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Climate change damage and property rights: do Lockean principles require Western nations to compensate poorer ones?

June 13th, 2008 No comments

Dedicated libertarian law professor Jonathan Adler and longtime libertarian policy analyst Indur Goklany discuss the above issue at in a Roundtable entitled “Climate Change and Property Rights” hosted by Shikha Dalmia of the Reason Foundation and made available online last week.

[Update:  Ron Bailey discusses the Adler/Goklany debate here.]

As both Jon Adler and Indur Goklany are serious and even-handed, fortunately the discussion includes none of the cheap, sneering dismissals of the moral issues (as “climate welfare” such as I addressed earlier on these pages and more recently on the main blog, where an author dismisses as “absurd” and another poster labels “beautiful propaganda” my suggestion that Lockean views must be seriously considered when addressing claims that the use of the atmosphere should be shared) that tends to be the hallmark of shallow, reflexive and emotional engagement so frequently encountered here at Mises and elsewhere from purported libertarians with respect to climate change and other environmental issues.

Unfortunately, the exchange between Adler and Goklany is far too academic, and neither commentator makes any effort to seize common ground (and climate change concerns) to push for liberalization of agricultural trade or other institutional changes that would (i) materially improve wealth (and ability to adapt to climate change) in poorer nations and (ii) enhance needed mitigation and adaptation efforts at home.

Both Adler and Goklany appear to agree on the fundamental, Lockean-based principles underlying their discussion and would probably agree that, even though the nations that benefit most from climate change (and from the long period of GDP growth when GHG emissions have not been priced) have at least a moral obligation to be concerned about an uncompensated shifting of costs to other (largely poorer) nations, it is nigh impossible to build a legal case mandating compensation. 

I suppose both Adler and Goklany probably also agree that (1) climate change is likely to further bedevil the development problems in poorer nations, which are least capable of adapting to such changes, (2) development problems in such countries is largely related to the failure of governing elites to protect property rights and capital, and (3) traditional development aid has in large measure failed and instead served to benefit well-connected elites from both sides.

I am curious (4) what both Adler and Goklany think about proposals that do not amount to compensation, but recognize the interest that the West has in aiding growth and climate adaptation in the developing world, such as the proposal reported last Friday in Osaka by Treasury secretary Hank Paulson for the Group of 8 industrialized nations to back a special $10 billion fund to help developing countries fight global warming and (5) why they (and other libertarians) do not seem to see that climate change concerns in many way present golden opportunities to urge positive governmental changes, such as greater free trade (and roll back of domestic agricultural subsidies and import restrictions), greater freedom in domestic energy markets, the desirability of allowing accelerated depreciation and lowering capital gains taxes, etc.

Why are libertarians so reluctant to focus on a positive agenda that would actually do some good?

In note that, back in July 2000, Adler proposed a “no regrets” domestic deregulatory agenda when he was associated with CEI: “Greenhouse Policy Without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change“; Jon has subsequently been rather quiet with respect to any specific climate change policy agenda.  Cato has just published an essay by Goklany, “What to Do about Climate Change“, in which Goklany essentially argues that a focus on mitigation (GHG reductions) is a relatively expensive and in effective way to combat climate change or advance well-being (particularly of the world’s most vulnerable populations), as compared with adaption efforts that would reduce vulnerabilities to climate-sensitive problems that could be exacerbated by climate change.

As I have previously noted, there are several libertarians who have recently been urging constructive libertarian approaches to climate change:

  • Edwin Dolan, in his Fall 2006 Cato Journal essay, Global Warming: Rethinking the Market Liberal Position, analyzes relevant Lockean considerations and cautions that market liberals appear to be hamstringing their own analytic strengths by falling into a reflexive and conservative mind-frames that benefit established economic interests.
  • Sheldon Richman of the Foundation for Economic Education also recommends Dolan’s essay and calls for less wishful thinking and greater engagement by libertarians in the December 8, 2006 edition of The Freeman:  The Goal Is Freedom: Global Warming and the Layman.
  • Gene Callahan makes a similar warning in his essay How a Free Society Could Solve Global Warming“, in the October 2007 issue of The Freeman.
  • Bruce Yandle, Professor Emeritus at Clemson University, Senior Fellow at PERC (the “free market” environmentalism think tank) and a respected thinker on common-law and free-market approaches to environmental problems, has in PERC’s Spring 2008 report specifically proposed a A No-Regrets Carbon Reduction Policy.

I further note that Shikha Dalmia of the Reason Foundation hosted a similar roundtable on climate change policy in October 2006.

