Public versus Private Distortions

I've had several conversations with many business leaders who insist that all environmental policy, from direct regulation of effluent to pricing mechanisms that stimulate market-based trading schemes, constitutes an inefficient distortion of an otherwise efficient marketplace. This line of reasoning seems to posit that most, if not all, environmental "problems" are best solved by markets. More on this in a moment, but for now, I think it's interesting to note that "general" policies that define goals broadly seem to be more effective than specific policies. One case in point.