In the free market, property rights not only deter polluters of the environment, but also ensure the rational conservation of resources such as timberland or fossil fuels. In a system of private ownership of timberland, for example, the harvesting of timber from a tract decreases the value of the property, unless proper replanting procedures are followed. Even if the landowner intends only to resell the depleted property, its market value will equal only the approximate discounted sum of its future rents—that is, the productive returns that the land can still provide to future owners (pp. 4.8:20 ff.). Directly or indirectly, in short, the landowner must pay any costs of depletion. The market system thus obliges him or her to take into account the future effects of depletion in his present decisions.

Now consider the contrasting case of "publicly owned" timberland, such as a tract of "public" land from which many harvesters may obtain timber. With good reason, economists refer to such situations as "the tragedy of the commons." Under this collectivist system, each timber harvester has an incentive to exploit the resource to a maximum degree, removing as much timber from the land as she can possibly utilize. This exploitation, of course, deprives the land of much of its value. Since the cost of her timber cutting is borne jointly with the other harvesters, however, the marginal cost of her action to herself is minimal. The aggregate effect of the policy, obviously, is a wasteful depletion of the resource, which each harvester individually would regard as highly undesirable. This divergence between individual values and "collective behavior" seems paradoxical only if we forget that the individual, and not the group, is the true acting entity in human affairs (pp. 2.4:3-14).