Where Markets Meet the Environment PERC REPORTS · Where Markets Meet the Environment ... by Allan...

PERC REPORTSWhere Markets Meet the Environment

Volume 17 Number 5 December 1999 502 South 19th Avenue, Suite 211, Bozeman, Montana 59718

6

DRIVING ANDDENSITY

More people per squaremile means more cars,too.

byRandal O'Toole

SUPERFUNDFOLLIES

Cost doesn't matter, butpolitical pressure does.

byDaniel K. Benjamin

LAND TRUSTS ORLAND AGENTS?

Second thoughts abouta tool for conservation.

byBruce Yandle 169

ECOSYSTEMMANAGEMENT:AN ILLUSION?

3

by Allan K. Fitzsimmons

Copyright © 1999 by thePolitical Economy Research Center.

ISSN 1095-3779

502 S. 19th Avenue, Suite 211Bozeman, MT 59718 Ž (406) 587-9591

Fax: (406) 586-7555E-mail: [email protected]

www.perc.org

PERC Reports 2 December 1999

PERC

EXECUTIVE DIRECTORTerry L. Anderson

SENIOR ASSOCIATESDaniel K. BenjaminP. J. HillDonald R. LealRoger E. MeinersJane S. ShawRandy T. SimmonsRichard L. StroupBruce Yandle

ADMINISTRATIVE DIRECTORAND TREASURERMonica Lane Guenther

DEVELOPMENT DIRECTOR

Eric C. Noyes

ENVIRONMENTALEDUCATION DIRECTORDonald R. Wentworth

EDITORIAL ASSOCIATELinda E. Platts

RESEARCH ASSOCIATESMatthew BrownHolly L. FretwellDavid E. GerardJ. Bishop GrewellClay J. Landry

CONFERENCE COORDINATORColleen Lane

COMPUTER OPERATIONSMichelle L. L. JohnsonDianna L. RienhartSheila J. Spain

BOARD OF DIRECTORSKimberly O. Dennis,ChairmanD & D Foundation

David W. BradyStanford University

Thomas J. BrayThe Detroit News

Jean A. BriggsForbes

David G. CameronDana Ranch Co., Inc.

Eugene Graf IIILand Developer

Joseph N. IgnatJ. N. Ignat & Associates

Dwight E. LeeBarker, Lee & Company

Adam MeyersonThe Heritage Foundation

E. Wayne NordbergKBW Asset Management

Neil OldridgeAssociated Business Consultants

Jerry PerkinsKarst Stage, Inc.

Leigh PerkinsThe Orvis Company

Hardy ReddCharles Redd Foundation

Vernon L. SmithUniversity of Arizona

John TomlinThe Vista Group

CONSULTING DIRECTORWilliam A. DunnDunn Capital Management, Inc.

INSIDE THIS ISSUE

PERC REPORTS

TRULY SUSTAINABLE

19

An Enviro-Capitalistaward for the

White MountainApache Tribe.

–by Terry L. Anderson

GREENER PASTURES

Can gas drillingsave the Attwater’s prairie

chicken? Can cattlereclaim land?

–by Linda E. Platts

12

POLLUTION

Economists recommendtaxes and fees, but

industries likedirect controls.

–by Todd J. Zywicki

14

EDITORJane S. Shaw

ASSOCIATE EDITORLinda E. Platts

PRODUCTION MANAGERDianna L. Rienhart

ARTISTJames Lindquist


The high-sounding notions that

populate ecosystem ecology

are long on style and

short on substance.

The problems starts with

the idea of an ecosystem itself.

ne of the Clinton admin-istration’s first major envi-

ronmental policy initiatives wasto call for a shift to ecosystemmanagement. In a nutshell,ecosystem management meansthat the federal governmentmakes protection or restora-tion of the health, integrity,and sustainability of ecosys-tems the primary goal of its ac-tivities. The Forest Service, forexample, now intends to makeprotection of ecological sus-tainability the “guiding star” ofland management (USDA1999b, 54095). Secretary ofAgriculture Dan Glickman,who supervises the Forest Ser-vice, calls the new approach a“fundamental change in phi-losophy” (USDA 1999a).

Protection of naturecomes first in ecosystem man-agement. Enhancement of hu-man well-being is subordinateto this goal. This represents aradical departure from over acentury of natural resourcepolicy in the United States. Inthis essay, I will explain some ofthe difficulties with the newparadigm, difficulties discussed more thoroughly inmy book, Defending Illusions: Federal Protection of Eco-systems (Fitzsimmons 1999).

Supporters of ecosystem management use scien-tific language to enhance the credibility of their pro-posals with policy makers and the public. But what isthe state of the science on which such proposals rest?

To answer this question, Ireviewed what ecologists havebeen writing about their fieldand what scholars say about ideaslike “ecosystem,” “ecosystemhealth,” “ecosystem integrity,”and “ecosystem sustainability.”My review revealed numerousproblems.

Prominent ecologistsStuart Pimm and Robert Petersnote several shortcomingswithin their discipline. Pimm(1994, 188) writes that “ecosys-tem ecology for too long has op-erated in a dream world withfew hypotheses and even fewerdata.” Peters (1991, 1) pointsout that “to many contemporaryecologists, the weakness of ecol-ogy is patent and the problemneeds little elaboration.” His listof difficulties includes: “lack ofscientific rigor,” “weak predic-tive capability,” “lack of testabletheory,” and “many constructs ofdubious merit.”

It turns out that thehigh-sounding notions thatpopulate ecosystem ecology arelong on style and short on sub-stance. The problem starts with

the idea of an ecosystem itself. The term was coinedby Arthur Tansley in 1935, who described them asphysical systems encompassing living and nonlivingthings and their interactions. Ask the Forest Service,the Environmental Protection Agency, the Fish andWildlife Service, and the Sierra Club to show youtheir maps of the ecosystems of the United States.

O

THE PITFALLS OF A RADICAL NEW POLICY

THE ILLUSION OFECOSYSTEM MANAGEMENT

By Allan K. Fitzsimmons


ECOSYSTEM MANAGEMENT

■

The ecosystem

concept may be a helpful tool for

researchers, but it is too ambiguous

to serve as an organizing principle

for federal policy.

■

They differ greatly. The so-called Greater YellowstoneEcosystem can cover anywhere from 5 to 19 millionacres, depending on who is defining it.

These discrepancies occur because the humanmind fabricates ecosystems. Nature does not put eco-systems on the land for researchers to discover. In-stead, as Bruce Hannon (1991, 238) observes, “thedelimitation of the [eco]system is strictly up to theobserver. . . .”

Ecosystems are only mental constructs, not real,discrete, or living things on the landscape. They donot breathe, emerge from wombs, or spring fromseeds. They are not real, organized entities con-sciously seeking to perpetuate themselves against in-ternal or external threats to their existence. As SimonLevin observes (1992, 1960),“what we call an ecosystem . . .is really just an arbitrary subdi-vision of a continuous gradationof local species assemblages.”

While the ecosystem con-cept may be helpful as a tool forresearchers to better grasp theworld around us, it is far tooambiguous to serve as an orga-nizing principle for the applica-tion of federal law and policy.As spatial units, ecosystems rep-resent a geographic free-for-all.

Just as ecosystems are defined inconsistently, as-sociated concepts are similarly vague. People use theterm ecosystem health frequently, for example, but re-searchers disagree about its meaning, too. GuelphUniversity professor David Rapport (1998, 25) is astrong advocate of centering policies on protection ofecosystem health, yet he writes that “the question ofwhat constitutes ecosystem health remains somewhatperplexing and controversial.” He sees the literatureas “replete with a plethora of definitions that reflectthe views of researchers and environmental/resourceinterest groups.”

