How bottom-up rules and private property can protect the environment better than distant bureaucracies
By Elias Sanchez
While travelling through the Bolivian Amazon, I read Market Ecology, a sharp, unconventional text by Jesús Huerta de Soto. Its central claim is deceptively simple: environmental sustainability and economic freedom are not at odds. On the contrary, secure property rights, voluntary exchange, and decentralised governance may be the most effective tools for ecological stewardship.
Bolivia offers a telling example. In Parque Machía, near Cochabamba, it is community consensus—not state decree—that keeps environmental norms intact. Back in 1996, the Villa Tunari Municipal Council granted the conservation group Comunidad Inti Wara Yassi (CIWY) the right to use the park’s land for its work with rescued animals. Since then, CIWY has shielded the area from indiscriminate hunting and deforestation, while gradually expanding its presence by purchasing additional plots for a veterinary clinic, an aviary, and housing for staff and volunteers.
As a result, plastic waste, poaching, and deforestation are curtailed by local rules that, though politically nominal, prove remarkably effective. Compliance does not stem from mandates handed down in La Paz, the seat of the central government, but from behaviours forged through lived experience and woven into the fabric of community life.
This bottom-up form of governance echoes the insights of Hayek and Elinor Ostrom: effective institutions evolve through trial and error. Institutions such as law, in this perspective, are not deliberately constructed but gradually discovered through the accumulated practices and experiences of society.
Yet most environmental policy in Latin America operates on a contrary logic. It presumes that individuals are ecologically reckless and must be controlled by central authority. The result is a tangle of inflexible regulations, detached from local context and often unenforced. Worse, such topdown systems stifle the very learning processes that build durable norms.
By contrast, market ecologism sees environmental harm not as the failure of freedom, but of its absence. Where property rights are weak or undefined—as in much of the Amazon—governance fails, extractive outsiders exploit, and wildfires rage. The problem is institutional, not market driven.
This article defends the latter view. Free markets—anchored in private property and decentralised decision-making—can deliver more effective environmental outcomes than bureaucratic command. What the planet needs is not another global summit, but empowered communities with a stake in their ecosystems—and the freedom to protect them.
2. Theoretical Foundations: Market Ecologism
In this analysis, I examine Professor Jesús Huerta de Soto’s concept of Market Ecology, a framework that builds on the pioneering work of Terry L. Anderson and Donald Leal’s Free Market Environmentalism (1991). At the heart of this approach lies a straightforward but powerful principle: that environmental sustainability depends on a system of clearly defined and enforceable property rights over natural and environmental resources.
Huerta de Soto advances this insight through a distinctly Austrian lens, grounded in the theory of entrepreneurship as purposeful human action. Drawing on Ludwig von Mises and Hans-Hermann Hoppe, this view defines action as rational and intentional—human beings act deliberately to achieve chosen ends using scarce means. As Hoppe explains, all action is by nature goal-oriented; its rationality lies in its structure, not necessarily in its outcomes.
This perspective is reinforced by the Argentine economist Alberto Benegas Lynch Jr., who underscores the role of trial and error in the discovery and evolutionary process of education. For him, true learning is not the product of a “rigid curriculum imposed from above” but an adaptive process shaped by experience. While human action is intentional, its outcomes are not always foreseeable. Learning, much like institutional development, is therefore experiential rather than imposed, unfolding through feedback and adjustment rather than centralised prescription.
Huerta de Soto incorporates this element into his market ecological theory: actors operate within natural systems, constantly adjusting their behaviour in response to feedback. Trial and error thus becomes a mechanism for both economic coordination and environmental learning. Sustainability, in this view, is not designed from above but discovered through the evolving relationship between human agency and ecological reality.
Market Ecology thus represents the fusion of two contexts—“market processes and ecological systems”—understood as complementary rather than conflicting. Human beings act within natural environments, and their decisions inevitably affect ecological outcomes. Errors are part of this process, but so too is learning. Within this view, the individual is not isolated from their environment or community, but functionally intertwined with both. Their actions generate feedback, which in turn shapes institutional and ecological norms over time.
