The citizens of the Developed World live in an age of unprecedented prosperity. The output of our economy includes massive pollution of both air and water, as well as physical garbage. The extraction and processing infrastructures have a significant environmental footprint , impacting the ecology directly through their physical presence. Sadly, the free market system provides no natural disincentive against environmental damage.
Producers try to maximally supply consumer's demands, while minimizing their costs of production.
Nowhere does environmental impact enter this equation. Past attempts to deflect the tendency of free market industry to lay waste to the ecology have focused on regulation, which is difficult and costly to enforce, and often not very effective. Regulations also often create unanticipated incentives for behaviours worse than the original problem. No government policy can succeed unless all of the incentives it generates are clearly understood, and unless the policy deliberately engenders incentives towards positive , rather than negative behaviour. Whenever possible, the government should try to co opt the power of the Market itself, by generating appropriate incentives, thereby minimizing the need for active government intervention.