One of the first reasons that people think of when talking about whether or not we need a large federal government (or global government for that matter) is the environment. Even self described libertarians often have trouble answering this question because much of the main stream libertarian publications and think tanks have avoided this for some time. Well, the Austro-libertarians have come to the rescue again and describe how we can have a much cleaner environment with absolutely no regulation at all. The case for this is actually pretty simple, that law, not regulation, protects people from aggressive action by others. Pollution is an aggressive action (it harms either you or your property). It therefore follows that the law should be used to protect people from such action.
If a company pollutes a river, people downstream have a right to claim damages. The reason that this was not often done in the past was because large corporations often used lobbyists to change liability laws to protect themselves against such damage suits from being filed. More regulation is just a very poor Band-Aid that tries to regulate away the damage causing chemicals in the water by making them less toxic but toxic is still toxic, even if it is a lesser degree. The real answer is to hold companies and individuals completely liable for any contamination in the water supply. The threat of lawsuits will ensure the river will stay much cleaner but regulation has the opposite effect, it simply lets the industrial company get away with a certain amount of pollution.
Walter Block explains (skip the add)