Thursday, April 23, 2009

Free Market Environmentalism

Unfortunately, I don't get think about this blog all that often, and when I do I don't have anything worth sharing. But I do have two essays I wrote for my ethics/writing NHV class that I think are relatively good, so I'll go ahead and share those. We discussed various articles and issues in class and this first paper was to take one of the essays, summarize it, and agree or disagree. I don't think I had every been exposed to libertarianism before (although it was hinted at in economics last semester), so I was intrigued by the idea and went with the essay by Anderson and Leal, as described below. (We weren't expected to do full citations, so the page numbers are just the page in the main article by Anderson and Leal.)

Can the Free Market Save the Environment?

In “Free Market Versus Political Environmentalism,” Terry L. Anderson and Donald R. Leal argue that the solution to environmental issues is free market environmentalism. This view essentially claims that the government does a poor job of managing natural resources and that private ownership is more effective. Privatization of nature would be in the best interests of everyone – the environment, the government, and new land owners. I agree with Anderson and Leal that unregulated and private ownership of the land is the best structure for its preservation. However, I think it’s important to clarify that this plan is not the answer to all our problems. There are simply some situations in which privatizing is impractical or not immediately beneficial.

Anderson and Leal outline how inefficient the government is at managing public resources. They point out that government bureaucracy is slow to react to environmental problems and wastes a lot of tax money in the process. The government also lacks enough information about public lands to make good judgments about their use. Anderson and Leal observe that individual officials are not held accountable for their decisions about land use: “Because politicians and bureaucrats are rewarded for responding to political pressure groups, there is no guarantee that the values of unorganized interests will be taken into account” (411). Corporations and other large organizations are much better at pressuring officials than individual citizens are. In short, Anderson and Leal feel that leaving nature for government regulation is an expensive and ultimately inadequate proposition.

Anderson and Leal’s alternative to big government is to use the free market to buy and sell property rights to nature. They reason that a person or group with a stake in the health of the land, or even an individual species, will do a better job at ensuring its survival than the government will. Damaged land isn’t as profitable as healthy land, so a business will try to protect it from harm. Anderson and Leal also observe that a private business won’t struggle with choosing the best value for the land: “With markets for commodities and amenities, prices provide the necessary information for making tradeoffs” (413). This means that instead of guessing whether a piece of forest would be better for logging or recreation, an easy decision can be made based on current market prices.

For those items that can’t really be protected by ownership, like the atmosphere, Anderson and Leal propose a different type of market structure: individual transferrable quotas. These would restrict a given activity, such as fishing or emitting pollution, to a certain amount per person or group. A really good fisherman may prefer to buy “fish quotas” from a less efficient fisherman than to go completely without the profit from those fish. Quotas also make the fisherman avoid overfishing. Besides the fact that it would be illegal, running out of fish today would put a dent in profits tomorrow, so the fisherman will make sure there’s enough reproduction for the future. The same general concepts could apply to other issues such as pollution, which will be covered later.

Overall, I feel that Anderson and Leal have come up with a good plan for taking care of the environment. Conceptually, it sounds like a nearly flawless plan that would benefit some groups while improving the quality of the planet. However, that is not to say it’s a perfect idea. This libertarian approach could indeed be used in many situations, but it fails in important ways. It would be a nightmare to implement on a large scale, would lead to economic difficulties in the short term, and certain parts of the natural world are simply not conducive to ownership.

Some ideas can sound really good on paper but not work well in the real world. For example, to some people at least, communism is a very appealing ideology; the only problem is that it didn’t actually work in a nation as large as the USSR. I suspect that this approach to the environment is similar. In practice, the wealthy will have more money for buying and selling land or quotas. In some locations, the resources of major logging companies are surely greater than a wildlife conservancy. Polar bear or spotted owl habitat might be saved, but, as was mentioned in class, some species wouldn’t be so fortunate. For example, Preble’s mouse is officially endangered, but there’s some debate on whether it’s really a unique species (“PREBLE'S MEADOW JUMPING MOUSE”). It’s unlikely that many people would be financially motivated to protect it. Although some species would see vast improvements, others may wind up in worse shape than under the current protection of the Endangered Species Act.

