April 2005 Archives

Apparently the goats are not paying their way - as 'thousands' of people come to the Valley of the Rocks to see the wild goats. The council rejected financing to fence the area where the goats roam (e.g. to build a fence or erect a cattle grid).

(An earlier post discussed goats in Africa )

The topic of the panel in which I participated - 'is private ownership the future of sustainable development?' - analysed the role of institutions in attaining sustainable development, arguing that sustainable development is a process, not an outcome. This distinction is important, but generally not well understood.

Without private ownership, the quality of stewardship suffers. At least recreation fees match users with those who bear the cost in a manner closer to the way that a private homeowner bears the cost of repairs to his or her own home. Ms. Benzar apparently cannot see the difference between having taxpayers pay for the upkeep of her house and paying for it herself. She apparently thinks the former is more fair.

The Colorado resolution claims that the fees amount to double taxation. But as I've written elsewhere, this isn't accurate. Recreation fees are more analogous to paying for a token or a pass to use public transportation. It matches the extra damage and costs from actual use with funds to pay for that use. To the extent that the fees do amount to double taxation, this is an argument for getting rid of the taxes that are poorly appropriated to federal lands rather than an argument for getting rid of the fees. Concerns about double taxation are answered in a more detailed form here.

While I haven't seen any recent polls about recreation fees, most polls in the past have shown positive feelings about recreation fees as shown by the table below from the Department of Interior's 2000 report. Given the disconnect between popular support for fees and the state legislators' resolutions, it would seem the legislatures have probably been captured by vocal special interests such as the Western Slope No-Fee Coalition at the expense of providing the result that their citizens demand. Alternatively, maybe Montanans and Coloradans simply have a different view of fees than the rest of the nation, but I have my doubts.

Given that recent studies done in Oregon and Washington, where fee opposition has been highest, show that even low income people who are most likely to find the fees burdensome support the fees, it seems more likely that some very vocal opponents (rather than a silent majority) are capturing the legislatures' ears. In research conducted by the University of Florida and Pennsylvania State University, found on page 54 of the Forest Service's 2002 Annual Report to Congress on Fee Demo, support for the Northwest Forest Pass, which simply charges for access to Forest Service lands in the area, was positive among low income respondents in both Oregon and Washington. Yet Oregon is in the process of considering a resolution similar to the ones passed in Colorado and Montana.

The people support recreation fees, federal lands are better off for them, and yet a vocal minority who want the rest of America's taxpayers to pay for their free lunch are getting state legislatures to sing their tune. Unfortunately, both of them are tone deaf.

Survey Location Opinions About Fees That Were Generally:Positive Negative

National Comment Cards 77% 19%
Boundary Waters Canoe Area Wilderness 87% 13%
Southern California National Forests 64% 18%
Vail Pass Winter Recreation Fee 46% 22%
Desolation Wilderness Fee Site 64-78% 22-36%
White Mountain National Forest 68-72% 15-16%
Cataract Lake Fee Area 64% 14%
Tonto National Forest 55-64% 22-26%
News Article Analysis 65% 35%
Los Angeles Times Survey (natl.) 51% 42%

" The most important is that prices must be set correctly. The best way to do this is through liquid markets, as in the case of emissions trading. Here, politics merely sets the goal. How that goal is achieved is up to the traders.

A proper price, however, requires proper information. So the second goal must be to provide it. The tendency to regard the environment as a “free good” must be tempered with an understanding of what it does for humanity and how. Thanks to the recent Millennium Ecosystem Assessment and the World Bank's annual “Little Green Data Book” (released this week), that is happening. More work is needed, but thanks to technologies such as satellite observation, computing and the internet, green accounting is getting cheaper and easier.

