No single tool will solve all environmental problems. But one powerful tool--the market--has been neglected by environmentalists in recent years. The Thoreau Institute is a free-market environmental group not because it believes that markets are a panacea for all problems--they aren't--but because Institute research has found that markets will solve many environmental problems better than more government regulation. These frequently-asked questions about free-market environmentalism will help explain these ideas.
- Isn't free-market environmentalist a contradiction in terms?
- No. Environmentalists share a common goal of trying to protect the environment. Markets are simply one means of achieving that goal. Free-market environmentalists are environmentalists who believe that in many--though not necessarily all--situations, markets will do far more to protect the environment than regulation or bureaucracy.
- Aren't markets a conservative ideas that we would expect to hear from Newt Gingrich?
- Yes, but that doesn't make them bad. Until just a few years ago, environmentalism was completely nonpartisan: neither liberal nor conservative, left nor right, Democrat nor Republican. In fact, when Newt Gingrich first ran for Congress, he was endorsed by the League of Conservation Voters and the local chapter of the Sierra Club.
- Aren't conservatives people who just want to keep things the way they are?
- That claim, often made by liberals, hardly describes conservatives. In today's parlance, conservatives are people who believe in solving problems at a local, decentralized, or individual scale. In contrast, liberals today try to solve problems using the power of the federal government.
This definition has changed over the decades. In the nineteenth century, liberals wanted to liberate people from government control. They advocated free markets as the best expression of individual desires. They also supported free trade, freedom of expression and religion, and freedom of inquiry. Today, people who hold these views sometimes call themselves classical liberals to distinguish themselves from modern liberals. The Thoreau Institute is a classical liberal environmental group.
- Name some free-market or classical liberal environmentalists.
Henry David Thoreau, often celebrated as America's first environmentalist, was a classical liberal. He supported free markets (which he called commerce) and opposed government regulation. He resisted taxes when those taxes went for activities that he considered immoral. He opposed slavery and advocated a government that recognize[s] the individual as a higher and independent power, from which all its own power and authority are derived, and treats him accordingly.
More recently, the founder of the National Park Service, Stephen Mather, was a conservative Republican who wanted to preserve America's scenic wonders but who also wanted the national parks to pay for themselves with user fees. He and several of his successors--notably Newton Drury, also a conservative Republican--believed that the National Park System should only contain the crown jewels, while other scenic areas should be preserved by the states.
Even more recently, several notable Republicans in the Nixon administration were ardent environmentalists. Among them were Walter Hickel and Rogers Morton, Nixon's interior secretaries, who strongly resisted efforts to overexploit public lands.
- So why does free-market environmentalist seem like an oxymoron today?
- During the Reagan administration, many environmental groups discovered the power of polarization as an organizing tool. By blaming environmental problems on James Watt--including numerous problems that he had nothing to do with--environmentalists found a convenient scapegoat that helped them build memberships and raise funds.
Groups that used such polarization techniques proved far more successful than ones that did not. But such polarization had the major drawback of driving people out of the environmental movement. It also narrowed the range of tools environmentalists could use to protect the environment.
- How does polarization drive people out of the environmental movement?
- Few people consider themselves enemies of the environment. But to use polarization as an organizing tool, you have to identify an enemy. Anyone so identified, and their friends, would soon see themselves as enemies--not of the environment but of environmentalists.
Since most of the people identified as enemies were Republicans, environmentalists began thinking of themselves as Democrats. During the 1970s, environmentalists frequently endorsed Republican candidates such as Newt Gingrich for office. But such endorsements thinned during the 1980s.
One Republican member of Congress complains that
No matter what I do for the environment, environmentalists will claim it wasn't enough and will oppose me in the election. So I might as well work for the people who will support me.
- How does polarization narrow the range of tools used to protect the environment?
- Polarization is based on the premise that there are good guys and bad guys. If environmental problems result from bad people, then the solution is to punish those bad people and make them pay for the damage they caused. This made regulation a preferred tool. On the other hand, any solution that allowed the so-called bad guys to prosper was ruled out as immoral. If it helped the bad guys--even if it was good for the environment--it must be wrong.
