Regulations took care of the most serious issues. Now it’s time for markets to handle the rest, says Terry Anderson.
By Valentin Schmid, Epoch Times
The days when political lines could be drawn in terms of where one stood on the environment are over. Everybody wants cleaner air, open spaces, vibrant wildlife, and lusher vegetation. The question is, how do we get there: through more regulation, or through free-market solutions? To seek answers, The Epoch Times spoke to Terry Anderson*, a senior fellow at the Hoover Institution and one of the country’s foremost experts on free-market environmentalism, at the Gottfried von Haberler Conference in Liechtenstein on May 19, 2017.
The Epoch Times: People equate environmental protection with regulation. You say the market can also find solutions. How?
Terry Anderson: The original regulations came from some pretty serious problems. The Clean Water Act in the United States was passed when rivers were burning. The Clean Air Act was passed when children couldn’t go outside because of the smog in Los Angeles. The Endangered Species Act was passed when the bald eagle was nearly extinct. These were low hanging fruit; we picked the worst sources of pollution, where people were dumping poison into the rivers and air. We also said, “Don’t shoot bald eagles,” and this was relatively easy to do.
Now we are looking at higher fruits that are harder to get through the political process. I see free-market environmentalism as having two prongs: one is a healthy economy that allows you to achieve the higher hanging fruit, and the second is getting the incentives right.
The Epoch Times: Why is having a good economy important? Doesn’t more business harm the environment?
Mr. Anderson: Wealth is created by productivity, by humans generating capital. The more productive you are, the fewer resources you need. The more capital you have, the more you can use it on the environment.
If you ask people in the developing world to save wildlife, it’s very low on their priority list. They may care about the air quality in their home if they are burning dung and maybe they would prefer to have natural gas. They care about the water quality in the river where they get their drinking water. They want to have those basic needs met first.
The Epoch Times: What about the incentives?
Mr. Anderson: Political solutions and regulations don’t depend on incentives other than the threat of punishment. If we find positive incentives through markets, we can solve the more difficult problems, even for the developing world. One example is wildlife in Africa. If you tell local people, “Save elephants because they are magnificent animals,” and the elephant just trampled over their crop, they won’t be very enamored with this argument.
But one successful program implemented in Zimbabwe is called CAMPFIRE (Communal Areas Management Programme for Indigenous Resources). It gives communities control over their wildlife without central planning. They can market hunting; they can market ecotourism. Then they see elephants as a source of revenue, and they start to treat them differently.
They distribute the profits from hunting, as well as the meat of the hunted elephants, among the people. And there are jobs for the people along the way. Because the elephant has value to the community, poaching went to zero in those places. The live elephants are worth enough that the last thing the village wants is another person coming to kill the elephant just to sell the ivory on the black market.
A game warden told me: “We don’t kill poachers the first time, we just beat them up and send them back. But the second time they come, we will kill them.” The elephant becomes so valuable that the local people have an incentive to have more elephants around. Fewer of them are killed, and the ones alive are treated better.
Also, it’s not just hunting, it’s eco-safaris too. That’s a solution that’s hard to get through regulation. We have regulations about poaching, and they mostly don’t work.
The Epoch Times: What about the United States?
Mr. Anderson: Leaving water in the streams and rivers, for example, is good for the fish and the birds and other wildlife. But there is a trade-off between leaving the water in the rivers and using some of it for farming. In Montana, people say the state should tell people how much water they use for farming. But if one party wants to keep water in the stream for fishing, instead of forcing the farmer not to use water for irrigation, they can make a deal with the farmer and buy the water from him.
This is putting your money where your mouth is. If you have to pay for the water you want to preserve, you are going to be much more careful with the quantities and places you choose. There is a group in Oregon called The Freshwater Trust, and they purchase water from farmers to create habitats for salmon to spawn.
They purchase the water, leave it in the stream, and count the fish, and if it doesn’t work, they don’t buy the water anymore and they move to another stream.
The people out there who care about the salmon have better information about the salmon, [which allows them] to make the right decision. The farmer who sells the water has some idea how much it would be worth if it was still used for crops. Bureaucrats who pass laws mandating this or that have none of that information and no skin in the game.
Markets encourage cooperation. Unlike a lawsuit, you can’t strike a deal if you don’t cooperate. So the environmentalists operate as “enviropreneurs” and search for these win-win solutions. Some people say, “We should not have to pay for this; the elephants should just be saved.” Yes, that should be, but you have to be more realistic and say, “This is our starting point. The regulation doesn’t work, so let’s look for a better solution.”
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We’re All Environmentalists Now
*Terry L. Anderson has been a senior fellow at the Hoover Institution since 1998 and is currently the John and Jean DeNault Senior Fellow. He is the past president of the Property and Environment Research Center in Bozeman, MT, and a Professor Emeritus at Montana State University where he won many teaching awards during his 25 year career. Anderson is one of the founders of “free market environmentalism,” the idea of using markets and property rights to solve environmental problems, and in 2015 published the third edition of his co-authored book by that title. He is author or editor of 39 books, including most recently, Unlocking the Wealth of Indian Nations (2016), exploring the institutional underpinnings of American Indian reservation economies.