Ecological norms, in this framework, arise not from abstract mandates but from lived experience, reinforced by feedback mechanisms—such as media, education, and local dialogue—that enable individuals to assess the ecological validity of their actions at the municipal or community level. Such lived experience is often absent in contexts where government is distant from local realities or where bureaucratic structures prove cumbersome in practice. Through these locally grounded channels, information is transmitted in ways that allow society to internalise the cause-and-effect relationships between human activity and environmental outcomes.
Institutions, viewed through this lens, are not exogenous impositions but the cumulative result of endogenous human interaction—formed through repeated processes of trial and error. As individuals engage with their communities, they co-create norms—some flexible and responsive to changing environmental conditions, others more resistant due to cultural inertia. As Javier Arazandi argues in Society as a Creativity Process (2023), “an institutional and cultural framework will be more efficient, the more individual possibilities of action are generated.” Institutional vitality, therefore, depends on how well local systems of coordination allow space for entrepreneurial experimentation and adaptation.
These evolving norms shape individual and collective behaviour in relation to the natural world, forming what can be called an emergent ecological governance structure. Such a structure is not planned but discovered—an outcome of decentralised learning rather than centralised design.
However, this organic process is often disrupted when a third-party actor—most notably the state— intervenes coercively from a distance, undermining both individual agency and the ecological framework. Such interventions tend to sever the link between entrepreneurial agency and ecological responsibility. As Huerta de Soto notes, this breakdown occurs due to the violation of “ property rights and the free exercise of entrepreneurship,” resulting in “tragic events of
environmental degradation and plunder.” In these cases, environmental deterioration is not the result of market failure, but of institutional distortion: when top-down imposition replaces the spontaneous evolution of order.
From this emerges Huerta de Soto’s conception of Market Ecologism: a dynamic, bottom-up framework in which human action, embedded within ecological contexts, unfolds through decentralised mechanisms of adaptation, learning, and feedback. Within such a system, individuals and communities share symmetrical agency and aligned incentives to develop norms appropriate to their local environmental realities. Environmental governance, in this view, is not something to be engineered by technocrats, but something to be discovered—through voluntary cooperation, local experimentation, and the accumulated wisdom of experience.
3. Case Study: Parque Machía and Local Ecological Norms
As I walked along a trail lined with lush pastures and towering exotic trees—home to several species of monkeys—I spoke with the park’s caretaker. He explained that the facility receives no support from the municipal government, relying almost entirely on donations to sustain its operations. This aligns with statements from Comunidad Inti Wara Yassi (CIWY), the NGO responsible for Parque Machía, which confirms that the sanctuary is financed exclusively through volunteer fees, donations, and grants, with no direct funding from municipal, departmental, or national authorities.
Villa Tunari, along with other protected areas such as the Isiboro-Sécure National Park and Indigenous Territory (TIPNIS)—a biologically rich, tourism-prone region located in eastern Bolivia —exemplifies a dilemma. An institutional weakness underscored in 2024, which marked the worst fire season on record in Bolivia. More than three million hectares were burned, including vast tracts in Cochabamba. Satellite imagery revealed dense smoke covering cities such as Cochabamba and Santa Cruz, producing some of the worst air pollution episodes globally and resulting in widespread respiratory emergencies alongside severe ecological disruption. This institutional weakness can be clearly defined: in Bolivia, regional and municipal governments lack not only fiscal autonomy but also the political and legal authority to attract funding or create incentives from diverse actors—whether local businesses or international NGOs—for programmes comparable to Parque Machía.
Despite their considerable ecological value and economic potential, such regions remain administratively subordinate to decisions taken by the central government. This centralisation was starkly illustrated during the Morales administration, when the state’s ambition to become the “epicentre of energy” translated into large-scale concessions for monoculture and extractive megaprojects in the Amazon. The outcome was not merely the displacement of local communities but also the dismantling of traditional ecological practices developed over generations. The resulting tragedy was not a failure of markets but of institutions: central planning dislocated the decentralised systems of stewardship that might otherwise have preserved the forest.
This process has not only constrained local initiative but entrenched a structural dependency, leaving communities unable to enforce property rights or seek restitution when environmental harm occurs. The burden falls especially heavily on indigenous populations, many of whom remain unfamiliar with the formal structures and legal language of Bolivia’s plurinational state.
