Libertarians are not against the idea of environmental regulation, or any regulations that prevent externalities from harming 3rd parties.
The core principle of libertarianism is that people do not have the right to initiate force against others. Transactions should be voluntary, and individual liberty held as the highest moral cause.
Therefore, it is against libertarian philosophy for two people to come to an agreement which results in damages to a third person not party to that agreement. Two people can’t legally contract with each other to steal a third person’s car and split the proceeds.
In the case of the environment, two people cannot contract with each other to engage in an activity which puts effluviant into the drinking water of a third person. This is an externality cost being borne by someone who did not agree to it, and therefore it falls under the same heading as fraud, theft, extortion, and other behaviors that libertarians consider illegal and which warrant state intervention.
Now, before someone goes off and finds a quote from a libertarian saying that environmental regulations are anti-libertarian, I’ll point out that the simple principle, like all simple principles, can be difficult to apply to the real world in consistent fashion. Everyone imposes externalities on other people. By just breathing I’m putting CO2 into the air. If I build a house in front of a park, someone’s view of the park is obscured. So there are legitimate questions as to how much intervention should be allowed by the government, and just what types of externalities we are going to subject to regulation.
The libertarian answer here is that government intervention should be the last resort, not the first. If market mechanisms can be found to solve the problem, they are preferable to government edict.
Let me give you an example: Public roads are a common good. However, when roads get crowded, every car that enters the road creates an externality for everyone else in the form of additional congestion. If I make a decision to enter a crowded freeway, I have just imposed a small additional cost in time and gas on everyone else.
So what’s the solution?
The big government, interventionist solution might be to mandate smaller cars, or raise taxes to pay for additional road construction, or to build high-speed trains, or to force everyone into buses or light-rail transit, or to set up zoning laws that prevent businesses or houses from being built in areas that would lead to more usage of the congested road.
A libertarian would say that the problem is that people aren’t paying for the externality. So long as we can make everyone internalize the cost of congestion, the problem will go away on its own. We don’t know HOW it will go away - the market will find a solution. Our job is to simply make sure that people pay the real costs of using the road.
So a valid libertarian solution might be congestion charges. If you can calculate the cost imposed by using a congested road, you simply charge people more for using the road when it’s busy. Once we’ve done that, the market can figure out how to efficiently allocate a scarce resource. For example, if it costs more to drive to work from 8 AM to 9 AM, some companies at the end of congested roads may move to a start time of 9 to 10. Telecommuting may have more value. New companies will have an incentive to build in areas where there is spare road capacity instead of in business parks served by congested roads. More people might take the bus. Maybe the market will devise another solution we haven’t thought of yet. Perhaps private roads will spring up around the public one if the congestion charges make new roads profitable.
The point is that libertarians aren’t interested in telling you what to do. They don’t care how you solve the economic problem of using congested roads. They’re confident that free people can sort that out themselves, once the cost of congestion is transferred back to the people causing it.
There’s your example of a very practical libertarian solution to real world problems today. Note that there’s still a government involved, because to be practical we have to accept that government exists. And I’m sure you can find libertarians that will srceam, “No! No government! Privatize all roads!” - just as you can find ‘liberals’ who think that government should nationalize the oil industry and other liberals who disagree.
The important point to take from this is that libertarians do not want to control behavior. To the extent that we need government, it should only be as a referee, to make sure that people aren’t coerced and that they pay for what they use. In practice, that can result in a fairly large government because society is complex. But there is a bright line between being a referee and being a nanny. Government should not attempt to shape society. It should not try to micro-manage our affairs. It should not force specific solutions on the people. It should not be activist. It has no business taxing people to pay for other people’s retirement. The tax code should not bias one choice against another (for example, giving tax credits for having children, while applying punitive taxes on luxuries). Government should not be the controller or director of society, using the power of force to push people around in ways that central planners deem to be ‘better’.
Libertarians recognize that markets can fail. They can fail not just because of externalities, but because of information asymmetries, natural limitations such as there being room for only one road out of town. The libertarian answer to failed markets is that the government has a role to play to keep markets working properly. Again, there’s a bright line here: A regulation which corrects a defect in the market so that market-based choices work again is fine. A regulation which replaces the market with government edict is not. Nor are regulations which distort markets to produce outcomes that central planners think are better, such as subsidizing specific choices or taxing specific behaviors to achieve some larger social goal.
And most emphatically, libertarians do not believe in ‘collective’ rights. They do not believe you can have a right to the output of someone else’s work. Thus there can be no ‘right’ to health care, no ‘right’ to a living wage, no ‘right’ to shelter. None of these things can exist unless someone else provides them. For example, the only way you can assure someone’s ‘right’ to health care is to stomp on a doctor’s right to choose who he or she wishes to treat. In libertarian philosophy, this is immoral.
And needless to say, wealth distribution through taxation is anathema to libertarians.