Which leads naturally to the third goal, the embrace of cost-benefit analysis. At this, greens roll their eyes, complaining that it reduces nature to dollars and cents. In one sense, they are right. Some things in nature are irreplaceable—literally priceless. Even so, it is essential to consider trade-offs when analysing almost all green problems. The marginal cost of removing the last 5% of a given pollutant is often far higher than removing the first 5% or even 50%: for public policy to ignore such facts would be inexcusable. "

(This definition of cost-benefit analysis is broad; a recent panel at the Association for Private Enterprise Education revealed that some members of The Commons believe to varying degrees that CBA is simply a necessary evil.)

The same economic growth also enabled today’s rich societies to invest in research and development that helped, for instance, raise crop yields worldwide, develop new and more effective medicines (e.g., for HIV/AIDS), provide aid in times of famine or other natural disasters, provide funding for reducing TB, create and support of the Internet, and other items now considered by some to be global public goods (ODS 2003). Also, absent such economic growth, the sum of human capital worldwide would have been much less — consider, for instance, the millions of non-Americans who have been cycled through US universities who, then, have gone back to help in their native countries’ economic and technological development. Clearly, all countries indulge in activities that lead to global warming (GW), and all countries benefit from the activities that cause GHG emissions. So one should try to estimate whether direct and indirect costs of GW will, in fact, exceed direct and indirect benefits.

Some might argue that if the actions of A produce both benefits and harms to B, A should compensate B for the harms, but she cannot subtract the benefits in estimating the amount of compensation (because, after all, B did not solicit A to undertake the actions in question). I would disagree with this because benefits are nothing but negative harms, and should, therefore, necessarily be subtracted in estimating net harm to B. Also, if B insists on not subtracting benefits from the compensation package, he loses his moral claim for any compensation. In other words, you can’t insist on compensation on one hand, and be a free rider on the other.

Some might also argue that one should not take indirect effects of GHG producing activities into consideration: only direct effects should be considered. But the claim for compensation is itself based on indirect (and inadvertent) outcomes. After all, developed countries did not emit GHG emissions with express intent to harm anyone. So there has to be symmetry in these matters.

Let’s assume for the sake of argument that one can indeed estimate the fraction of global warming caused by Americans, the next step is to figure out what is the net harm that has been caused to, say, Bangladesh (ignoring for now issues such as whether today’s generation should be liable for damages incurred by previous generations, etc.). To make such estimates, it is not sufficient to know the direct impacts of climate change on Bangladesh, but also the indirect consequences of all GHG producing activities. This involves developing answers to questions such as: had there been no GHG producing activities in developed countries, what would have been Bangladesh’s level of human well-being? What would be its life expectancy (which is currently 62 years and was about 35 years in 1945) had there been no GHG emissions in the interim? What about its hunger and malnutrition rates? How many Bangladeshis (and Indians, I may add) were saved in the 1960s and 1970s because of food aid from the developed countries? How much of the past increase in Bangladesh's agricultural productivity is due to higher CO2 levels, or indirectly due to efforts that were possible because developed countries were wealthy enough to support/stimulate them? Assuming in the future, agricultural productivity declines due to climate change, how do you subtract out past benefits from future harms? [These questions, which are quite germane since food production and distribution are among civilization's GHG generating activities, are just a small sample of issues that have to be addressed to render a full accounting of the consequences of climate change -- and, if there is any accounting at all, it must necessarily be full.]

If one could, in fact, answer these questions, I am skeptical that one would be able to show that the effects of GHG emissions has been, on the whole, negative (at least so far).

And if one doesn’t believe this, one should give up on economic growth and technological development.

References:
Goklany, IM. 1995. “Strategies to Enhance Adaptability: Technological Change, Economic Growth and Free Trade.” Climatic Change 30: 427-449.

ODS [Office of Development Studies]. 2003. Global Public Goods ‘A Highly-rewarding Investment’, Briefing Note 3, UNDP. Available at http://www.undp.org/globalpublicgoods/globalization/background.html. Visited June 24, 2004.