Yet, despite these institutional limitations, many environmental practices continue to be managed informally at the community level, largely without state interference. Residents act within the limited scope permitted to them, but their ecological awareness stems from lived experience rather than legal instruction. Indeed, legal frameworks advanced under the banner of Keynesian-style development often introduce loopholes from La Paz that obstruct both community initiative and individual preference. One local resident, for example, candidly admitted having no knowledge of environmental legislation but conveyed a simple, intuitive ethic: “Don’t leave plastic in the forest—animals might eat it,” and “Don’t dump waste—it poisons the soil.”
These informal norms, shaped through direct observation and reinforced by a shared understanding of cause and effect, frequently prove more effective than the symbolic or inconsistently enforced regulations issued from distant government offices. Where the state imposes rules from afar, communities adapt through practice—developing ecological norms that reflect their own realities and sustain their environments.
4. Two Contrasting Models of Environmental Governance
This brings us to two competing visions of how environmental governance should function—each reflecting a different assumption about human agency, institutional knowledge, and the role of the state.
Model A: Top-Down Environmentalism
In the dominant technocratic paradigm, the individual is presumed to be a source of ecological harm. Left unchecked, it is assumed, local actors will over-consume, pollute, and deplete resources. The policy response is therefore pre-emptive regulation: a web of rules, quotas and prohibitions designed and enforced by central authorities.
These rules are typically uniform, crafted in administrative capitals with limited insight into the ecosystems or communities they govern. By their nature, they suppress decentralised experimentation. Trial and error—a necessary process for institutional learning—is replaced by a rigid framework of legal compliance. Norms are imposed a priori, rather than emerging from practice.
Such systems often yield counterproductive results. Because rules are detached from local context, compliance is shallow or symbolic. Because enforcement capacity is limited, impunity grows. And because communities are sidelined, the legitimacy of regulation erodes. The net effect is an ecologically stagnant regime: one that neither adapts to feedback nor fosters a culture of stewardship.
Model B: Market Ecologism
A more dynamic alternative rests on a different assumption: that individuals and communities, when empowered through secure property rights and institutional autonomy, are capable of managing their environments sustainably. This bottom-up approach views environmental order as the product of human action—not of human design.
Here, norms are not legislated in advance but evolve through experience. Communities experiment with practices, learn from consequences, and reinforce behaviours that protect shared resources. Institutions are decentralised and pluralistic, often informal, but deeply embedded. What emerges is a spontaneous order in which ecological rules align with lived knowledge.
Property rights play a central role. When individuals have a stake in land, water, or wildlife, their incentives shift from exploitation to conservation. Voluntary cooperation replaces coercion. Accountability is local and immediate. Mistakes, when they occur, are contained—and thus more easily corrected.
Rather than assume environmental virtue must be legislated, this model trusts that incentives and institutional feedback can do the work more effectively. It reframes sustainability not as a product of state enforcement, but as an outcome of liberty properly structured by preferences.
5. When the State Harms What It Seeks to Protect
Environmental degradation is often blamed on markets and individual behaviour. But a closer look reveals a more unsettling culprit: the state itself. Far from acting as a neutral steward, the state often disrupts the very incentive structures and informal norms that make sustainable environmental management possible.
At the core of this disruption is a simple dynamic. When central authorities impose rules from above—rules that disregard local knowledge, property rights or cultural practices—they weaken the capacity of communities to govern themselves. Over time, the fabric of informal regulation frays. Norms once enforced through lived experience are replaced with compliance mechanisms that are rarely understood, barely enforced, and often ignored.
The issue is not governance per se, but how it is structured. In a decentralised system, individuals respond to ecological signals through trial and error. When property rights are secure, and the costs of environmental harm are internalised, communities have both the knowledge and the incentive to manage natural resources prudently. These feedback loops—between action, outcome, and adjustment—are what make institutional learning possible.