Bruce Yandle on "no regrets", free-market approaches to climate change policy

April 4th, 2008 No comments

Bruce Yandle, Professor of Economics Emeritus at Clemson University and Senior Fellow at PERC (the “free market” environmentalism think tank founded by John Baden and now headed by Terry Anderson), has an article in PERC`s latest monthly report, in which he offers his thoughts on climate policy in the US: “A No-Regrets Carbon Reduction Policy”, http://www.perc.org/pdf/spr08%20Carbon%20Reduction.pdf.  Yandle is a respected thinker on common-law and free-market approaches to environmental problems.

I present here the “TT Notes” precis of Yandle-sensei`s article.

Yandle first notes that “most of our wealth-producing engines exhale carbon. Population growth and longer life expectancies mean more carbon dioxide emissions. More gross domestic product (GDP), translates into more carbon emissions. Proposals for dramatic, short-run reductions are not just costly in dollars, they are draconian in terms of human well-being.”

Notwithstanding the costs of GHG-control efforts, Yandle specifically notes that many economic actors are already quite active in this endeavor (in a manner that indicates they obviously consider the science sufficiently convincing and the costs merited by potential gains):

“There are a vast number of carbon reduction activities taking place in the developed world, with many involving major U.S. firms. … There is a developing regional trading community composed of 10 northeastern states. … Carbon offsets produced by Iowa farmers who modify how they plow fields are purchased by Canadian industrial firms.”

But aside from ongoing private efforts – including those in response to regulatory approaches adopted elsewhere – what public policy approaches might be most efficacious domestically? Yandle asks,

“Can free market environmentalism (FME) provide guidance as to which policies might best promote human well-being? Consider these principles:

• Incentives matter.

• Property rights that reward asset managers improve environmental outcomes.

• Competition among suppliers of goods desired by consumers generates a larger yield.

• Decentralization increases experimentation, leading to more innovation and environmental quality at lower costs.”

Yandle suggests that policy makers should consider at least four important policy considerations (aside from being careful not to cater only to special interests):

“1. To what extent is the United States a net carbon dioxide emitter, and are we as a nation equipped to determine when and how much progress is made in reducing emissions? Should we establish procedures to evaluate legislative actions in terms of their carbon emission impact?  [Yandle doesn`t discuss the baseline efforts that have been underway for years.]

2. What about actions that might be taken to hasten the adoption of lower carbon-emitting processes? Is it possible to adopt a “no regrets” policy — one that will generate net benefits even if Americans later reduce their concern about climate change?

3. Simultaneously, if climate change is occurring, what are the actions that might be taken to encourage human adaptation? Can these be framed as “no regrets”?

4. Why have a one-suit-fits-all climate change policy that applies nationwide, if not worldwide? Why not encourage experimentation across the United States?”

With respect to possible “no-regrets” policies, Yandle indicates that, so far, “Less attention has focused on longer-term decisions that will support targeted research and development, increase capital turnover, encourage new technologies, and hasten the expansion of safer nuclear power plants that eliminate carbon emissions entirely. These actions could form a “no regrets” bundle.”

“Taking an FME-based, no-regrets approach to carbon reduction will recognize that:

Deeply rooted technologies and energy sources can and will be replaced by alternate technologies and non-carbon emitting energy sources;

Rapid depreciation of existing capital and reductions in capital gains and corporate taxes will hasten adaptation; and

Subsidies and regulations that distort energy consumption and investment decisions and increase carbon emissions should be eliminated.”

In particular, Yandle argues that “Higher corporate taxes of all forms discourage formation of new capital, which delays the introduction of cleaner technologies. Eliminating capital gains taxes, reducing corporate income taxes, and accelerating depreciation would get the incentives right for replacing high carbon emitting machines and activities with cleaner processes. Doing so would also increase U.S. GDP and employment growth—a “no regrets” outcome.”

Yandle also argues that nuclear power should be encouraged: “Nuclear power produces no carbon emissions but it does come with some risks. To protect community property rights, the current liability cap provided to utility companies by Congress should be reevaluated in terms of experience and preferences for risk reduction. Property rights should be protected with a mean- ingful liability rule. Yes, there is nuclear waste to deal with, but this too can and should be addressed by the federal government. Developing an expedited nuclear power plant approval process and eliminating the nuclear waste bottleneck would contribute to a long-run reduction in carbon emissions—another “no regrets” policy.”

Query to Austrians – is Yandle rights by implicitly concluding that concerns about climate change present opportunities?  Or do such concerns only present costs and risks, to be avoided at all costs?

Yandle`s other work is described here: http://www.perc.org/about.php?id=711

http://www.fee.org/publications/the-freeman/article.asp?aid=4064

http://www.econtalk.org/archives/2007/10/yandle_on_the_t.html

 

 

 

Categories: climate change, no regrets, PERC, yandle Tags:

Bison and the Theft of the Commons

December 16th, 2007 No comments

[Updated, as noted]

[I now view this as my first “Avatar” post. February 15, 2010.]

