Published On:Thursday, April 29, 2010

BY LARRY SMITH

"

I GET upset every Earth Day," says Laura Huggins, a political scientist at the Hoover Institution in California who describes herself as a free market environmentalist. "I get upset because of all those catastrophic claims that have been made about the environment for the past 40 years."

What "outrageous" claims is she referring to? The link between industrial pollutants and cancer made by Rachel Carson; the suggestions by Paul Ehrlich that population growth poses major problems for humanity; and the idea that we are plundering the planet at a pace which will outstrip its capacity to support life, to name a few.

Huggins was speaking at a public meeting last week organised by the Nassau Institute, which advocates libertarian free market policies for the Bahamas. She is a director of the Property and Environment Research Centre in Montana, and the author of books and articles that promote market principles to help solve environmental dilemmas.

"Are resources really finite?" she asked. "That depends on how you look at it, because our ultimate resource is the mind. Every generation has underestimated the potential for finding new recipes and ideas. The sky is not falling, and the end of the world is no closer today than it was in 1970."

But that too depends on how you look at it. Before the first Earth Day in the United States - April 22 1970 - small groups of people around the country were battling massive environmental degradation. Things were bad and, in some cases, they were spectacularly bad, and getting worse.

In the US especially, the decades following World War II were a period of unprecedented economic development, accompanied by big environmental changes. Lakes were being poisoned, rivers were catching fire, the Grand Canyon was about to be dammed and flooded, and a big chunk of the Everglades was being paved over for a jetport.

Earth Day mobilised these disparate groups of citizens into a widespread popular movement that was able to persuade politicians to take action. The US Congress passed aggressive legislation to curb air and water pollution, and to change the way government and business treated the environment.

Those reforms grew out of the first Earth Day, and in the years since then trillions of dollars have been spent differently than they would have if this new regulatory framework did not exist. And environmental impact assessments became the standard tool around the world to evaluate the impacts of development.

But Huggins is a free market environmentalist, so she does not accept these outcomes uncritically: "At what cost are things improving as a result of regulation?" she asked, before concluding that "red tape won't fix green problems."

Incentives

So what's the alternative? Well, Huggins says incentives and property rights are the answer. And she gave a few examples. In the US, a group called Defenders of Wildlife has been compensating ranchers for livestock losses due to wolves and grizzly bears. The goal is to share the economic responsibility for preserving these endangered animals.

Some green groups - like The Nature Conservancy - have been actively buying up private land in order to preserve special wilderness areas. And some commercial fisheries have benefited from rights-based management, which gives exclusive catch shares to fishermen that can be bought and sold. There are more than a hundred such programmes around the world, but Huggins cited the case of the Alaska halibut fishery, which had been reduced to a 48-hour season by the mid-1990s. At that point, the authorities allocated catch shares to individual fishermen, based on scientific estimates of the sustainable fish catch. And the results were striking.

The halibut season eventually stretched to nine months, meaning that fish hit the market in smaller numbers, but over a sustained period. This meant that the per-pound price of halibut increased and consumers enjoyed better access to year-round fresh fish. According to some proponents, rights-based management can halt and reverse fishery collapse.

But implementing such a system in the Bahamas would not be not easy, as you can imagine. How would rights be allocated? Could shares be consolidated, sold or traded? And how would fish populations, and catches, be monitored? It is unclear whether this approach would ever be feasible here, where enforcement of any rule is almost impossible. That is not to say the current approach is necessarily better. Our conch, lobster and reef fisheries are under heavy commercial pressure, yet we continue to underwrite the fisheries sector with subsidies (boats, engines and equipment are duty-free), by paying the costs of fisheries management, and through depletion of capital (read over-exploitation of fish stocks). This means that while the benefits of fishing accrue to a few, the costs of over-exploitation are shared by all of us - a concept known as perverse incentive.