But when the state intervenes, these loops are short-circuited. Formal laws replace flexible customs. Bureaucratic procedures override entrepreneurial discovery. As Jesús Huerta de Soto has argued, top-down impositions not only displace community rules but distort the intertemporal preferences of individuals. A case in point is the widespread use of credit inflation under fractional-reserve banking. By artificially lowering interest rates, this system stimulates excessive demand for consumption goods, fostering overconsumption and unsustainable production. What may initially appear as economic growth is, in fact, an inflationary distortion—one that accelerates resource depletion and ecological harm. I have previously examined this dynamic through the lens of financialisation, a theme also extensively developed by Huerta de Soto.
The damage is not only material but institutional. Informal norms—those that say “don’t dump waste in the river” or “don’t leave plastic in the forest”—are gradually undermined by norms elevated from above. Communities cease to enforce their own rules, not because they no longer care, but because the authority to act has been centralised and bureaucratised. The result is a creeping institutional vacuum in which neither formal nor informal rules are respected.
As Huerta de Soto puts it: “It is precisely in those areas where the definition and defence of property rights, and therefore the free exercise of entrepreneurial action, are obstructed, that we witness the most virulent forms of environmental degradation.”
Examples abound. The recurring wildfires in the Amazon are often blamed on free markets and capitalism. Yet in many cases, the root cause is not a lack of regulation but the absence of clear, enforceable property rights. When no one owns the land—or when ownership is ambiguous—no one has a reason to protect it. Add to this a state that claims authority but fails to enforce it, and what emerges is a dangerous institutional void.
In the end, it is not individual freedom that poses the greatest threat to nature, but the erosion of the frameworks that allow that freedom to operate responsibly. What the environment needs is not more state control, but more trust in local knowledge, incentives aligned with property, and the spontaneous order of human cooperation.
6. Policy Implications: How to Empower Market-Based Environmentalism
If environmental sustainability is to emerge organically from human action rather than from state imposition, then institutions must be allowed to evolve—in a way that supports decentralised governance, property-based incentives, and voluntary cooperation. Market-based environmentalism is not a blueprint to be engineered from above, but a dynamic process to be enabled from below. Several policy implications follow:
1. Strengthen Community Property Rights and Legal Recognition
The foundation of environmental stewardship lies in secure, enforceable, and locally recognised property rights. This is not simply a question of codifying land tenure in national registries, but of legitimising and protecting the property norms that emerge organically through communities’ repeated interaction with their environment. This bottom-up evolution—what Hayek might describe as a spontaneous order—rests on the accumulation of local knowledge and institutional learning.
Importantly, property rights need not always be individual. Communal or collective ownership—particularly within indigenous contexts—can function effectively, provided the community retains the authority to sanction misuse and defend boundaries. What matters is not the precise form of ownership but the ability to exclude, enforce, and benefit. At the same time, a robust legal framework based on the principles of life, liberty and property remains essential in contexts where communities seek to override or infringe upon individual agency rights.
2. Reduce Bureaucratic Centralism and Rebalance Legal Authority
Overregulation and bureaucratic inertia often paralyse local environmental initiative. A centralised system that imposes uniform policies on diverse ecosystems typically lacks both the granularity and the legitimacy needed for effective enforcement. Instead, policy should devolve judicial and regulatory authority to the local level, empowering communities to resolve disputes. Yet these mechanisms must remain anchored in the principles of negative freedom—the protection of life, liberty, and property—a pivotal framework for incentivising dynamic efficiency. Such decentralisation is not merely administrative but normative. It entails a cultural shift: from rule-making to rule-discovering, from prescriptive compliance to adaptive governance.
3. Encourage Polycentric Governance
Drawing on the work of Elinor Ostrom, polycentric governance offers a promising alternative to monolithic state control. It envisions a system of overlapping and nested authorities—village councils, municipal courts, regional alliances—that collectively manage shared resources. This arrangement allows for experimentation, diversity of approaches, and mutual learning.
In Latin American contexts such as Bolivia, embracing polycentricity may entail granting greater legal and fiscal autonomy to local entities. While this opens the door to political pluralism—and in some cases, calls for autonomy or, in anarcho-capitalist terms; even secession—it also provides the institutional flexibility necessary for environmental resilience. For libertarian and anarcho-capitalist thinkers, such outcomes are not failures but signs of a more competitive and voluntary order.
