It’s Not Easy Being Green

Anderson and Huggins

Chapter 1

Greener Than Thou

Whoever can out green the other gets to set the regulation, and if you don’t jump on the bandwagon you risk being left behind altogether.

The race to apply red tape to green problems is being disguised as a duty of moral leadership.

In terms of real environmental improvements, however, this greener-than-thou attitude is dangerous.

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Green Politicians

Bush questioned whether global warming was real. He added polar bears to the endangered species list,

and advocated a limited cap-and-trade program for greenhouse gas emissions.

Schwarzenegger required California utilities to reduce carbon dioxide

emissions by 10 percent by 2020. pushed for state mandates for increased automobile

fuel efficiency. allowed the state to sue car manufacturers for

damages due to global warming.

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Fighting to Be More Green

Democrats recall the good ole final days of Clinton and they embrace Al Gore’s sermons on Capitol Hill calling for fast track regulations to curb global warming.

Republicans claim that Theodore Roosevelt was the original conservative conservationist. They also point out that Richard Nixon was the

first environmental president because he signed several environmental acts into law.

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Is God Green?

Support for environmental regulation is also growing among evangelicals. Protection of the environment, they say, is a

biblically rooted commandment. Many religious groups see global warming as a

moral issue and thus being greener than thou is a must.

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Business

If regulation is on its way, then companies that help define the rules have a better chance of winning the game. General Electric and Goldman Sachs actively

support going green—because they think there is money to be made and more influence to be had over policymakers.

At the very least, businesses want to avoid a patchwork of conflicting local environmental regulations.

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Must Regulation Be the Answer? So why is green equated with regulation and

not with harnessing the power of markets to improve the environment?

Market Failure suggests government action. To correct alleged failures, the government

attempts to determine the costs being imposed on others and impose a tax on emissions to account for those costs.

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Free Market Environmentalism Free market environmentalism (FME) challenges

the assumption that the policymaker has sufficient knowledge to set the optimal tax.

The policymaker needs information about production processes, production costs, and the health and consumption effects of the product.

No group of people, however well informed, can determine the optimal emissions or tax through a centralized process.

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FME

FME emphasizes the important role of markets, incentives, and property rights.

At the heart of FME is a system of property rights to natural resources that create incentives for resource users because the wealth of the owner is at stake if bad decisions are made. Free market environmentalists strive to transform

environmental problems into assets.

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Oxymoron?

People often assume free markets mean that corporations can do whatever they please, including polluting the air and water without concern for the consequences.

In such a system, landowners will overcut their trees, overplow their soil, and overgraze their pastures.

How, then, can markets solve the problems they are seen as causing?

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1. Environmental quality, priceless If you are green, you are expected to oppose

paving paradise and to favor conserving energy and recycling regardless of the cost. Ignores the trade-offs inherent in all transactions. Example: Despite there being no scientific models

to suggest that proposed global warming policies will significantly reduce the effect of climate change, people continue to call for action. Why invest trillions of dollars now to reduce carbon if we

cannot expect a return in the next hundred years?

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Costs and Benefits

Free market environmentalists recognize that improving environmental quality comes at a cost and that these costs must be weighed against the benefits.

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2. Mother nature and materialism don’t mix In the early stages of economic development,

people often are willing to sacrifice environmental quality for higher income.

But as wealth rises and people move beyond subsistence, they begin to demand better stewardship and environmental quality.

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3. Markets know no limits

Property rights allow the owner to reap the benefits of ownership but also to be held responsible for how the property is used.

If the garbage is dumped into a river that is unowned and mixes together, it can be difficult to determine who is doing the dumping and difficult to assign responsibility. This is what courts are in the business of

resolving.

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Jacobs Farms, Inc. v. Western Farm Services WFS legally applied pesticides to a conventional

farm; fog turned the pesticide to liquid droplets and air currents carried them to the organic Jacobs Farms, destroying $500,000 worth of dill.

Under state law, the sprayer’s responsibility ends once the chemicals have been applied; WFS did not violate the law.

Attorneys representing JF argued that neighboring farms were responsible for the pesticide that contaminated the organic crops, convincing a judge to order WFS to stop spraying pesticides.

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Prior Appropriation System

For free market environmentalists, one of government’s most important roles is to define and enforce property rights, thus encouraging environmental stewardship. Proof of beneficial use required diversion and did

not count water left in streams as a beneficial use. In states such as Oregon, Montana, and

Colorado, environmentalists are using water markets to increase instream flows.

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4. Don’t worry, be happy

Doomsayers claim that population growth was our greatest environmental problem.

Julian Simon, a professor of business administration at the University of Maryland, was fond of saying, “With every mouth comes two hands and a mind” and that human ingenuity is “the ultimate resource.”

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“Don’t waste energyworrying about the wrong issue” Free market environmentalists are optimistic

about human ingenuity and the environment because history shows that resourcefulness leads to positive results.

Environmental conditions are improving by almost any measure in areas where incomes are high and growing.

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A Green Thumb for the Invisible Hand Today’s global marketplace has lifted millions

of people out of poverty and has the potential to continue doing so.

It has the same potential for improving environmental quality, but most policymakers see markets and globalization as the cause of environmental degradation. “conservation will ultimately boil down to

rewarding the private landowner who conserves the public interest”

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Plan of the Book

Just as “no one washes a rental car,” people do not take care of natural resources they don’t own.

If property rights can be established, numerous examples show that “markets are a frog’s best friend.”

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