The Free Market Status Quo Assumption
I'm not a "free market environmentalist" who thinks that leaving the market to its own devices (or creating government programs that contain market mechanisms) will solve all of our environmental problems. The free market is often to blame for environmental problems, so there are many cases where FMSQA is accurate, including the paradigm case of environmental protection: pollution regulations. FMSQA is a "pernicious ideology" because it's applied across the board, coloring our views of environmental issues where it is false. A surprising number of cases of environmental degradation are created or subsidized by government action.
I won't spend much time on the easy cases where government activities directly damaged the environment: the military is exempt from many environmental laws and acts accordingly; the Forest Service not only instituted damaging fire suppression policies on its own land but actively worked to stamp out fire use on non-federal land; the Army Corps of Engineers tried to drain all our wetlands and channelize all our rivers; government offices are enormous consumers of energy and paper, etc. I'm more interested in cases where the government's role is more subtle.
Sprawl is a good example. Suburban life is so closely associated with the American Dream that it seems obvious this phenomenon is driven by the market and that coercive government intervention would be needed to change things. But in fact government policy is a key contributor to sprawl, making it far easier to live there and far harder to find an alternative. Zoning regulations are a key player here, mandating low-density development, prohibiting "mixed use" neighborhoods where people can walk to the store or to work, and requiring huge parking lots around each new store. What's more, existing towns' governments provide massive subsidies in the form of utilities infrastructure and services like police and fire protection to new development, often at a net loss after you factor in the tax breaks they give in a quixotic effort to lure business to their area.
Transportation is another sector where FMSQA fails (and which contributes to the problem of sprawl). People love to gripe about being taxed to support mass transit. But in fact the alternative -- highways -- is far more generously subsidized by the government. Funds for new roads flow freely and with few conditions, whereas getting government aid to build a train requires jumping through hoop after hoop -- matching funds, cost-benefit analysis, etc. Evening out the disparity in either direction (making it harder to build roads or easier to build trains) would dramatically increase the availability and desirability of taking a trip by less-polluting rail. (At this point in history a case can be made for reversing the disparity, giving disproportionate subsidies to rail in order to correct the historical imbalance.)
Finally, let's talk about logging. Obviously, logging of our nation's forests (which can degrade ecosystems even if it doesn't ultimately reduce total tree cover) is just the free market satisfying demand for paper and wood. Except that logging in our National Forests is subsidied by the government. The Forest Service's expenses in arranging a logging sale, building roads to give loggers access, etc (not to mention the expense of managing the forest in the years prior to the sale) frequently exceed the revenue gained from the sale. In other words, we're paying logging companies to cut down our trees.