- What do free-market environmentalists believe?
- Like all environmentalists, free-market environmentalists believe that we face serious environmental problems, including pollution, habitat destruction, toxics, and endangered species. Unlike some environmentalists, free-market environmentalists believe that decentralized tools such as user fees, incentives, and markets will solve those problems better than centralized tools such as subsidies, bureaucracy, and regulation.
- Aren't markets bad for the environment?
- This is a misconception that results from the fact that every environmental problem results from a conflict between a marketed resource (for example, timber) and a non-marketed resource (for example, scenic beauty). In such a conflict, the non-marketed resource loses because resource managers have no incentive to protect such resources. So people see the marketed resource as the threat and the non-marketed resource as the innocent victim.
In turn, this has led people to think of markets as the problem. But markets are actually very effective at allocating resources and in insuring sustainability--provided that those resources are marketed. The real problem is the lack of markets for some resources.
- Aren't markets short sighted?
- Markets sometimes seem shortsighted because many investors focus on how much profit they can make in a short time. But markets also give investors an incentive to look at the long term. If they invest in a factory and then let the factory deteriorate, they won't get much for it if they decide to sell it.
The bond market, for example, includes bonds that won't mature for 99 years. The people buying those bonds don't expect to sell them in 99 years. But they know that if the issuer of the bonds remains solvent, they can sell the bonds to someone who will sell them to someone . . . who will sell them to someone who will redeem them in 99 years.
The relevant question is not Is the market short sighted? but Which is more short sighted: markets or government? The average elected official has a time horizon of two to four--or at most six--years. A typical market-driven company may have a time horizon in decades. That may not seem long to ecologists, but it is far better than a two-year horizon.
- Doesn't the lack of markets for some resources mean we need government regulation to protect those resources?
- In fact, government regulation is usually the reason why markets don't exist in the first place. We don't have very good markets for scenic beauty, for example, because some of the nation's best scenery is on federal land and Congress has strictly regulated user fees to well below market value. This gives federal land managers little incentive to protect scenery and makes it difficult for private land owners to capture the value of scenic beauty when they have to compete against below-cost recreation on federal lands.
The fundamental problem is that government regulation doesn't work very well. Those who are regulated usually end up controlling the process and warp the regulations to their own benefit. This means that regulation should be a last resort, and whenever we can we should try to find alternatives. If we can make markets work, they are usually the best alternative of all.
- Do classical liberals support privatization of the public lands?
- Some free-market environmentalists do believe that privatization is the best solution to public land controversies. But the Thoreau Institute considers privatization to be neither necessary nor sufficient to improve public land management.
Privatization won't, for example, necessarily save taxpayers any money. After all, the nation's 400 million acres of private farm lands (crop lands) receive an average of nearly $50 of federal tax subsidies per acre per year. By comparison, the nation's 600 million acres of federal lands receive less than $10 of federal tax subsidies per acre per year.
Instead of privatization, the Thoreau Institute advocates marketization. This means four things:
- Public land managers should be allowed to charge fair market value for all resources, including recreation.
- National forests, national parks, and other public lands should be funded exclusively out of a share of the net user fees they earn.
- Public land permits, which are now all written on a use-it-or-lose-it basis, should allow users to use it or conserve it.
- A share of gross user fees should be dedicated to trust funds designed to protect biodiversity, historic sites, and wilderness.
- Won't recreation user fees deny poor people access to public lands?
- Given market value user fees, some recreation--such as visiting Yosemite Valley, hiking in popular wilderness areas, or hunting trophy elk--will be expensive. But most recreation will be relatively low in cost, adding no more than about 1 percent to the average recreationist's expenses. Recreation fees will distribute use, discouraging overuse of popular areas and encouraging people to visit less popular areas.
The lack of recreation fees has proven so devastating to public lands that it can hardly be justified on the grounds that it helps poor people. If fees in some areas deny access to some people, the solution is to help people out of poverty, not to destroy the areas by giving them away. Free recreation will do little to help people out of poverty.
- Why fund forests, parks, and other public lands out of their net income?
