Free Market Ecology and the Rare Earth Tailing Pond Dilemma
Originally published on Botsfordism Substack on November 26, 2025.
Why Democracies Have Outsourced Their Dirtiest Industry — and How FME Brings It Home Without Coercion
This essay proposes “Free Market Ecology” (FME) as a solution to environmental damage from rare-earth mineral extraction. The author argues that democratic nations externalize dirty industrial processing to authoritarian countries while claiming environmental virtue.
Core Argument
The piece describes toxic tailing ponds near Baotou, Inner Mongolia—byproducts of rare-earth oxide production essential for modern technology. Western democracies reject hosting such facilities domestically but import the finished products, effectively outsourcing environmental harm.
The Proposed System
FME replaces monetary transactions in supply chains with “Resource Usage Rights” (RURs)—hundreds of distinct, non-fungible permits tracking specific environmental impacts (land damage, water use, radioactive waste, etc.). Each RUR type has scientifically-determined caps managed by an “Ecological Central Bank.”
Key features include:
- Non-fungible tracking: Damage remains attached to products through supply chains
- Distributed consumer veto: Customers decide acceptable environmental costs through purchasing decisions
- Innovation incentives: Clean producers earn markup profits by reducing actual damage while charging competitive RUR prices
- Democratic compatibility: No forced sacrifice zones; outcomes reflect genuine market preferences rather than government mandates
Contrasts with Current Systems
The author dismisses carbon credits and offset markets as enabling greenwashing by separating environmental damage from products. FME makes separation impossible through cryptographic binding of RURs to materials.
Conclusion
The framework positions environmental restoration as profitable entrepreneurship—the entrepreneur eliminating rare-earth tailing ponds becomes extraordinarily wealthy through RUR profits rather than merely wealthy through conventional markets.