With respect to the first question, here is an answer from someone who considers himself a libertarian:
I would prefer to see air and water pollution handled on the basis of litigation rather than on the basis of legislation and regulation. The litigation could be handled similarly to a class action lawsuit, on this basis: the air belongs to everyone (or no-one), and therefore no-one has a right to pollute it. You, company X, are demonstrably polluting the air. You owe us damages, compensatory and punitive.
That is, the government wants to tell you that you have to put air scrubbers on your smokestack that meet certain standards; businesses claim this is an onerous cost, and environmentalists complain that the standards are not strict enough. A rich company can afford the fines, or maybe they’re allowed to do something like trade carbon credits. But in all this, there is no thought to the actual immediate victims of pollution. Government concern seems to be limited to whether regulations were followed, and whether the regulations should be changed, which is always a big political football.
Litigation would focus on where the actual damage is. If I, as a defendant, can prove that my 1 part per trillion of arsenic released into the air could never harm anyone, then I should be immune from litigation on that point. If I, as a litigant, can make a reasonable case that your pollution caused my son’s cancer, then I should get large damages from you, as well as the continued threat of additional damages if you continue. If all I can prove is that your pollution is contributing to a decreased quality of life, but in some less dramatic way, the damages should still be forthcoming but on a smaller scale.
Note how different the history of American industry would have been if this had been the norm; we would already be green, because that’s where the dollars would be (in inventing non-polluting solutions, and in avoiding big damages).
I admit I don’t have a good idea to get from where we actually are, to where the litigation approach is the main one. I suspect there are currently many bars to such litigation, so we could start by reducing those bars.
Roddy