My attention was drawn today to a letter to the editor published by The Property and Environment Research Center (PERC), an organization of free-thinkers who pioneered what is now known as “free market environmentalism” and which is the nation’s oldest and largest institute dedicated to original research that brings market principles to resolving environmental problems.

The letter, by P.J. Hill, Professor of Economics at Wheaton College and a PERC Senior Fellow, addresses an interesting article titled “Bisonomics” by Brian Yablonski in the Fall 2007 issue of “PERC Reports” on the growing private market that has led to a remarkable expansion of bison herds in North Americahttp://www.perc.org/perc.php?subsection=5&id=900.

[Update: According to the bison industry webpage, (i) bison producers can be found today in all 50 states, every Canadian province, and in several countries overseas, (ii) the Department of Agriculture reported in 2002 that approximately 4,000 private ranches held 232,000 head of bison across the United States, (iii) approximately 25,000 additional animals are kept in public herds, and (iv) the Canadian herd is estimated at 150,000 head.  This is an amazing comeback for a species that hovered on the brink of extinction in 1900.  http://www.bisoncentral.com/index.php?c=63&d=71&a=1087&w=2&r=Y

However, in the lower 48, only the 4000-head Yellowstone herd is genetically pure.  While there are  no “domestic” breeds, ranched bison all carry cattle genes, largely as a result of efforts to make hardier breeds of cattle.  Efforts to further domesticate bison continue.]

In explaining the near extirpation of American bison herds in the late 1800s, Yablonski rather conventionally describes this occurrence as “one of the great environmental catastrophes in our nation’s history” and “one of the starkest examples of the tragedy of the commons. No one owned the bison. Those who were not the first to capture the economic benefits of a bison lost those benefits to someone else.”

Professor Hill challenges this conventional wisdom and offers what seems to be a new twist:

“Yablonski …  errs in saying “the tragedy of the bison is one of the starkest examples of the tragedy of the commons.” A tragedy of the commons occurs when a resource is consumed more rapidly than it would be if well-defined and enforced property rights existed. In other words, the institutional framework leads to over-use. The primary reason bison did not remain abundant on the Great Plains after 1880 is not because they were unowned, although that fact might have sped up their slaughter. But, bison were a costly way to convert grass to meat in comparison to cattle, and if there would have been rights to bison on the parts of nineteenth century ranchers most of them would have been killed and cattle would have replaced them.

In the 1880s, a buffalo hide (the only part of a bison that could be easily shipped to eastern markets) was worth $3 in Miles City, Montana. A cow was worth $20 to $25 (see The Not so Wild, Wild West by Anderson and Hill 2004). Ranchers understood the economics of bison ranching versus cattle ranching and hence made no efforts to stop the hide hunters.

(emphasis added). http://www.perc.org/perc.php?subsection=5&id=1022

But is this really a new insight, or merely stating the obvious, while ignoring the ethnic and natural resource war of which the bison slaughter was part and parcel?  What follows below is part of an email that I have sent to PERC, cc: to Mr. Yablonski and Prof. Hill (with slight editing):

