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The reason why is because free market economies are often structured so that it's in someone's best interest to screw up the environment to get a quick buck. To use an example from classical economics, if I make money by running a coal furnace and don't have to pay for your worsened air-quality or blackening shirts, I will. It's only when the government taxes the soot I produce or the government mandates that everyone move to clean fuel that the soot starts to decrease.I don't really see why free market economies would per definition be worse for the environment than planned economies.
With regards to the Private/Tariff economy choice: while tariffs keep production in local hands (thus a + to industry could be justified), they only do so in the cases when local hands are strictly worse than foreign hands. If you look at Indian history, Gandhi wanted a return to cottage industry, where people manually spun clothes. That's hideously inefficient compared to machines doing it (-efficiency), not just in terms of capital loss but also in terms of production (-industry, which doesn't mesh well with the +industry suggested before). That's a general principle as well, not just related to that example- the producers of lasers will fight to stop particle impactors if they can't produce them (which might even suggest -research, although that may be going too far). The lack of foreign competition can dissuade growth and innovation, which are largely the things that boost economy (-economy, although when you factor in it being private the net would be +) and lends more credence to the previous -research. Finally, few people want to trade with someone who doesn't want to trade with them, so commerce would suffer (since I don't think you can affect commerce directly, the best way would be -economy).
The other main problem with a "protectionist" economy in Alpha Centauri is that protectionism is already the default. You don't start trading until you manually contact someone else and begin to trade- perhaps it should replace subsistence? But that seems unnecessary.
I would actually put Green back in economy. You can see a Green economy starting to unfold in the United States, where people are paying more for eco-friendly choices- but they can only afford to do so because of their natural affluence. Educated people are typically drawn towards environment-friendly policies because they tend towards long-term benefits among other reasons. It's obviously more expensive to manufacture a building in a way that minimizes its energy loss (although that tends to be economical, if you can fork over the initial cost) and emissions, and the best way of reducing pollutants, taxing, tends to hurt industry. So, something like +2 Planet, +2 Efficiency, +1 Talent, -1 Economy, -1 Industry would be realistic, and seems like a counterpoint to the other two economies.
Now, that could just be my laissez-faire capitalist bias, but that tends to happen if you study economies enough.
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), let's just abstract that away and assume the faction leader will use protectionism only the smart way.
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As intended I can't run Free Trade but can both Planned and Protectionist.
If it's any consolidation, I'd prefer to rename police state to a more general 'authoritarian state' (which can also refer to a stricter morale and not necessarily a dictatorship), but that would fit even less in the small SE screen. 
Anyway, under -3 Police you can still send out one unit per base without pacifism drones. And of course the more bases, the more units you can send out, which further reinforces a Gaian ICS strategy. But of course this requires lots of micromanagement, which is an inevitable pain in SMAC. 
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