and mixed with all the other pollution.
The libertarian approach runs face first into the brick wall of the very economic theory it's based on.
The sensible solution, as Coase himself noted, is a regulatory apparatus to stop pollution before rights are violated. As a lawyer I'd love the litigation free-for-all that would arise in the libertarian scenario, but it's just an unworkable approach. The fact that it is repeated so much is a triumph of ideology over rationality.
About the transaction costs issue... how do class action lawsuits rate in terms of transaction costs?
I'm with you that the libertarian approach is somewhat worse on the effectiveness scale than what we're capable of doing in our current system. But I'm not going to go so far as you and say it's nonsense.
A current issue in my area (Minneapolis metro area) is 3M's PFCs contaminating ground water in Lake Elmo, Oakdale and Woodbury. 3M released these chemicals into the area starting in the 1940s, when their health and environmental effects were not known. Regulation would therefore not have helped in this particular case.
The court system is working, though: the State of Minnesota is suing 3M for damages, and 3M is engaged in clean up. Note that this lawsuit is not alleging an infringement of regulations (at least, not to my knowledge), but instead is focused on 3M having negatively affected property regardless of intent.
This is one example of the court approach working (I've got my fingers crossed that 3M's gonna lose).
My point is, framing it as a property rights issue and handling it in the courts is a helpful thing and not nonsense.
You have a market failure: pollution creates negative externalities and are over-produced in a free market.
You use one common solution to market failures: create property rights that can be protected by litigation.
You now run into another economic problem: Coase's theorem only guarantees efficient outcomes if transaction costs are low. The cost of litigation to enforce injuries as diffuse as environmental injuries would be huge.
You also run into another problem: it's nearly impossible to track injury resulting from pollution to a source once it's out and mixed with all the other pollution.
The libertarian approach runs face first into the brick wall of the very economic theory it's based on.
The sensible solution, as Coase himself noted, is a regulatory apparatus to stop pollution before rights are violated. As a lawyer I'd love the litigation free-for-all that would arise in the libertarian scenario, but it's just an unworkable approach. The fact that it is repeated so much is a triumph of ideology over rationality.