This article assesses the current and likely impact of the Supreme Court's federalism cases on federal environmental regulation. As a result of this assessment, the article seeks to make four points: (1) Thus far, the Supreme Court's federalism cases have had a limited impact on federal regulation, as federal courts have not used these cases as a basis for limiting the reach of federal regulatory authority. (2) Notwithstanding this limited impact, the underlying logic of the Supreme Court's cases does pose a challenge for federal regulation, particularly in the Commerce Clause context. (3) The thrust of the federalism cases makes it likely that the Supreme Court will revisit the constitutional limitations on the Spending Clause, and this could have a substantial impact on federal environmental regulation, as some federal environmental provisions exceed even the highly deferential Spending Clause standard outlined in South Dakota v. Dole. (4) Judicially enforced limitations on federal regulatory authority do not necessarily translate into limitations on environmental protection. The federal government will retain substantial - although not unlimited - authority to advance environmental protection. Where federal authority is constrained, state and local governments and non-governmental entities will retrain their ability to address many environmental concerns.

Congratulations to Jonathan Adler for forcing his colleagues to confront the reality that consumers of fossil fuels do not own the global climate system, and have no established right to impose the costs of climactic change on others without compensation or permission. (CEI has distinguished itself in the past on other issues for its rigor in separating issues of net-total-welfare from individual rights and questions of compensation, but applying this to global warming is a big step forward.) A second bracing and positive feature is that everyone admitted that there are substantial practical difficulties with using common law mechanisms to achieve compensation, even if compensation is normatively called for. No one hid behind Ronald Coase by pretending that we live in a world without such transaction costs.

What was sad was that Adler's question, a basic ethical one, was too often confined to a debate about damage to property, and that the even more compelling reality that in many cases what is involved is loss of life was lost. While there are many countries where property rights are indeed poorly recognized, it is hard to construct an ethical basis for saying that consumers of fossil fuels are therefore licensed to kill these people.

Surely all theories of free markets rest on self-ownership. Assault on one's person is an even more egregious violation of freedom than assault on one's property. So the churlishness of some of the comments, implying that poor are somehow "free riders" was grating. Nevertheless, it's a good thing for everyone that this dialogue has begun. Thanks to you for publicizing it.

Even climate change that is largely benign in temperate regions could have -- indeed would be likely to have -- negative impacts on developing nations. Nonetheless, I think it is an exaggeration to say that the real issue is "loss of life." Most of the effects in tropical regions will not "kill" people -- at least not directly. Indeed, from a macro perspective, the various energy suppression policies favored in some parts of the environmental community pose a greater threat to the health and well-being of people in the developing world than climate change.

If the goal is to save lives in developing countries, direct investments addressing causes of mortality in these countries -- disease, unsafe drinking water, lack of sanitation, lack of infrastructure, etc. -- would do far more than a dozen Kyotos -- yet the the likes of Bjorn Lomborg get pilloried when they suggest as much. What I am suggesting here is that there may be a normative case for such investments -- that industrialized nations may actually have an obligation to fund such projects as a form of compensation for violating the property rights of developing nations that will bear costs due to climate change -- even if there is no practical way to make sure that such compensation is paid (or that it accomplishes its goal). Perhaps the Clean Development Mechnism is a step in this direction, but I skeptical that any other international institution -- existing or proposed -- is capable of fulfilling this role, and I do not believe there is any way such concerns justify Kyoto-type treaties. At least that's how I see it right now. To be continued . . .

The press release says that

The huge 3 tonne figure stands 7 metres high and is totally composed of WEEE – from washing machines to mobile phones and electronic toys. This represents the amount of waste that a single person in the UK is likely to produce in a lifetime.

Most on the "right" argue that the best response is to do little or nothing. Whlie some advocate various "no regrets" policies to improve the efficiency of energy markets (and perhaps pave the way for alternative fuels) -- as I did here -- few conservatives, libertarians, or other free-market advocates believe the most reliable climate forecasts justify drastic measures to suppress the use of carbon-based fuels. The costs of such measures, many argue, are likely to swamp the costs of climate change, and more direct measures to address global ills that could be exacerbated by climate change (disease, flooding, weather extremes, etc.) would be far more cost-effective than reducing greenhouse gas emissions.