Indeed, the editors of the book Ecosystem Healthconclude that “there is no clear conception of theterm” (Haskell, Norton, Costanza 1992, 1). Further-more, they note, both ecosystem health and ecologi-cal integrity “have never been defined well enough tomake them useful” in policy documents.

The fundamental difficulty supporters of ecosys-tem health face is the lack of norms to judge the con-dition of ecosystems. Looking at one view of

ecosystem health illustrates the woolliness of the idea.Ecologists Bryan Norton and Robert Ulanowicz(1996, 429) consider “the capacity for creativity” asthe crux of ecosystem health.

But what is “creativity?” It is the ability of anecosystem to solve problems, which requires the eco-system to possess “ordered complexity,” which meanshaving enough “apparatus” to respond to events via “achannelized sequence of reactions.” At the same time,ecosystems must also have internal “incoherence,” orthe presence of “dysfunctional repertoires” not nor-mally used by the ecosystem but that serve as reser-voirs of “stochastic, disconnected, inefficient featuresthat constitute the raw building blocks of effective in-novation.” This spiral of ill-defined concepts leadsthem to accept the vague idea that “an ecological sys-tem is healthy and free from ‘distress syndrome’ if it is

stable and sustainable; i.e., if itis active and maintains its or-ganization and autonomy overtime.”

To test the usefulness ofthis definition, try applying itto a beached whale carcass,which ecologists assure us is anecosystem. Does the carcassactually strategize using a “ca-pacity for creativity” in orderto sustain itself? Clearly not. Isit active or does it maintain itsautonomy over time? No. Can

the idea of “stability” have any reasonable meaningfor this ecosystem?

or can scientists pin down ecosystem integrity.Some ecologists link ecosystem health and eco-

system integrity, but differ on the nature of the rela-tionship. Rapport (1992, 145) argues that healthyecosystems are “characterized by systems integrity”while James Kay (1993, 205) considers ecosystemhealth as “the first requisite for ecosystem integrity.”He links integrity with the “wholeness and well be-ing” of the ecosystem which means naturalness; e.g.,the less impact people have on an area the greater itsintegrity.

To make matters more complex, some ecologistsreject naturalness as the measure of integrity. HenryRegier (1993, 16), for example, writes that “there isroom for choice in the kinds of ecosystems with integ-rity that humans might prefer.” De Leo and Levin(1997) likewise reject nature-based definitions of in-tegrity and acknowledge that multiple (and often

N


References

quite different) definitions of the term abound.Finally, the idea of a sustainable ecosystem is

self-contradictory. While some ecologists (Christensenet al., 1996, 666) urge us to make protection of ecosys-tem sustainability the centerpiece of ecosystem man-agement, they say at the same time that “ecosystemsare dynamic in space and time. . . [they] are constantlychanging,” “there is no single appropriate scale ortime frame for management,” and “boundaries de-fined for the study or management of one process areoften inappropriate for the study of others.” Howcan sustainability have intelligent meaning whenthe entity to which ecologists would attach it is, inthe view of those same ecologists, in constant flux inspace and time and has no intrinsic attributes?

Sixty years after the ecosystem idea surfaced inthe scientific literature; after decades of dominanceon university campuses; after thousands of books, ar-ticles, conferences, and monographs; scholars can-not agree on the most fundamental mattersregarding ecosystems. They do not agree on whatconstitutes the core characteristics of ecosystems.They cannot say where ecosystems begin or end inspace or time, or tell us when one ecosystem replacesanother on the landscape. They cannot agree onhow to locate ecosystems. They offer no generallyaccepted definitions or measures of health, integrity,or sustainability. The state of the science concern-ing the ecosystem notion and its attendant ideasprovides little scientific justification for the radicalchange in public policy proposed by the Clintonadministration.

Christensen, Norman L., et al. 1996. Report of theEcological Society of America Committee onthe Scientific Basis for Ecosystem Management.Ecological Applications 6(3): 665–91.

De Leo, Guilio, and Simon Levin. 1997. The Multi-faceted Aspects of Ecosystem Integrity. Conser-vation Ecology 1(1). Available: http://www.consecol. org/vol1/iss1/art3.

Fitzsimmons, Allan K. 1999. Defending Illusions: Fed-eral Protection of Ecosystems. Lanham, MD:Rowman & Littlefield Publishers, Inc.

Hannon, Bruce. 1991. Accounting in Ecological Sys-tems. In Ecological Economics: The Science ofManagement of Sustainability, edited by RobertCostanza. New York: Columbia UniversityPress, 234–52.

Haskell, Benjamin D., Bryan D. Norton, and Robert

Costanza. 1992. Introduction: What is Ecosys-tem Health and Why Should We Worry AboutIt? In Ecosystem Health: New Goals for Environ-mental Management, edited by Robert Costanza,Bryan D. Norton, and Benjamin D. Haskell.Washington, DC: Island Press, 1–19.

Kay, James J. 1993. On the Nature of Ecological In-tegrity: Some Closing Comments. In EcologicalIntegrity and the Management of Ecosystems, ed-ited by Stephen Woodley, James Kay, andGeorge Francis. Delray Beach, FL: St. LuciePress, 201–12.

Levin, Simon. 1992. The Problem of Pattern andScale in Ecology. Ecology 73(6): 1943–67.

Norton, Bryan G., and Robert E. Ulanowicz. 1996.Scale and Biodiversity Policy: A HierarchicalApproach. In Ecosystem Management, edited byFred B. Samson and Fritz L. Knopf. New York:Springer, 424–34.

Peters, Robert H. 1991. A Critique for Ecology. Cam-bridge: Cambridge University Press.

Pimm, Stuart. 1994. An American Tale. Nature379(21): 188–89.

Rapport, David J. 1992. What is Clinical Ecology? InEcosystem Health: New Goals for EnvironmentalManagement, edited by Robert Costanza, BryanG. Norton, and Benjamin D. Haskell. Washing-ton, DC: Island Press, 144–55.

———. 1998. Defining Ecosystem Health. In Eco-system Health, edited by David Rapport, RobertCostanza, Paul Epstein, Connie Gaudet, andRichard Levins. London: Blackwell Science,18–33.

Regier, Henry A. 1993. The Notion of Natural andCultural Integrity. In Ecological Integrity and theManagement of Ecosystems, edited by StephenWoodley, James Kay and George Francis. DelrayBeach, FL: St. Lucie Press, 3–18.

U.S. Department of Agriculture (USDA), Forest Ser-vice. 1999a. Glickman Proposes New Rules forManaging the National Forests. Press Release0399.99, September 30. Washington, DC.

———. 1999b. National Forest System Land and Re-source Management Planning: Proposed Rule.Federal Register, 54073–112, October 5.

Allan K. Fitzsimmons, Ph.D., is the author of DefendingIllusions: Federal Protection of Ecosystems (Rowman &Littlefield), which can be purchased by calling 800-462-6420 oronline at www.rowmanlittlefield.com. A geographer andenvironmental analyst, Fitzsimmons is president of BalancedResource Solutions, a consulting firm in Woodbridge, Virginia.


elebrated by market enthusiasts and conserva-tionists alike, land trusts have become the instru-

ment of choice across the nation for conservingfarmland, sensitive habitat, and open space. Recently,however, free market environmentalists have beenraising a few questions about them.

For years, friends of the market such as PERCassociates have cheered trusts because of the way theygo about achieving their mission: Trusts rely on vol-untary transactions and respect private propertyrights. They buy land and pur-chase or receive voluntary dona-tions of land and conservationeasements. (See p. 12 for an ex-ample of the sophisticated man-agement typical of the NatureConservancy, the nation’s largestland trust.)

Conservationists, whethermarket-oriented or not, applaudthe mission of protecting landfrom development and other dis-turbance. Some 17 million acresof U.S. land is now controlled byland trusts.1 That’s a lot of habitat, farmland, andopen space, an amount close to the size of SouthCarolina.