- Whether they work for private companies or for the public, managers always tend to maximize their budgets. Managers funded out of their gross income would try to avoid earning a profit because they would fear that someone would take their profits away from them. This means that they would use any profits they earn from one activity to subsidize some other activity. Such cross-subsidies would almost always be bad for the environment and would lead to overdevelopment of the public lands.
- Won't timber or mining companies simply outbid recreationists for the public lands?
- In fact, the other way around is more likely in most cases. According to the Forest Service, the market value of recreation on the national forests is $6.6 billion per year. By comparison, the total income from all national forest commodities is less than $1 billion per year. While Forest Service estimates of recreation values may be high, even a modest recreation fee would overwhelm the revenue from other sources on most federal lands. Of course, this doesn't mean that all other activities would cease, only that public land managers would have incentives to make sure activities were compatible and, where conflicts exist, would focus on the more valuable uses.
- What do you mean by use it or conserve it?
- The Nature Conservancy and other environmental groups often go to private landowners and offer to buy the development rights to their land. This helps to preserve the land in perpetuity. Such a development right is sometimes called a conservation easement.
But this can't be done on federal lands, since all permits for timber cutting, grazing, and mining are on a use-it-or-lose-it basis: If the permittee doesn't cut the trees, graze livestock, or dig the minerals, the government takes the permit away and gives it to someone who will cut, graze, or dig. The Thoreau Institute proposes to change such permits so that people could, for example, buy a grazing permit and leave the forage for the wildlife.
- How can markets protect endangered species?
- No one tool is perfect, and markets by themselves won't solve all problems. But a classical liberal look at endangered species shows:
- Most endangered species are partly or mainly threatened by government subsidies. Classical liberals advocate ending those subsidies, which would greatly help many species.
- The Endangered Species Act ironically threatens many species because the regulatory power it imposes on private landowners leads many private owners to destroy their habitat before someone finds out they have endangered species on their land.
- How would free-market environmentalists protect endangered species?
- More than half of all endangered species are primarily found on private land, and classical liberals recognize that private landowners have legal rights to use their land. Under common law, wildlife belong to the government, but the habitat belongs to the landowner. This means that, if the government wants landowners to protect habitat for a particular species, it should compensate the landowner.
- But shouldn't private landowners be morally obligated to prevent a species from going extinct?
- Morals and ethics can play an important role in protecting the environment, but by themselves they are not enough. To be really effective, they have to be supplemented with sound incentives. That is why the Thoreau Institute supports the creation of a biodiversity trust fund, seeded with a share of public land user fees, that would give public land managers and private landowners incentives to protect habitat.
- How would a biodiversity trust fund work?
- Income to the trust would be managed by a board of trustees appointed (perhaps by the Secretary of the Interior) for their expertise in conservation biology and ecology. The board would use the funds to protect biodiversity by, for example, buying conservation easements; paying landowners to use or to avoid certain practices; or even paying bounties to any landowner whose land provided breeding habitat for an endangered species.
- But aren't endangered species something like slaves before the civil war? Slavery was once considered moral; now it isn't. Won't our ethics soon evolve so that harming a species will be considered immoral?
- People's ethical views do change. But we still can't rely on ethics alone to solve problems. We must supplement those ethics with either government coercion or incentives.
Slavery is a good example of how this works. In Britain, the government solved the problem with incentives. It simply bought the slaves from their owners and freed them. This was called emancipatation.
An emancipation movement began in the U.S., notably in Virginia, where it was supported by such people as Robert E. Lee. But the Northern abolitionists wanted to end slavery through coercion; they considered slavery too immoral to be solved through emancipation. This polarized the issue as Southern slaveholders told other Southerners, in effect, first they want to take our slaves; then they will want to take your land..
The result, of course, was a Civil War that killed or maimed more than a million people and left the South polarized against civil rights for more than a century. In contrast, the black slaves emancipated by the British government in the early 1900s easily integrated into English society.
So the lesson is: If you want to protect a resource through coercion, the likely result will be violence and generations of resentment against that resource. Incentives will work far better and at far lower political and social cost.
If you have any other questions, please send them to us on the comment section of the Electronic Drummerorder form.
Return to the Electronic Drummer.