As an analytical matter, these assessments are probably correct -- it is hard to justify one Kyoto on ecoomic grounds, let alone the dozen or so that would be necessary to stabilize greenhouse gas concentrations in the atmosphere -- but that does not mean the proper "free market" climate policy is to "do nothing."

If property rights lie at the heart of free market environmentalism, than FME advocates should think seriously about the normative implications of human-enhanced climate changes that could disproportionately harm those portions of the world that have (at least thus far) contributed least to the problem. Even if a modest warming were, on balance, beneficial, the impacts would not be uniform. It may well be, as some argue, that increases in crop productivity and reduced energy costs in temperate regions will be greater than the costs to tropical regions, but this does not address the property rights concern absent some system whereby industrialized nations would compensate or indemnify less-developed nations. No such system exists -- nor is it likely that existing international institutions could implement such a system -- but that does not mean it would not be the first-best approach to climate change from an FME perspective.

I posed this issue to several of my FME colleagues. PERC Reports published the resulting dialogue here. I welcome additional comments below.

UPDATE: Tyler Cowen and Brad DeLong like this approach. Grist's Dave Roberts is not so sure, and the Sierra Club's Carl Pope comments here.

Strict liability for environmental contamination has become a fact of life in the past twenty years since the 1980 enactment of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), and similar state laws imposing strict liability for the release of hazardous substances. Since that time, awareness of the widespread nature and risks of environmental contamination and the need for strong tools to remedy those conditions has permeated the public consciousness, the business community, and the courts. As a result, our society has come to live with the existence of widespread strict liability for environmental contamination under various federal and state statutes, even if many believe the current statutory liability scheme is misguided or ineffective.

Over the same period of time, however, some scholars have
argued that courts have grown reluctant to apply common law
strict liability in general under either the doctrine of Rylands
v. Fletcher or Sections 519 and 520 of the Restatement (Second)
of Torts, which impose strict liability for abnormally dangerous
activities. These commentators conclude that, apart from cases
involving blasting and a few other historic applications, the
current trend is for courts to reject the expansion of strict
liability in favor of negligence as the dominant tort theory.
The existence of these two seemingly divergent trends raises the
question of whether CERCLA's enactment and implementation have
influenced courts' willingness to impose common law strict
liability in environmental contamination cases, even if the
doctrine is not otherwise expanding.

That CERCLA may be impacting common law strict liability is
significant and somewhat unexpected because the Restatement
(Second) of Torts does not identify the existence of a federal
or state statute governing the conduct at issue as a factor to
consider in determining whether the activity is abnormally
dangerous. In other words, if courts are being influenced by the
existence of CERCLA and state strict liability statutes when
considering application of the common law strict liability
doctrine to environmental contamination cases, they are doing so
for policy reasons beyond the black letter law of Rylands or the
Restatement.

A review of post-CERCLA court decisions involving
environmental contamination and claims for common law strict
liability reveals that even though the existence of a state or
federal strict liability statute is not one of the factors a
court is directed to consider under the Restatement, courts
consistently refer to the existence of such a statute or the
general importance of addressing hazardous waste problems as a
justification for applying strict liability. These cases show
that while the prevailing trend among courts may be to reduce
the reach of common law strict liability, the trend in
environmental contamination cases appears to be the opposite.

This Article argues that it is both appropriate and desirable
for courts to consider state and federal statutes and other
indications of public policy when determining whether an
activity is abnormally dangerous. This can be best accomplished
by revising the current draft of the Restatement (Third) of
Torts to include the existence of a state or federal statute
imposing strict liability for the activity as a factor in
determining whether or not the activity is abnormally dangerous
under the common law.