Land trusts have been growing dramatically.Prior to 1950 there were fewer than 40 land trusts inthe United States. There are now more than 1200land trusts operating across the 50 states and U.S. ter-ritories (Land Trust Alliance 1999).

Small local trusts are found in every state, ledby Massachusetts with 137, followed by Californiawith 119 and Connecticut with 113. The local trustscontrol some four million acres of land. The 14larger national land trusts control 13 million acres ofU.S. land. Indeed, the Nature Conservancy aloneclaims to have protected 10.5 million acres since its

ARE THEY TOO CLOSE TO THE GOVERNMENT?

LAND TRUSTS ORLAND AGENTS?

By Bruce Yandle

founding in 1953 (Nature Conservancy 1999).Notice the word “control.” Of the 4.7 million

acres protected by local and regional trusts, only 17percent is owned in fee simple. Some 30 percent iscontrolled by way of conservation easements, andthe rest, about 50 percent, is transferred to govern-ment or controlled by other means such as throughthe ownership of mineral rights (Land Trust Alli-ance 1999).

The breakdown appears to be different for thelarge national land trusts. Nine ofthe 14 national trusts provide landmanagement data. They indicatefee simple ownership of just onepercent of the land they “control.”Some 20 percent is transferred togovernment, and the remainder ismanaged by way of conservationeasements, deed restrictions, andmineral right ownership (LandTrust Alliance 1998, 197–99).

The growth of land trustsraises three issues that environ-mentalists and conservationists

would do well to consider.First, land trusts don’t always retain the right to

divest ownership. Yet this is a key characteristic ofprivate property rights. If land parcels can be trans-ferred, they can be traded and assembled to betterachieve environmental objectives. When they areable to do so, land trusts willingly sell or trade landthat has been donated to them so that they can ac-quire more sensitive habitat.

For example, some years ago the Nature Conser-vancy surprised some observers by selling beachfrontproperty that it had received as a gift. The beachfrontland in the Virgin Islands was degraded and damagedand did not have any endangered animals or plants.The conservancy, whose mission was to protect en-

■

The growth of land trusts

raises issues that

environmentalists

and conservationists

would do well to consider.

■

C


dangered species, traded the beachfront property forWisconsin land that provided nesting habitat for thehooded warbler, a rare Neotropical migrant bird.2

When land is set aside through easements andother agreements rather than through direct owner-ship, this freedom to divest is lost. Some of the tradi-tional incentives of private property rights weaken.Conservation easements or land donated as a perpe-tuity freeze the present use of land into the limitlessfuture.

Over time, both the environment and the de-sires and locations of human populations can change,turning a perpetuity into a millstone. Perhaps itwould be wise for donors to require that court-super-vised environmental reviews bemade every one hundred yearswith an allowance for sellingland that no longer satisfies thedonor’s intent.

second issue is the transferof land from private own-

ership to government. The fed-eral government’s track recordfor managing land is not a stellarone. To select a few examples:Yellowstone’s outmoded sewersystem spews sewage into nativetrout streams and prehistoricdwellings in Mesa Verde Na-tional Park are disintegratingfrom a buildup of oils and airborne particles(Fretwell 1999, 3). And according to a General Ac-counting Office (1999, 22) report, 39 million acresof national forests are in danger of going up inflames due to poor management.

Managing land properly costs money. When ad-ditional land is transferred to governmental bodies,public funds for land management must be stretchedeven farther.

The issue is incentives, not the character orcommitment of government agents. Generally speak-ing, government managers and the units they managedo not reap rewards for managing resources effec-tively. Nor are they systematically punished when baddecisions are made.

A third problem to consider is that land trustsare making many large purchases using taxpayermoney. Evidence comes from the Interior Depart-ment. Between 1985 and 1991, the Department ofthe Interior made 317 land purchases of land fromconservation organizations. These cost $222.6 mil-

lion in taxpayer funds. In some cases, the departmentreported, the land was sold to the government atprices that exceeded fair market value (U.S. Depart-ment of the Interior 1992, 3).

Such taxpayer-financed purchases cloud thewidely held image of trust managers accepting andmanaging donated land or buying it with funds con-tributed by dedicated land trust members. It did notsit well with a member of the Nature Conservancywho wrote a letter to the editor of the conservancy’smagazine (the November/December 1999 issue).

The reader fumed about the conservancy’s pur-chase of 45,000 acres of Florida land using $133.5million in federal funds: “If the federal government

is paying for the Conservancy’spurchases, then you do notneed my membership pit-tance!” wrote Osman Latif.“An explanation would be ap-preciated.”

The letter generated twoexplanations within the sameissue of the magazine. Themagazine’s editor respondedthat donations from individu-als “comprise the greatest andmost valued source of fundingfor our work; nevertheless,when an opportunity arises toaccomplish our conservationgoals with funding from outside

sources, we think our members would want us totake full advantage of the opportunity.”

In his column, John Sawhill, president of theconservancy, implied an even more expansive rolefor government funds and government ownership.He noted that the Nature Conservancy “has a longrecord of working with federal, state and local pub-lic agencies to protect ecologically important landand waters,” and added that “stewards from the Na-ture Conservancy collaborate with government offi-cials to promote conservation on all types of publicland holdings” (Sawhill 1999, 5). This descriptiondiffers from the usual concept of a land trust.

or the most part, there is little journalistic scrutinyof how organizations such as the Nature Conser-

vancy operate. However, land trust collaboration withgovernment was described in a series of 1991 columnsby the late Warren Brookes, editorial page writer forthe Detroit News. For example, Brookes discussed(January 23) a provision that had been added to the

■

“If the

federal government is

paying for the Conservancy’s

purchases, then you do not need

my membership pittance!”

a member wrote.

■

A

F


Interior Department appropriation bill for fiscal 1988.It required Diamond International Paper Company tosell a 53,000-acre New Hampshire holding to theNature Conservancy or the Society for the Protectionof New Hampshire Forests; if it did not, its land wouldbe purchased by the U.S. Forest Service for $5.25 mil-lion. This, Brookes commented, was a fraction of itsactual value.

It appears that these two trusts were obtaininghelp from the federal government. All they had to dowas to offer something more attractive than the pricedemanded by the Forest Service to get a deal. (Theconservation group could offer a tax benefit if the landwas sold at a loss and in turn gain a “profit” when theland was resold to the government.)

oday, the federal government is dangling beforeenvironmental organizations enormous sums of

money that can be used to control land use. For ex-ample, the 1998 Transportation Equity Act for the21st Century provides some $630 million for trans-portation enhancements, which include greenways,bike trails, and open space easements. Millions inmatching funds have emerged for the acquisition ofwetlands. And billions are being proposed to enrichthe Land and Water Conservation Fund, a plan thathas received support from Republicans as well asDemocrats.

A typical example of the close relationship be-tween government and private organizations was theForest Service’s 1999 purchase of acreage near Yellow-stone National Park. The Rocky Mountain Elk Foun-dation acted as a facilitator as the Forest Servicenegotiated the purchase of land from a religious orga-nization, to the tune of about $13 million. The elkfoundation, along with the Forest Service, holds aright of first refusal to assist the federal government inacquiring additional land (Rocky Mountain ElkFoundation 1999a and 1999b).

Such programs encourage land trusts to serve asgovernment land agents, often quite profitably. If landtrusts continue to respond to this temptation, landconservation will become ever more political. Thesplendid conservation incentive that comes withbearing costs and earning benefits will be compro-mised. History teaches us that market incentives forconservation are strongest when individuals pay mar-ket prices and receive market rewards. They are weak-est when government agents spend someone else’smoney and get no reward for good management.

Free market environmentalism is about harness-ing property rights and markets for the purpose ofmanaging environmental resources. Beneficial out-comes depend on getting the incentives right andkeeping them right.