Additionally, if industry completely followed Anderson and Leal’s approach, the result would be disastrous. Their proposed solution to pollution is to use ITQs. A dirty, coal-burning plant would have to buy the right to pollute off of cleaner plants. This would motivate industry to pollute less, while also subsidizing green technologies. It seems clear that in the long run this would push industry to be more careful with the environment, as over-pollution would be too expensive. In the short term, however, nothing would change, except for an unpopular shift in the balance of wealth. A dirty factory can’t change its ways overnight, and adding trackers to identify the sources of pollution, as Anderson and Leal also propose, would be very expensive and time consuming, doing little for immediate problems. Eventually this would be a good way to reduce pollution, rewarding the environmentally-conscious and discouraging waste, but the costs may be too great at present.

In these rough economic times, privatization and ITQs in particular could also push companies that are already struggling to make ends meet even further towards bankruptcy. In the long run, it would probably all balance out. If a major car producer went out of business, another would likely be hiring with all its newfound ITQ money. The government would be hiring as well; a whole new division would be needed to ensure compliance with new laws. In the more immediate future, however, struggling companies would have to let go of more employees, which is not a future the public will like.

Some parts of nature are ill-suited to privatization and quotas. Anderson and Leal try to downplay this detail by merely suggesting creative solutions. Even then, however, it seems that some hidden costs and benefits can’t be dealt with, or internalized, by individual groups, at least not easily with today’s technology. For example, over the years it would take to stabilize and reduce carbon levels in the atmosphere, it’s reasonable to predict rising sea levels could flood some property. The question then becomes: Whose fault is the property damage? In other words, who pays the fine? There’s no simple answer to that question as all of society is to blame. To accurately determine who pays how many fractions of a cent would require tracking emissions from all automobiles, flights, factories, power plants, and more (past and present!), and then a system of dividing those costs out to the individuals responsible. Though this could theoretically be done, we just don’t have the technological infrastructure yet, nor is it a reasonably priced alternative to government regulation. Granted, this example may be a bit extreme, but there will be complications in a legal system that’s already too complex.

With that said, we shouldn’t throw the baby out with the bath water, so to speak. In the long-run, privatization is theorized to lead to more efficient management over the environment, while creating profits for private companies and maybe even jobs. It’s just not a smart idea to rapidly switch the entire nation to a new system and then expect staggering results. Anderson and Leal don’t propose this, but it’s not much of a stretch to anticipate if their idea is accepted fully. The problems should work themselves out over time, by means of the invisible hand of the free market, so we should minimize the chaos and prolong the transition time as much as possible. Gradually implementing Anderson and Leal’s ideas in selected regions or for certain resources would allow preparation by the interested parties and allow unexpected issues to be solved without mass chaos. In small enough areas, the transition could be smooth and effective.

The other part of a gradual transition involves phasing out the laws currently in place. Since some parts of the environment can’t easily be sold, it would be wise to keep some laws in place. Public lands could be auctioned off to the highest bidder but still require protecting their endangered species. New owners should be responsible to meet existing regulations. This may seem to defeat the purpose of selling it, but if the National Audubon Society can protect birds on its land even with oil development taking place, as Anderson and Leal observe, it should be possible in many cases to develop the land without harming it. Keeping existing laws in place while allowing new owners to make money off the land could benefit everyone involved. Over time, as the free market meets the needs of the environment without intervention, statutes could be repealed even more.

Privatization of the environment is only one of many possible routes to its preservation. The free market’s ability to motivate individuals to actually care about their impact on nature makes it stand out. Although privatization won’t work in every scenario, it is a viable option in many cases. In others, use of individual transferrable quotas and existing regulations can ensure the environment’s sustainability and eventual recovery. If done at a measured and thoughtful pace, I believe that this libertarian approach should be actively pursued.

Works Cited

Anderson, Terry L., and Donald R. Leal. "FREE MARKET VERSUS POLITICAL ENVIRONMENTALISM." From Animal Rights to Radical Ecology. Ed. Michael E. Zimmerman et al. Upper Saddle River, NJ: Pearson/Prentice Hall, 2005.

“PREBLE'S MEADOW JUMPING MOUSE.” U.S. Fish & Wildlife Service. 15 Feb. 2009 .

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