In the late 1980s and early 1990s, it was widely reported that the United States faced a solid waste crisis. Existing landfills were reaching capacity or being shut down because of more stringent regulations while waste volumes were continuing to rise. At the time, several market-oriented policy analysts advocated the adoption of variable rate charges for mixed refuse in conjunction with curbside pick-up of recyclables (without charge) as a means of reducing waste volumes and diverting recyclable material to more valuable uses. During the course of the past decade, such policies have been adopted widely throughout the United States - approximately 20 percent of the U.S. population now face variable rate charges for mixed refuse collection. Even more have curbside collection of recyclable materials. This article collects and reviews empirical studies evaluating the effects of variable rate pricing. It finds that these policies have been quite effective as a means of boosting diversion rates beyond the levels that can be achieved through curbside collection of recyclables alone. The overall cost-benefit analysis of such programs is modestly favorable. Since many states and communities have committed to achieving specified waste diversion targets, variable rate policies have been a cost effective policy tool. The experience with variable rate policies represents a promising example of non-coercive, information-oriented government intervention. With a relatively small budget and no authority to impose household solid waste policy on local governments, EPA has been remarkably successful at developing and diffusing effective solid waste management policies. The economic theory underlying variable rate pricing has proven, after some tinkering at the implementation stage, to be quite workable in practice. In fact, the practical realities of implementing charges have shown that theoretical perfection in terms of getting the prices right is less important in the grand scheme than keeping the transaction costs manageable. Looking forward, variable rate pricing can be expected to become even more economically advantageous as recycling markets continue to mature, landfill tipping fees rise, and improved technologies for curbside collection, monitoring, billing, and measuring waste develop.

The article discusses the problem of privately subsidized recycling schemes, that are common in the developed countries and that may in certain circumstances harm the environment of developing countries, as a result of the asymmetry in economic development and environmental protection between them and the developed countries where the products originate. This may happen, for instance, when such products are exported to developing countries and have a negative impact on the economic viability of collection and recycling of their own waste. Newly established and still struggling recycling plants, unsupported by private or governmental subsidies or other protective measures prevailing in the rich and more environmentally conscious countries, may be forced to close down. Alternatively, they may decide to abandon expensive collection of local waste, in favor of free or subsidized waste imported from developed countries. In both cases, collection and recycling activities in the importing countries are reduced, and sometimes eliminated. The objective of this article is to document and draw attention to this problem, that has not yet been discussed in the rich literature on trade & environment, and to examine the question of what remedies, if any, may be offered under international trade law (in particular GATT/WTO rules) to affected countries. Would countries in situations as those described above be permitted to take measures against imports harming their recycling activities? Of particular interest in this regard, is how to relate to privately paid, but governmentally induced, subsidies under the WTO Subsidies Agreement? Such subsidies, while fulfilling most economic definitions of subsidies, appear to have escaped the attention of the Agreement's drafters and may therefore be outside its scope. Importing member countries would therefore be precluded from taking countervailing measures against products enjoying such subsidies. These and other potential protective measures will be discussed in the article, in light of recent case law of the WTO, in particular in the matter of United States - Measures Treating Export Restraints as Subsidies. This discussion will demonstrate the formalistic nature of the existing WTO jurisprudence and show how a more purposive, teleological approach to interpretation of international trade rules could lead to a better solution to the problem at hand.

Goldberg writes:

Broadly speaking, environmentalists want to end poverty, hunger, and disease, but they also want to keep indigenous cultures unchanged. But you can't have both simultaneously. It is the natural state of indigenous cultures, after all, to be constantly vulnerable to disease and hunger, and no man fighting to keep his children alive cares about "biodiversity."

For decades, environmentalists pointed to various calamities and boasted that they were identifying the problems, which is the first step for providing a solution. But they were wrong; environmental distress is a symptom of political and economic corruption. There's reason to hope the United Nations has finally recognized the real problem, and that's great news.