1. These figures are based on calculations fromdata included in Land Trust Alliance (1998, 197–99).

2. Brent Haglund, former Wisconsin NatureConservancy official, e-mail correspondence, Novem-ber 10, 1999.

Fretwell, Holly Lippke. 1999. Paying to Play: TheFee Demonstration Program. PERC Policy Series,PS-17. Bozeman, MT: Political Economy Re-search Center, December.

General Accounting Office (GAO). 1999. WesternNational Forests. GAO/RCED-99-65. Washing-ton, DC, April.

Land Trust Alliance. 1998. 1998 National Directory ofConservation Land Trusts, Washington, DC:Land Trust Alliance.

———. 1999. Summary of Data from the 1998 Na-tional Land Trust Census. [cited 10/26/99].Available: www.lta.org/censtate.html.

Nature Conservancy. 1999. About the Nature Con-servancy. [cited November 15, 1999]. Available:http://www.tnc.org/welcome/about/about.htm.

Sawhill, John. 1999. The President’s View: Conserva-tion in the Commons. Nature Conservancy, No-vember/December. Available: http://www.tnc.org/magazine/president.html.

Rocky Mountain Elk Foundation. 1999a. RoyalTeton Ranch Phase II Purchase AgreementReached, Public Celebration Planned. [citedNovember 15, 1999.] News release dated August29, 1999. Available: http://www.rmef.org/press_releases. php3?articleid=28.

———. 1999b. Royal Teton Ranch TransactionSigned and Sealed. [cited November 15, 1999.]News released dated February 11, 1999. Avail-able: http://www.rmef.org/press_releases.php3?articleid=12.

U.S. Department of the Interior. 1992. InspectorGeneral’s Report on Land Acquisitions. (Com-ments by Solicitor.) M-36974, 100 Interior Dec.195, July 30.

Bruce Yandle is Alumni Professor of Economics and Legal Studies atClemson University and a Senior Associate of PERC.

LAND TRUSTS

T

References

Notes


DRIVING AND DENSITY

MORE PEOPLE,FEWER CARS?

By Randal O’Toole

ne technique proposed forcombating “urban sprawl”

is increasing population densi-ties. Government planners arebeginning to require new resi-dential developments to housemore people per acre. Even ex-isting low-density suburbs aresupposed to be rebuilt to higherdensities.

The “smart growth” planfor Portland, Oregon, consid-ered a model for anti-sprawlpolicies, calls for increasing thedensity of the entire urban area,suburbs and all, from under3,000 to nearly 5,000 people persquare mile (Metro 1994). A re-port by Metro (1996, 20), Portland’s regional plan-ning agency, says that “congestion signals positiveurban development.”

In reality, however, most people have alwayslived in fairly low densities. They don’t necessarilywant to change that fact. Nor is increasing densitylikely to achieve the objectives of its proponents.

It was not until 1920 that the Census Bureaucounted more Americans living in urban areas thanin rural areas (U.S. Census Bureau 1995). And bythat year, many city dwellers were already moving tolow-density suburbs (which census takers count asurban rather than rural). In 1990, the Census Bureaufound that nearly half of all Americans lived in thesuburbs. Half the remainder lived in rural areas (U.S.Census Bureau 1993). In other words, only a quarterof the nation lives in what the Census Bureau calls“central cities.”

A careful scrutiny of census data (U.S. CensusBureau 1993) shows that only a small percentage ofAmericans live in truly high densities:

Only about half of allAmericans live in densities of2,000 per square mile or higher.To put this in perspective, India-napolis and Tulsa have densitiesaround this figure. Half of allAmericans live in cities that arethis dense or more, while halflive in even less crowded areas.About 28 percent live in ruralareas, which have between zeroand 200 people per square mile.

Only 3 percent of Ameri-cans live in densities like NewYork’s 20,000 people per squaremile. (Manhattan’s density is50,000 per square mile.)

Only about 18 percent ofAmericans live in cities with densities above 5,000per square mile—cities such as Seattle, Washington,D.C., Chicago, and Boston. About a third live in den-sities of 3,000 or more (Houston and Atlanta havedensities of about 3,000). In other words, two-thirdsof all Americans live in cities with densities of 3,000per square mile or less. Bozeman, Montana, has about2,300 people per square mile, while Little Rock has1,700; Colorado Springs, 1,500; Chattanooga, 1,300.

All these numbers count only the central cities.Suburbs around these cities are typically much lower.

dvocates of higher density say that it will improveurban livability. Because people will live more

closely together, they will reduce auto usage, and morepeople will walk or ride transit (Sierra Club 1998).

But Census Bureau (1990) surveys (which askedone out of six households how they got to work) in-dicate that hopes for reducing auto usage are unreal-istic. Ninety percent of commuters drive to work untildensities are above 5,000 per square mile. Even above

A

O


that density, huge changes in density are needed tosignificantly change driving behavior.

For example, quadrupling Seattle’s density from5,000 per square mile to New York’s 20,000 might cutper capita driving in half. But with four times as manypeople, twice as much traffic would be on the roads.

It is not even likely that simply quadrupling den-sity would lead Seattle to achieve New York’s lowdriving rates. Unlike Seattle, New York enjoys veryhigh employment densities as well as a historicallydense transit network . Most American cities havewidely dispersed employment, with less than 10 per-cent of jobs located downtown. Mass transit is only ef-ficient when employment densitiesare high.

“Smart growth” is even moreimpractical when applied to entireurban areas—meaning the centralcities and their suburbs. Only three ofthe nation’s 400 urban areas havedensities greater than 5,000 persquare mile. For the rest, even dou-bling density would reduce per capitaauto driving by only about 5 percent.Twice as many people, each driving95 percent as much translates to a 90 percent increasein traffic. Since “smart growth” calls for few to no newroads, this means far more congestion.

nce we understand that the “smart growth” solu-tions will increase congestion, we can begin to

understand their appeal to people who expect to ben-efit from more crowds. Transit agencies love density.The Metropolitan Council (1996, 54), which oper-ates transit in Minnesota’s Twin Cities, says that “astraffic congestion builds, alternative travel modes willbecome more attractive.”

Big city mayors and officials also love these poli-cies, which will give them more control over the sub-urbs. Portland city councilor Charles Hales makes nobones about his dislike of the suburbs around his city.He has called the suburbs “trashy . . . godawful subdi-visions” (quoted in Ehrenhalt 1997, 23). Officialsand business executives tied to urban downtowns alsolike “smart growth.” It would reduce the low-conges-tion advantage that suburban shopping and officecenters have over downtowns.

Ironically, the push for congestion is at odds withworldwide trends toward lower densities. Today’s“smart-growth” policies echo those adopted by most

European countries after World War II, when theydecided to emphasize high-density housing and tran-sit and heavily tax autos and gasoline. Yet today, Eu-ropean cities are losing population, their suburbs aregrowing rapidly, urban densities are falling, auto own-ership and usage is rising, and transit usage is stagnantor declining (Kenworthy and Laube 1999).

“In worldwide perspective, rapid growth of auto-mobiles began in the United States because we werericher than other nations,” says University of Califor-nia (Irvine) economist Charles Lave (1992, 11). “Butother nations headed down the same path as their in-comes increased.” Lave concludes that “the desire forpersonal mobility seems to be unstoppable.”

Policies to increase density will be an urban disas-ter. In the years ahead, they will havethe opposite of the intended effect,leading to an even more rapid move-ment away from the cities.

Ehrenhalt, Alan. 1997. The GreatWall of Portland. Governing,May, 20–24.

Lave, Charles. 1992. Cars and De-mographics. Access 1: 4–11.

Kenworthy, Jeffrey R., and Felix B. Laube. 1999. AnInternational Sourcebook of Automobile Dependencein Cities, 1960-1990. Boulder, CO: Universityof Colorado Press.

