A Theoretical Study on Negative Externalities and the Free-Rider Problem in Natural Resource Management from Islamic Law Perspective

This paper aims to address two major problems faced throughout the production and management of natural resources, which are negative externality and free-rider problem and to offer some relevant solutions and suggestions for policymakers within the framework of Islamic Law. In this paper, a descriptive research methodology was used to identify the problems, using a conceptual analysis model as a primary method used throughout the research. Deductive reasoning was employed to derive specific predictions from general theories and established Islamic jurisprudence principles. The research findings indicate that the negative externality and free-rider problem extend beyond economic concerns and are intricately linked to the violation of rights within the framework of Islamic law. It is evident that both negative externalities and the free-riding of natural resources can lead to violations of human rights (ḥuqūq al-‘ibād) and community rights (ḥuqūq Allāh). This observation underscores a critical intersection of economic and legal dimensions within an Islamic context. The practical and social implications of the study highlight the need for Islamic economic and environmental policies to align with Islamic law and ethics, prioritize public interest and well-being, and promote responsible resource stewardship and sustainability. Additionally, the study encourages policymakers to adopt a global perspective, recognizing their role as stewards in a broader context. To the best of the author’s knowledge, this paper is the first study on dealing with negative externality and free rider problems from Islamic legal theory point of view.