4. Protect Local Experimentation and Feedback Loops
Environmental knowledge is inherently local, contextual, and often tacit. Allowing communities to experiment with approaches to river management, forest conservation, or waste disposal is essential. Mistakes made at this level tend to remain small and manageable; successful solutions, meanwhile, can be observed and replicated elsewhere.
This decentralised learning process is far more agile than central planning. If one community (A) pollutes its river, the immediate social costs may remain local. Yet once neighbouring communities (B, C, and D) begin to feel the effects and raise complaints, the dispute becomes both visible and pressing. In such cases, a hierarchical system of courts can provide a mechanism for retribution and enforcement: communities B, C, and D may appeal to higher courts to seek compensation and a halt to the pollution. This creates a form of systemic consensus, curbing the contamination of shared resources such as River X.
Where ownership or stewardship rests with the community itself—as is often the case in indigenous territories—norms are more likely to emerge that discourage future abuse. The moral logic becomes internalised: “We don’t poison the river not because the law forbids it, but because we have learned not to—and because we ourselves bear the costs.” When the costs of harmful actions are directly aligned with those who take them, the incentive to avoid such behaviour increases significantly.
5. Elevate Liberty and Entrepreneurship in Environmental Governance
In many political systems, power remains centralised and resistant to reform. Yet even within such constraints, it is possible to reframe the environmental agenda amid the broader cultural debate. Rather than portraying markets as inherently destructive, political actors can highlight the entrepreneurial potential of conservation—empowering individuals and communities to discover innovative ways to manage, protect, and benefit from natural resources.
The aim is not to deny the relevance of the state, but to redefine its role: shifting from that of a coercive planner to that of a legal guardian, protecting the institutional space where liberty, cooperation, and discovery can thrive. Over time, such a framework may allow for its gradual replacement of centralised authority with decentralised institutions that emerge organically over time.
Market-based environmentalism is not a utopian vision. It recognises failure as part of the institutional learning process and rejects the illusion that sustainability can be engineered from above. Its strength lies in its humility: the understanding that ecological complexity cannot be mastered through central command but must instead be navigated through decentralised adaptation. In this way, it restores dignity to local initiative, rationality to ecological practice, and freedom to the individual.
7.Conclusion: Let the Market Breathe
At a time when ecological crises increasingly dominate global discourse, the instinctive response has been to centralise authority, expand regulatory frameworks, and entrust environmental protection to distant bureaucracies. Yet this technocratic impulse often overlooks the most fundamental insight of both ecological and institutional theory: that complexity cannot be governed from the top down. It must be engaged from within—through decentralised processes that harness local knowledge, contextual norms, and entrepreneurial initiative.
This article has argued that market-based environmentalism—grounded in clearly defined property rights, voluntary cooperation, and bottom-up institutional evolution—offers a more adaptive and resilient alternative to state-led environmental governance. Far from being a source of ecological degradation, properly structured markets can serve as powerful mechanisms of stewardship. When communities have ownership, when feedback loops are intact, and when norms arise organically through experience, sustainable practices emerge not as mandates but as learned behaviours.
As Friedrich Hayek cautioned, attempts to manage complex systems through central planning inevitably falter. Environmental systems are no exception. Their intricacies demand decentralisation —of authority, of knowledge, and of responsibility.
Nowhere is this shift more urgent than in Latin America, where grand state-led environmental ambitions often mask institutional fragility. A new paradigm is needed—one that trusts communities and individuals to govern, respects liberty as a precondition for sustainability, and treats property not as an obstacle to conservation but as its foundation.
Letting the market breathe is not about deregulation for its own sake. It is about recognising the ecological value of freedom. It is about restoring to communities the right—and the capacity—to care for the environments they know best.
Elias Moises Sánchez Flores is a political economist and Master’s student in Global Political Economy at the University of Leeds. His research centres on Austrian Economics, monetary institutions, and the structural roots of inflation and neo-extractivism in Latin America. He writes critically on state intervention, fiscal imbalances, and the limits of rentier-led development, drawing on the theoretical foundations of Mises, Hayek, and Huerta de Soto.