Metro. 1994. Regional 2040 Recommended AlternativeTechnical Appendix. Portland, OR, September 15.

———. 1996. Regional Transportation Plan Update.Chapter 1. Portland, OR, March 22.

Metropolitan Council. 1996. Regional TransportationPlan. St. Paul, MN: Metropolitan Council.

Sierra Club. 1998. The Dark Side of the AmericanDream. San Francisco: Sierra Club.

U.S. Census Bureau. 1990. Census Lookup. CurrentLevel: State. Available: venus.census.gov/cdrom/l o o k u p / C M D = L I S T / D B = C 9 0 S T F 3 A /LEV=STATE.

———. 1993. Land Area, Population, and Density forPlaces: 1990. Available: www.census.gov/popula-tion/www/censusdata/places.html. (March 23).

———. 1995. Urban and Rural Population: 1900 to1990. October. Available: www.census.gov/population/censusdata/urpop0090.txt.

Randal O'Toole is senior economist with the Thoreau Institute([email protected]).

DRIVING AND DENSITY

■

For most cities,

doubling density would

reduce per capita auto driving

by about 5 percent.

■

O

References


December 1999

Dear PERC Reports Reader:

As you are thinking about holiday gifts, I hope your list will include a tax-deductible year-end contribution to PERC. After twenty years, free market environmentalism is movingtoward the center stage of the environmental policy debate. So now, more than ever, we needyour support to make a difference for the environment and for freedom.

Generous support from those who receive PERC Reports has contributed to the advanceswe have made in common-sense, market-based approaches to environmental concerns. Hereare a few policies that we have encouraged:

• Water markets can enhance fish habitat, as exemplified by the Oregon Water Trust,which purchases irrigation water from farmers and keeps it in the stream.

• Realistic recreation fees on public lands can improve roads and sewage facilities, asshown in Yellowstone National Park.

• Direct compensation of landowners can increase wildlife habitat, as shown by DeltaWaterfowl’s “adopt-a-pothole” program for ducks.

• Marketable pollution credits can improve water quality, as illustrated in the Tar-Pamlico Sound in North Carolina.

• Tradable fishing rights can improve ocean fisheries, as demonstrated by the AtlanticSalmon Federation, which retires fishing rights to increase wild salmon stocks.

Now PERC is embarking on a campaign to put its ideas into the national and internationalspotlight. Our goal is to increase annual budgets by $500,000 through individual supporterswilling to make a long-term commitment to these ideas. The additional funds will allow PERC to1) conduct more research in five major areas—water, fish and wildlife, land management,pollution control, and international environmentalism; 2) produce more newspaper columns;3) host more students; and 4) develop and present more curriculum materials to teachers.

Please make the most generous year-end contribution you can make in any of theseconvenient ways:

� Use the attached business reply envelope.� Go to www.perc.org and contribute online quickly and easily.� Call 1-888-406-9532 and use your Visa or MasterCard.

Thank you for your contribution as we celebrate our twentieth anniversary in 2000.

Sincerely,

Terry L. AndersonExecutive Director


GREENERPASTURES

PRIVATE INITIATIVES

By Linda E. Platts

DRILLING FOR HABITAT

he Nature Conservancy, well known for protect-ing habitat for threatened plants and animals, is

taking a fresh look at ways to fulfill its mission. Sur-prisingly, gas drilling on one of its preserves seems tomake a lot of sense right now.

The Galveston Bay Prairie Reserve near TexasCity was donated to the conservancy in 1995 byMobil Exploration & Production US, Inc. It providedbadly needed habitat for the nearly extinct Attwater’sprairie chicken. In fact, biologists estimate that of the46 remaining wild birds, 28 of them make their homeon this 2,263-acre site. In order to ensure the prairiechicken’s survival, however, a wild population ofmore than 3,000 is needed. The current preserve canonly support about 50 birds, which means the NatureConservancy needs more land.

Money for the purchase of additional land couldcome from gas wells on the existing preserve. Theconservation group has granted permits to two com-panies for exploratory gas drilling. Strict safeguardshave been put in place, although some risk to thebirds does exist. Still, the conservancy is willing totake that risk as the project could provide as much as$5 million to finance the acquisition and restorationof more habitat.

—Houston Chronicle

TANTALIZING TAMARINS

n Brazil’s Atlantic coastal forest, farmers are find-ing they can make more money by protecting the

trees than from agriculture. The golden lion tamarin,a rare monkey, makes its home in this forest and at-tracts ecotourists from around the world.

Scientists have relocated monkeys who arebarely surviving in small isolated forest patches tolarger, intact areas where the owners agree to protectthe forest. In return, the farmers are able to attractpaying customers who want to be guided through theforest in hopes of seeing the brilliantly colored tama-rins in their native habitat.

Luis Nelson, a farmer and forest owner, has builta lodge for 12 visitors based on his ability to attracttourists to his land. He has added a waterfall and pondfor swimming, a series of gardens that are home tobutterflies and birds and also provide fresh nativefruits and vegetables to his dining room.

However, the highlight of any visit to Nelson’slodge is the guided walk through the forest. While heis well versed in the local flora and is able to point outmany of the unusual wild plants, most eyes are gluedto the treetops. A glimpse of the golden lion tamarinswinging through the treetops is what keeps Nelson inbusiness, and also protects the forest that is home tothe endangered monkey.

—Los Angeles Times

THE HOOVES HAVE IT

he sight of 600 cattle crammed onto an acre ofground might cause even a certified urbanite to

wonder about the quality of land management. Butaccording to Land Renewal, Inc. of Albuquerque thisis actually a healing process for lands that have beenseverely disturbed by the likes of mining, construc-tion, and fire.

Reclaiming disturbed landscapes is thiscompany’s job, and it has found that many hooveswork better and cost less than the shaping, seeding,and watering process that has been widely used bymining companies. Because tailings piles lack nutri-

T

I

T


ents and often form hard, impervious surfaces, theyrarely support new vegetation.

Land Renewal enriches the soil first with greenwaste such as grass clippings and then introducescattle, allowing them to feed for one day on twice theamount of food they normally consume. The pound-ing of many hooves breaks up the hard surface andbegins to incorporate the green matter as well as theexcess feed into the nutrient-poor soil.

While capping, the traditional reclamation pro-cess, can cost as much as $7,000 an acre, LandRenewal’s high impact cattle approach costs just$1,500 an acre. It requires some ongoing mainte-nance, but the results are long-lasting compared withthe short-term success of seeding barren soil.

According to Shannon Horst, a principal withthe company, the firm did $150,000 worth of businessin its first year and expects to do $1 million in its sec-ond year. It is planning projects at 10 reclamationsites in three countries and is in the process of open-ing subsidiary offices in South Africa and Australia.

—Albuquerque Journal

CALLING ALL CHEMICALS

ow Chemical Company and a group of environ-mental activists have completed a two-year col-

laborative project to cut the production of toxicchemicals and reduce their release into the air andwater. Despite deep skepticism on both sides, theproject has achieved reductions of more than 35 per-cent in both areas.

The challenge was to determine if environmen-talists who were thoroughly versed in the company’sneeds and processes could reduce pollution and alsoboost profits. The answer turned out to be yes. Dowinvested $3.1 million to make the necessary changesat its Midland, Michigan, plant and as a result standsto save $5.4 million annually.

In one instance, innovations and modificationsin the manufacture of resins eliminated formalde-hyde-laced tars as a by-product. The one-time cost of$330,000 produced annual savings of $3.3 million atDow’s waste treatment center.

In other departments, pollution preventionequipment was being bypassed or not used properly asmanagers strove to increase production. Dow execu-tives changed these practices by tying a portion oftheir engineers’ salaries to the performance of theenvironmental equipment.