I see that P.J. Hill has commented in a letter that the near extinction of the bison was NOT a “tragedy of the commons”; his paper on this [“The Non-Tragedy of the Buffalo Commons”] carries the argument even further: www.isnie.org/ISNIE05/Papers05/hill.pdf
This deserves a much more detailed response, but suffice it to say that Mr. Hill’s analysis suffers from the very curious omission of a blindingly salient issue – the conflict between a hunter-gather Indian society and a much more technologically advanced white society.  The Indians were simply incapable of protecting the land and the resources that previously they had unquestionably occupied and possessed.  The slaughter of the bison was part and parcel of the elimination of the Indians as the lords of the Plains.
Once an eastern/white market for buffalo skins was established, the Indians, like the bison, stood no chance, and the rest of Mr. Hill’s argument is also fairly obvious.  Bison are powerful animals, not tame like cattle, and can be ranched today only with difficulty, through costly measures not available 135 years ago.  Their hides had value, but they themselves were a nuisance and a competing grazer.  Killing them was a free-for-all on land that was not owned or protected by whites, and on land that was, the skinners provided a service.
Finally, of course, removing the bison also had a value to the white government and settlers in removing emphatically their competitors for the land, the Indians.
Wikipedia summarizes:
“In August 1867, Grant appointed Sheridan to head the Department of the Missouri and pacify the Plains. His troops, even supplemented with state militia, were spread too thin to have any real effect. He conceived a strategy similar to the one he used in the Shenandoah Valley. In the Winter Campaign of 1868–69 he attacked the Cheyenne, Kiowa, and Comanche tribes in their winter quarters, taking their supplies and livestock and killing those who resisted, driving the rest back into their reservations. By promoting in Congressional testimony the hunting and slaughter of the vast herds of American Bison on the Great Plains and by other means, Sheridan helped deprive the Indians of their primary source of food.[39] Professional hunters, trespassing on Indian land, killed over 4 million bison by 1874. When the Texas legislature considered outlawing bison poaching on tribal lands, Sheridan personally testified against it in Austin, Texas. He suggested that the legislature should give each of the hunters a medal, engraved with a dead buffalo on one side and a discouraged-looking Indian on the other. [40] This strategy continued until the Indians honored their treaties. Sheridan’s department conducted the Red River War, the Ute War, and the Black Hills War, which resulted in the death of a trusted subordinate, Lt. Col. George Armstrong Custer. The Indian raids subsided during the 1870s and were almost over by the early 1880s, as Sheridan became the commanding general of the U.S. Army.[41]
Sheridan’s said the following to  Texas legislature in 1875: “These men, the buffalo hunters, have done in the last two years, and will do more in the next year, to settle the vexed Indian question, than the entire regular army has done in the last thirty years. They are destroying the Indians’ commissary; and it is a well-known fact that an army losing its base of supplies is placed at a great disadvantage. Send them powder and lead, if you will; but for the sake of lasting peace, let them kill, skin, and sell until the buffalo are exterminated. Then your prairies can be covered with speckled cattle, and the festive cowboy, who follows the hunter as a second forerunner of an advanced civilization.”
(emphasis added)
Far from a simple tragedy of the commons, we had a deliberate war, and a slaughter, driven by a white market demand, in a no man’s land from which Indians had been driven.
Dr. Hill simply addresses the question of whether those whites who established and could enforce property rights would prefer bison or cattle – and he hardly needs any firepower for that, as the comparison of bison to cattle for purposes of white markets is an open and shut case in favor of the much more docile (and less powerful) cattle.
One wonders whether Dr. Hill would venture similar arguments that the removal of native americans from their land in the Amazon and conversion of the “public land” to cattle ranches and soybean plantations (and palm oil plantations in Indonesia) is not a problem of the identification and enforcement of property rights, but is also simply a matter of economic efficiency.
Sincerely,
Tom

(emphasis added)

[Update: I couldn’t stop myself from noting here a few thoughts]

P.J. Hill concludes in his paper that:

“There was no tragedy in an economic sense in the killing of the bison; it was simply a rational economic act by people who wished to maximize the value of the grass on the Great Plains.” 

Bison herds both consumed the grass and disrupted cattle production so their removal was an economic necessity, not a tragedy or a waste of resources.”

“The history of the American bison is one of rational individuals operating under an institutional framework that did not create a tragedy of the commons. It is true that property rights were not well defined and established for buffalo on the open prairies, but since they were not a valuable resource, property rights entrepreneurs put little effort into establishing rights, and if there would have been well-defined and enforced property rights, cattle would still have replaced bison as the primary converter of grass on the Great Plains.”

(emphasis and italics added)

P.J. Hill is right to say that the near-extirpation of the American bison was not a pure “tragedy of the commons”, but I disagree strongly with his reasoning. What occurred was NOT simply, as Hill describes, the replacement of a wild, open-access ecosystem with “more productive” individual cattle ranches, farms, towns and railroads inextricably tied to distant markets. Rather, what occurred was just as much the usual tragedy when an indigenous people with community-property systems encounter a more numerous and more technologically advanced society – namely, the prompt swamping of the native community-property system and outright theft of resources.

Once one accepts P.J. Hill’s premise that the Great Plains rightfully belonged to the white newcomers, then his conclusions naturally and logically follow.  But one is not seeing history clearly if a cold analysis does not also consider the the broader clash of peoples, which the Indians were fated to lose (a la Jared Diamond‘s “Guns, Germs and Steel”).

More than a little disturbingly, Hill’s references to “people”, “rational individuals” and “entrepreneurs” are references only to the white newcomers, and not those who were dispossessed.  Rather startlingly, one can get a clearer picture of how many in the much more powerful white culture contemporaneously viewed the subjugation and removal of the American Indian from what had once been their domain by simply replacing Hill’s references to “bison” in the quoted paragraphs with “Indians”.

I do not mean to attribute such a view to Dr. Hill, but I do think that his failure to consider the issue of a clash of owners is a fatal flaw in his apparently dispassionate, reasoned academic analysis.