According to Huggins, resources that are un-owned are subject to the tragedy of the commons - which means we scrabble over the spoils until they are all gone. A good example of this was the northern Caribbean sponge fishery, which - at its peak before the Second World War - removed 47 million pounds of live sponge annually and employed thousands of people and hundreds of ships in the Bahamas alone. But over-exploitation and disease wiped out the sponge beds in 1939, leaving the fishermen destitute. And only a tiny remnant of this once thriving industry exists today. Could we have escaped this consequence if settlements had joined together to protect their exclusive fishing zones and set harvesting rules?

One of Huggins' main arguments is that our treatment of the environment improves as we get wealthier - in other words, respect for the environmental increases as gross domestic product goes up. Well, it is comforting to know that all we have to do is make enough money, repeal every regulation, and get rid of all public resources for everything to be right with the world.

But regulations that tax pollution are aimed at making the hidden costs (known as externalities) part of the decision-making. Laws can force polluters to take notice of these external social costs by prescribing limits to what can be discharged or emitted. The optimal level of pollution, for example, then becomes the level at which the extra costs of cleaning up equal the cost of environmental damage caused by that pollution.

Regulations that offer incentives for alternative technologies - like electric vehicles or solar panels or mass transit - are aimed at offsetting some of the external costs associated with the entrenched and highly polluting transportation and power generating industries. Currently, these costs are avoided by the polluters.

It is a fact that if you build too close to the sea and destroy the dune, you will eventually lose the beach, which is what attracted you to the area in the first place. But there are any number of examples of wealthy, well-informed individuals and companies that have done exactly that throughout the Bahamas and the rest of the world. Just look at the former Crystal Palace Hotel on Cable Beach.

Regulations

Would clear government regulations setting out building requirements along our coastline fix this problem? I believe so. Will we be able to benefit from electric car and renewable power technologies unless tax policies are adjusted? Clearly not within a reasonable time frame. Can we prevent the destruction of wetlands by making them privately owned? Look at SandyPort and the south coast of New Providence, where developers are filling them in as we speak. Can we trade air pollution rights? For some reason, that's a big no-no for free marketers.

The phase out of lead in gasoline and paint that began in 1973 in the US is one of the most successful environmental health initiatives of the last century. Yet, despite the fact that the known harmful effects of lead to health were increasingly well known, industry continued to fight mandatory emissions controls for years. Through government regulation, the percentage of US children with elevated blood-lead levels dropped from almost 90 per cent to less than 5 per cent.

This brings me to the nagging concern I kept coming back to while listening to Huggins speak last week. As a political scientist, everything she said was based strictly on her strongly-held ideological views. And if something doesn't fit in with that ideology, then it must be discarded. This is the same approach taken by Marxists at the opposite extreme.

I can't buy that anymore. What we want are workable solutions to the very real challenges that we face, whether they involve private or public sector approaches. In the case of environmental impact assessments, the lesson is not that development must be halted, but that the consequences must be studied to weigh the pros against the cons, and to incorporate appropriate safeguards. Yes, that has a cost, but so does construction of poorly planned developments. The cost of the EIA is borne by the developer, but the cost of environmental disaster is shared by all of us. It is easy to make fun of environmental scenarios by saying the sky is always falling, but what about the never-ending assertions of free market thinkers that financial catastrophe is just around the corner due to Keynesian over-spending by governments.

We seem to be able to put off that disaster, which nevertheless still might come to pass. And the same is true for the consequences of rising populations, over-exploitation of resources, and industrial pollution.

Like Huggins, I get upset every Earth Day. Especially when I consider how we have wasted most of the past 30 years after the dismantling of America's nascent renewable energy programme in 1980. The ultimate symbol of those lost years was the well-publicised removal by President Ronald Reagan of solar water heaters installed by President Jimmy Carter on the roof of the White House. Solar panels - producing power and hot water - did not return to the White House until the early 2000s, when they were installed by the National Park Service. And now we are all scrambling to find ways to implement non-polluting renewable technologies to save the planet.

What do you think? Send comments to larry@tribunemedia.net

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