While the savings that resulted from the projectrepresent only a fraction of the $1.3 billion that Dowearned last year, the voluntary nature of the programand the chance to see their industry through new eyeshas not been lost on Dow executives.

Corporate goals call for reducing toxic emissionsby 50 to 90 percent by 2005. With that in mind, Dowis already making plans to duplicate the Michiganproject at its giant Freeport, Texas, petrochemicalcomplex.

—New York Times

CATALOGING PARKS

hile there has been no lack of news coverageon the sad state of our national parks, there is

still not enough money to shore up the buildings andpatch the roads. To help fill the gap, two energetic en-trepreneurs turned their disappointment over a can-celed trip to Yosemite during the 1995 governmentclosure into a new business that offers financial sup-port to the parks.

Joe Galliani and Mike Baggetta saw the parks asan underpromoted and undermarketed commodity.No one, after all, can doubt that Americans love theirnational parks. So they figured a lot of people mightlike to buy caps, T-shirts, coffee mugs, and other itemsthat feature the various national park logos. And,perhaps these same folks would cotton to the ideathat 5 percent of the money that they spent would bedonated to the parks. That was the deal the two busi-nessmen wanted to offer.

With that kernel of an idea, they put togetherthe merchandise and designed a catalog. In July1997, the first round of catalogs went to just 25people. The mailing list now stands at 60,000 andthe partners expect it to double before the holidayseason is over.

The Parks Company National Parks Catalog isavailable by phone or on the Internet. So far the mostpopular items are the series of park posters created inthe 1930s by artists for the Federal Arts Project.

The catalog company has donated more than$28,000 for national park programs and improve-ments. Although this is a small contribution in lightof the $9 billion the park service says it needs formaintenance and repair, at least it’s a start at narrow-ing the gap. (For more information: 888-727-5726 orhttp://www.theparksco.com).

—Environmental News Network

D

W


other resource that they mustpurchase. Although costs willincrease, there will be a ten-dency toward an equilibriumthat will fully reflect the cost ofthese additional inputs. Firmsthat fail to use these pollutionrights efficiently will be drivenfrom the market by firms thatdo. Pollution rights will tend toflow toward the firms and in-dustries that can use them mostefficiently (Coase 1960). Costswill be higher and outputlower, but a competitive out-come will be achieved and allremaining producers will earnnormal returns.

Direct regulatory controls,however, have a different im-pact. By imposing costs, theywill reduce overall industry out-put, thereby raising prices. If themarginal price increase that re-sults from the lowered outputexceeds the marginal increasein cost from regulation, theregulated industry will be more

profitable after the imposition of the regulation thanbefore. (This will be especially true if the regulationmakes the firm’s supply curve more inelastic.) Inshort, the regulation will encourage a cartel, coopera-tion among competitors that is illegal under the an-titrust laws (Pritchard and Zywicki 1998). Thegovernment will help substitute monopoly for compe-tition.

Not all firms in a given industry will benefit orbenefit equally, as the higher costs may be larger forsome firms than others and may even drive some firms

CREATING A CARTEL

WHY INDUSTRYEMBRACES REGULATION

By Todd J. Zywicki

any scholars still assumethat regulated industries

have nothing to gain and muchto lose from the imposition ofenvironmental regulation. To alarge extent this assumption re-flects ignorance of an AmericanEconomic Review article byJames Buchanan and GordonTullock (1975) and later find-ings that support their research.

Once it is understood howenvironmental regulation cantransfer wealth to those who areregulated, it will become moreevident why regulation gener-ally takes the form of inefficientcentralized, command-and-con-trol approaches, rather thanmore decentralized and flexibleapproaches, such as taxes ortradable pollution permits.

Indeed, the paradox isstriking: While economistsstress taxes and emissions fees,regulators generally prefer directrestrictions on pollution emis-sions or the imposition of tech-nological requirements. One reason is that theregulated industry may prefer direct regulation.

Consider what happens when regulators chargea tax in proportion to a firm’s pollution or require itto buy the right to pollute through purchase of trad-able pollution permits.

The cost of doing business will increase. Thepolluter previously used the environmental resourcefor free; now it must pay for each unit of waste it cre-ates. Firms will minimize their use of these inputs(i.e., the pollution permits), just as they do with any

M

Economists stress taxes and

emissions fees, but the industry

may prefer direct controls or

technological requirements.


■

Direct pollution

controls reduce

overall industry output,

raise prices, and increase

the profits of the

regulated industry.

■

from the market. However, at least some firms withinthe industry will benefit.

Empirical support for Buchanan and Tullock’sthesis comes from a study of the worker protectionstandards for cotton dust in textile mills and a Su-preme Court decision upholding copper smeltingregulations that limited entry of new smelters(Maloney and McCormick 1982). Tough regulationsincreased costs and thereby reduced output, yet thestock values of existing firms increased. While furtherempirical research is warranted, this study suggeststhat regulation led to higher profits in spite of thehigher costs.

imilar forces may also account for the otherwisepuzzling decision of some automobile producers

to support even stricter miles-per-gal-lon standards than Congress eventu-ally adopted (Yandle 1980, 300).Presumably, for these manufacturersthe benefits of regulation in raisingprices outweighed the direct compli-ance costs.

These gains from regulation,however, will be dissipated unless en-try into the regulated industry is re-stricted. It turns out that such entryrestrictions are routine.

For example, environmentalregulations commonly impose stricterpollution control requirements onnew firms than on existing firms.The 1970 Clean Air Act and its amendments im-posed standards on existing pollution sources basedon the ambient air quality. In contrast, new firmshad to meet the strictest standards regardless of lo-cal air quality (Hahn and Noll 1983, 64).

Indeed, writes Robert Crandall (1983, 126), thelaw “heap[s]” requirements on those seeking permitsthat “can only be described as baroque,” while re-maining silent about existing sources. Entry restric-tions “seem to pervade every aspect of this regulatoryprocess,” write Michael Maloney and RobertMcCormick (1982, 101). Not only does this quashentry by new firms but it also discourages existingfirms from replacing older plants with new ones.

Barriers to entry are compounded by the applica-tion of different rules to different regions of the coun-try. Under the 1977 Clean Air Act Amendments,heavily polluted regions of the country are held to alower standard of ambient air quality than less devel-

oped regions. Peter Pashigian (1984), for example,found that politicians were driven more by the desireto protect home-state special interests from competi-tion than by environmental concerns.

In 1975, Buchanan and Tullock urged econo-mists to develop institutional arrangements thatwould make tradable permits and emission taxes “ac-ceptable to those who are primarily affected” (140).The past twenty-five years of environmental regula-tion suggest why many of those “primarily affected”—the regulated industries—still prefer direct controls.

Buchanan, James M., and Gordon Tullock. 1975. Pol-luters’ Profits and Political Response: DirectControl Versus Taxes. American Economic Re-view 65 (March): 139–47.

Coase, Ronald H. 1960. The Problemof Social Cost. Journal of Law andEconomics 3(1): 1–44.

Crandall, Robert W. 1983. ControllingIndustrial Pollution: The Economicsand Politics of Clean Air. Washing-ton, DC: Brookings Institution.

Hahn, Robert, and Roger Noll. 1983.Barriers to Implementing Trad-able Air Pollution Permits: Prob-lems of Regulatory Interactions.Yale Journal of Regulation 1: 63–91.

Maloney, Michael T., and Robert E.McCormick. 1982. A PositiveTheory of Environmental QualityRegulation. Journal of Law and

Economics 25 (April): 99–123.Pashigian, B. Peter. 1984. The Effect of Environmen-

tal Regulation on Optimal Plant Size and FactorShares. Journal of Law and Economics 27(April):1–28.

Pritchard, A. C., and Todd J. Zywicki. 1998. Findingthe Constitution: An Economic Analysis ofTradition’s Role in Constitutional Interpreta-tion. North Carolina Law Review 77: 409–521.

