The American Spectator

The Nation's Pulse

These Lands Are Your Lands

By G. Tracy Mehan, III on 10.26.06 @ 12:06AM

This is the 15th anniversary of the publication of Free Market Environmentalism by Terry L. Anderson and Donald R. Leal, the magnum opus for those who view property rights, local initiative, and economic incentives as friends, not enemies, of the natural world.

Max Borders of TCSDaily has said that this is "the book that changed the way many people look at environmental issues." It is "the book that defined a generation of newer environmentalists, a generation that is friendly to markets, to green values, and to the idea that these are not mutually exclusive."

For Anderson and Leal, "At the heart of free market environmentalism is a system of well-specified property rights to natural resources."

"Whether these rights are held by individuals, corporations, non-profit environmental groups, or communal groups, a discipline is imposed on resource users because the wealth of the owner of the property right is at stake if bad decisions are made," argued Anderson and Leal, who are part of PERC, the Property and Environment Research Center, in Bozeman, Montana, which is in the vanguard of free market environmentalism.

They cite the Nature Conservancy (TNC) as "an excellent example of how free market environmentalism works." TNC is the world's largest land trust with a million members and supporters which has protected 117 million acres of land and 5,000 miles of rivers worldwide. Its primary mission is to protect the highest value expressions of biodiversity.

ANDERSON AND LEAL challenged the reigning paradigm of scientific management of public lands through the instrumentality of the federal government. This was the legacy of Gifford Pinchot, the first Chief of the U.S. Forest Service (1905-1910) and the Progressive Movement which sought to rely on government experts to regulate and prioritize the multiple uses of land through an administrative or political process.

The insights of Anderson and Leal as they relate to the sausage making which is public lands management were revelatory:

There is good evidence that political land management has ignored important recreational and amenity values and that there is potential for providing them through markets in ways that promote harmony between development and ecology.

Incentives matter.That is a bedrock principle of free market environmentalism. There is also the appreciation for the inadequacies of information and the necessity of trade-offs, both of which make "political" management difficult. These realities can trump the best of intentions:

Even if the superintendent of national parks believes that grizzly bear habitat is more valuable than more campsites, his good intentions will not necessarily yield more grizzly bear habitat. In a political setting where camping interests have more influence over a bureaucrat's budget, his peace and quiet, or his future promotion, intentions will have to override incentives if grizzly bear habitat is to prevail. But if a private resource owner believes that grizzly habitat is more valuable and can capitalize that value, then politics will not matter.

If you consider all the infamous battles over public land use, you can appreciate how "scientific management," at least on federal lands, degenerates into the political equivalent of mud wrestling: owls versus logging, salmon versus irrigation and dams, snowmobiling versus cross-country skiing, grazing versus biodiversity.

There are, of course, countervailing arguments, based on equity and ecology, which point to the benefits of public lands. Access is one. Scale, in terms of watersheds, ecosystems, and vistas, is another. But as the TNC example proves, free market, private sector approaches can compensate for or overcome the disadvantages of political management of landscapes.

Free Market Environmentalism also emphasized the tendency of the political sector to externalize costs. The Holy Grail of most economists is to internalize costs, i.e., make those who benefit from the economic activity bear the costs or avoid the spillover effects, e.g., pollution, from their activities. This encourages efficiency and equity by discouraging waste and harm.

BUT GOVERNMENT TENDS TO EXTERNALIZE rather than internalize costs, because politicians and bureaucrats are rewarded for responding to political pressure groups. Thus, "there is no guarantee that the values of unorganized interests will be taken into account even if they constitute a majority of the population," claimed Anderson and Leal. Voters are "rationally ignorant" because benefits can be concentrated and costs diffused.

If you consider all the environmental degradation, pollution, and over-exploitation resulting from subsidized water, agricultural subsidies, below-cost timber sales, below-cost grazing fees, and tariffs on sugar imports (to the detriment of the Everglades as well as consumers), they all benefit favored constituencies at the expense of the taxpayers and the environment.

Free Market Environmentalism was published in the wake of the collapse of the Berlin Wall, the dissolution of the Soviet Empire, and the revelations of environmental degradation at a scale unimaginable even during the height of the Industrial Revolution in the West. Absent a robust civil society bolstered by private property, a productive economy, and a democratic regime with an active feedback loop, the nations behind the Iron Curtain experienced untold health and environmental catastrophes with which they must cope for generations.

The Soviet Union's environmental failure was Exhibit One relative to government failure as opposed to the traditional liberal complaints of market failure.This historical context was one reason for the receptivity of many readers to the lessons of Free Market Environmentalism.

ANOTHER TIMELY DEVELOPMENT which encouraged readers to bring an open mind to Free Market Environmentalism was the passage of the Clean Air Act Amendments of 1990 which established the ambitious and, as it turned out, very successful, market-based cap-and-trade program to combat acid rain caused by sulfur dioxide emissions. The GAO has projected the long-term savings of this trading program to be as much as $3 billion per year -- over 50% -- compared with a traditional command-and-control approach.

The arguments of free market environmentalists are quintessentially Lockean with their emphasis on well-specified, defendable, transferable property rights. These techniques can work very well for certain consumptive uses such as hunting for fee, or individual fishing quotas for marine fishing allotments. However, for a property rights approach to succeed environmentally in these and other areas such as air and water quality, it is often necessary to adopt some regulatory drivers or mandates to create mechanisms such as cap-and-trade programs which allow for the sale of credits generated by a discharger who can reduce pollution more efficiently than others.

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topics:
Trade, Business, Environment, Law, Socialism