Yandle, Bruce. 1980. Fuel Efficiency by GovernmentMandate: A Cost-Benefit Analysis. Policy Analy-sis 6: 291–301.

Todd J. Zywicki is Assistant Professor of Law at George MasonUniversity School of Law in Arlington, Virginia. This excerpt is fromhis essay, “Industry and Environmental Lobbyists: Enemies orAllies?” in the forthcoming book The Common Law and theEnvironment, edited by Roger E. Meiners and Andrew P. Morriss(Lanham, MD: Rowman and Littlefield, 2000).

References

S


economist, n. a scoundrel whose faulty vision sees things as they are, not as they ought to be.

—after Ambrose Bierce

WHERE RESEARCH ANDPOLICY MEET

T A N G E N T S By Daniel K. Benjamin

■

EPA cleanups

of Superfund sites

cost an average

of $12 billion for

every cancer

case prevented.

■

ost people are aware that we live in a world ofscarce resources and act accordingly. Not so

with the Environmental Protection Agency (EPA).When it comes to cleaning up Superfund sites aroundthe country, recent research suggeststhat the EPA acts as though costs don’tmatter—no matter how high thosecosts might be.

In a study actually funded by theEPA, Kip Viscusi and James Hamilton(1999) have found that EPA cleanupsof Superfund sites cost an average of al-most $12 billion for every cancer caseprevented. Even more amazing is thatvirtually all—99.5 percent—of thecancer cases that will be averted byEPA efforts are prevented by the first 5percent of the agency’s expenditures.The remaining 95 percent of expendi-tures avert only 0.5 percent of the can-cer cases—at a cost per case of an astonishing $200billion.

Although economists have previously scruti-nized the Superfund program, which is designed toclean up hazardous waste sites, the Viscusi-Hamiltonstudy is an improvement on several fronts. First, theyuse geographic information systems and detailed cen-sus data to permit the most precise assessment yet ofcosts and benefits of cleanups. Second, by examininghow cleanup decisions are made, they uncover newevidence regarding biases in EPA responses to risks.And finally, they isolate the role of political factors ininfluencing cleanup decisions. Together, these fea-tures help us understand both the huge cost of

Superfund cleanups and the enormous variation inthose costs across sites.

Cleanup at Superfund sites targets chemicalpathways. These are the specific ways in which people

are exposed to particular chemicals—such as breathing in contaminated dustblown from a slag heap. When thepathways pose a high risk, cleanup ismandatory, while with low-risk path-ways cleanup is at the discretion of lo-cal EPA officials. Viscusi and Hamiltonfind that the forces pushing the extentof cleanup often vary markedly be-tween these two types of sites.

To cite just one example of EPA’sinconsistency: In high-risk settings, theagency sets more stringent cleanupstandards the greater the populationdensity, a policy that seems sensibleenough. But in low-risk settings,

greater population density leads the EPA to chooseless stringent standards—an outcome that neither theauthors nor I can justify on any sensible grounds.

Overall, Viscusi and Hamilton find that“Superfund site [cleanup] decisions do not follow theexpected pattern for efficient risk management.” Thiswill come as little surprise to many readers, becauseCongress directs the EPA to make Superfund deci-sions without also ordering the agency to considercosts. What is disconcerting is which factors replacecost-effectiveness in guiding EPA decisions: misplacedrisk perceptions and political influence.

For example, a key ingredient in determiningEPA cleanup stringency is the public notoriety of the

M


■

Daniel K. Benjamin is a PERC Senior Associate and Professor ofEconomics at Clemson University. “Tangents” investigates policy im-plications of recent academic research.

chemicals at the site. Even after controlling for theknown risks of the site, Viscusi and Hamilton foundthat the more times a chemical was mentioned in thepopular press, the more stringent was the target (orpermissible) risk chosen by the EPA. Thus, instead ofcleaning the most dangerous sites, the EPA is clean-ing up the sites that might get bad press.

Sadly, the EPA does not seem to care whetherthe cleanup costs it incurs will actually benefit realpeople. That is, cleanup decisions generally are unaf-fected by whether the risks of the site are borne bypeople who live there today, or are hypotheticallyborne by people who might someday, under a worst-case scenario, live near the site. (Often the EPA as-sumes that today’s Superfund sites will somedaybecome residential communities teeming with chil-dren.) Thus, many cancer cases “prevented” by EPAcleanups are purely hypothetical—benefits likely tomaterialize only in the minds of EPA employees.

The average cost per cancer case averted by theEPA expenditures—$11.7 billion per case—masksenormous variation from site to site. At the most ef-ficiently cleaned-up site, the cost per cancer caseaverted was but $20,000. At the other end of thespectrum, the cost was $961 billion. Now, the EPA isnot actually spending $961 billion; indeed, the larg-est amount spent on any one site was only $134 mil-lion. The problem is that the hundreds of millions ofdollars poured into the least efficient cleanups had so

little impact that they were essentially a completewaste to society.

What could possibly lead to such abysmal deci-sion-making by the EPA? The answer, it seems, isplain old politics. Viscusi and Hamilton use localvoter turnout as their proxy for political pressure.They find that higher turnout pushes the EPA intomore stringent cleanups—and does so in the worstpossible manner. For sites with cost-effectiveness atthe median or better, political forces actually havelittle effect. But at the most inefficient sites, wherecosts per cancer case averted are in the billions, politi-cal factors have their strongest effect. Thus, in answerto the question: does politics matter in determiningEPA policy, the answer is “yes”—by inducing localEPA managers to pursue ridiculously costly cleanups.For anyone who doubts that Superfund ranks with theworst of Congress’s policy choices, I can only hopethat this study will end their skepticism.

Viscusi, W. Kip, and James T. Hamilton. 1999. AreRisk Regulators Rational? Evidence from Haz-ardous Waste Cleanup Decisions. American Eco-nomic Review 89(4): 1010–27.

Reference

Readers of PERC Reports have already seen twoadaptations of material from the forthcoming book,The Common Law and the Environment, edited byRoger E. Meiners and Andrew P. Morriss. The bookwill be published early in 2000 by Rowman &Littlefield (www.rowmanlittlefield.com), the latest inthe Political Economy Forum Series edited by TerryAnderson. The book reevaluates the case for address-ing environmental problems through statutory law, asUnited States policies do at present, and considers a

return to traditional common law. For another ex-cerpt, see the article on p. 14 by Todd J. Zywicki.

■

The role of common law in environmental pro-tection is getting attention through “Common Lawand the Conceit of Modern Environmental Policy,” byRoger E. Meiners and Bruce Yandle in the GeorgeMason Law Review, vol. 7, no. 4. Roger Meiners is

what’s new

PERC UPDATE


PERC UPDATE

spreading the word about the role of common law,most recently at the State Policy Network annualmeeting in Dallas in October. Bruce Yandle, who ad-dresses numerous free market environmentalism top-ics, recently spoke at the Philanthropy Roundtable’sannual meeting in Naples, Florida, on “What HaveWe Learned about Environmental Giving?”

■

PERC has introduced a new publication, SquareOne, a newsletter for and about grassroots environmen-tal groups. In the premier issue, editor Linda Plattsnoted that “everyone from the mega environmentalgroups with chapters in every whistlestop on thecontinent to the federal agencies occu-pying acres of office space inWashington are going backto square one when it comesto working on environmentalissues.”

The result is “grassrootsenvironmentalism.” Platts ex-plained that the newsletter willcarry stories that are “rarelysimple, often a bit ragged anddirty, and the players are not al-ways cuddly. In some instances,they are just plain ornery. Despitethe untidy packages that they comein, these people are making a differ-ence.”

If you are interested in receiving acopy or wish to add an environmentalgroup to our mailing list, send us an e-mailat [email protected].

■

Terry Anderson was the luncheon speaker at aspecial session at the annual meeting of the Na-tional Council for the Social Studies in Orlando,Florida, in November. More than 200 teachers at-tended, a sign of growing interest in PERC and freemarket environmentalism. Sponsors included theNational Council on Economic Education, JuniorAchievement, the Foundation for Teaching Eco-nomics, and the Federal Reserve Bank of New York.The session was organized by Donald Fell of theFlorida Council on Economic Education.

The federal government’s program to raise en-trance and user fees in national parks and forests isthe subject of a new PERC Policy Series paper (PS-17)by Holly Lippke Fretwell. “Paying to Play: The FeeDemonstration Program,” points out that fees providea new source of funding for deteriorating parks andother public lands and can improve park managers’incentives. The paper is available from PERC or onour Web site (www.perc.org).

■

PERC Senior Associates Richard Stroup and P.J. Hill took part in a recent conference sponsored bythe Acton Institute. The Acton Institute seeks to fur-

ther a free society that is sustained by re-ligious principles. Its leadership isconcerned that many Christian andJewish congregations blindly supportgovernment solutions in dealing withenvironmental problems. The con-ference in New Haven, Connecti-cut, was designed to develop astrategy for bringing free marketenvironmentalism to these con-gregations.

■

Bishop Grewell partici-pated in the Fourth Interna-tional Wildlife RanchingSymposium in Toronto.Grewell and Don Leal are

authors of the handbook,Hunting for Habitat, which surveys the

state of ranching for wildlife programs. Clay Landry,author of the PERC handbook, Saving Our Streamsthrough Water Markets, continues to promote the ideaof water trades, most recently in Water Policy, a lead-ing international journal published by the World Wa-ter Congress.

■

Jane Shaw and Richard Stroup helped lead aworkshop at the Foundation for Economic Education(FEE) headquartered in Irvington-on-Hudson, NewYork, for students from across the country. In Novem-ber, Shaw spoke on free market environmentalism ata seminar for editors and publishers of the FreedomNewspapers, a chain with 27 dailies.


he word “sustainable” is frequently overused, butPERC associates are impressed with the sustain-

able management of natural resources by the WhiteMountain Apache Tribe. By strategically managingthe habitat on the tribe’s 1.6 million-acre reservationin east-central Arizona and by using thetools of the marketplace, the WhiteMountain Apache maintain a rich envi-ronment for wildlife, offer recreationalopportunities, and provide tribal jobsand income.

For this environmental entrepre-neurship, the tribe received PERC’s1999 Enviro-Capitalist Award. JonCooley, Director of Wildlife and Out-door Recreation for the tribe, acceptedthe award at PERC’s conference forjournalists in October.

The tribe is best known for its elktrophy hunts, which can cost $12,500and more. For example, between 1977and 1995, hunters took ninety bull elkthat were recorded in either Boone andCrockett or Safari Club record books.(For comparison purposes, this is about the number ofrecord elk that have been taken from the entire stateof Montana since record keeping began in 1932.)

However, the tribe provides a wide array ofhunting opportunities, some of which are much lessexpensive. For example, the tribe periodically issuespermits, priced at $300 each, for nonantlered elk. Thetribe also offers permits for black bear and mountainlion ($300), javelina ($75), and wild turkey ($1,500for a guided hunt and two turkeys). It costs $50 perseason or $10 per day to hunt quail, squirrel, and cot-tontail rabbit.

Nor is hunting the only recreation offered.Families and individuals can fish, camp, boat, andriver raft, they can even rent an entire lake. The feesfrom these enterprises have enabled the WhiteMountain Apache Tribe to take significant steps to

protect the endangered native Apache trout.The tribe’s environmental success story began in

1977. At that time, the state of Arizona was issuing700 nontribal elk permits a year, priced at $150 each,for hunting on the reservation. Each license entitled

the bearer to shoot a bull elk, regardless ofsize. Typical of state wildlife management,Arizona was maximizing the number ofhunter opportunities rather than pricingthe licenses to reflect the value to hunt-ers. A state and tribal permit were bothrequired to hunt on the reservation, butthe tribe received none of the revenues.

Things changed that year. Tribalchairman Ronnie Lupe, with the backingof the tribal council, told the state thatthe tribe would take over management ofhunting and fishing on the reservation.The state opposed this action but acqui-esced after a federal court decision.

The tribe began by reducing hunt-ing pressure on immature bull elk. Itended the general elk hunt, replacing itwith a trophy elk hunt. From 700, the

number of elk permits was cut to thirty, and the pricerose to $1,500.

The tribe tapped into a mother lode of hunterdemand. Today, at $12,500 per permit, fifty people areon a waiting list for the trophy elk hunt. Each year anauction is held so that some can hunt without goingthrough the waiting list. The winning bids can be ashigh as $35,000. Other attractive game include ante-lope, bighorn sheep, and white-tailed deer.

While the high prices—reflecting strong de-mand—attract the most attention, the accomplish-ment of the tribe is to use those fees and others tonurture its natural resources and to provide incomefor tribal members. To echo the subtitle of the bookEnviro-Capitalists (1997) that Don Leal and I wrote,the White Mountain Apache are “doing good whiledoing well.”

T

TRULY SUSTAINABLEBy Terry L. Anderson

ENVIRO-CAPITALISTS

Non

-Pro

fit O

rgan

izat

ion

U.S

. PO

STA

GE

PAID

BU

LK R

AT

EPe

rmit

No.

433

Boz

eman

, MT

PERC

502

S. 1

9th

Ave

nue,

Sui

te 2

11B

ozem

an, M

T 5

9718

AD

DR

ESS

SE

RVIC

E R

EQ

UE

STE

D

hy aren’t there more Kampgrounds of America,more youth hostels, more hunting and hiking

available on private lands? The answer is that federalrecreation is available at such low prices that privatelandowners, who must pay the full cost of their busi-nesses, have trouble competing. Rather than losemoney providing scenic landscapes similar to nationalparks, private recreation gravitates toward amusementcenters, theme parks, and sometimes garish museums.

Private owners who want to showcase their natu-ral resources must differentiate their offerings. Considerthe privately owned Kentucky Caverns. These are partof the same karst (limestone formation) as MammothCave National Park and have been open for publictours since 1927.

In 1946, nearby Mammoth Cave was designated anational park. The National Park Service dropped thefees for cave tours from $3 per person to $1.50. (In thelate 1980s, the fee gradually increased to $3.50.) Tocompete with the low fees, Kentucky Caverns had tooffer unusual features just to keep people coming. Theowner could not simply offer cave tours.

In the 1970s, the owner, Bill Austin, created aNorth American wildlife exhibit, adding bison to theexisting stock of elk and white-tailed deer. But in 1996,the Land Between the Lakes Recreation Area, oper-ated by the federal Tennessee Valley Authority, intro-duced an elk herd that visitors could see withoutcharge.

Unable to compete, Austin shifted gears. He re-placed elk with kangaroos, emus, and Aboriginal arti-facts from Australia. The facility is now known asKentucky Down Under and has an Australian theme.

Today, thanks to a federal program to raise fees tomore realistic levels, the fee for a Mammoth Cave touris $7. In addition to making life a little easier for BillAustin, such fees may encourage more entrepreneurs toprovide recreation that many Americans want.

This excerpt is taken from “Paying to Play: The Fee DemonstrationProgram,” a PERC Policy Series paper available from PERC.

AN UNSEEN COSTOF LOW PARK FEES

By Holly Lippke Fretwell

W

QUERY

Where Markets Meet the Environment PERC REPORTS · Where Markets Meet the Environment ... by Allan...

Documents

Transcript of Where Markets Meet the Environment PERC REPORTS · Where Markets Meet the Environment ... by Allan...