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Avatar, tragedy of the socialized commons and crashing salmon stocks; how the dirty hands of government destroy wild resources

February 17th, 2010 No comments

It’s a sad, sad story, now being played out practically wherever wild salmon stocks once were abundant. (This version refers to the Pacific Northwest, particularly to events in British Columbia).

First, national governments wrest control over salmon fisheries from native peoples, and eliminate low-level, community-based management systems.

With new socialized ownership, it becomes eternal “open season” on salmon and newcomers (whites or whatnot) go hog wild, resulting in the classic “tragedy of the commons” race to catch salmon before others do, without regard to others or to future harvests.

The state steps in to regulate take, banning nets at river mouths — smart fishermen take their nets to sea. Governments find themselves compelled to further regulate seasons and fishing gear, as fishermen who have no ownership stake in the resource look for ways to beat restrictions and to beat out competitors for unowned fish. Natives who don’t join in the race are left with ever slimmer takes.

As no one owns the salmon and has no legal rights that can be enforced against upstream users, governments build dams to benefit farmers (and nuclear bomb production sites and industry), and developers and loggers begin to trash streams and rivers. Reacting to howls from interested citizens, states begin to pass laws limiting the rights of property owners to use and manage their properties.

Governments get into the salmon hatchery business as salmon stocks start to plummet, and endangered species protection laws get passed. Loggers, developers, farmers and industries with cheap hydropower vent anger over “capitalism-hating” enviros and legislators, even as governments eager to please favored constituencies (farmers over natives, naturally) divert water in summer from dams to farmers, leading to large fish kills in lower and warmer rivers.

As fish stocks continue to fall, enterprising businesses get licenses from regional governments to “farm” salmon by raising them in pens (using ocean water flows, and catching and grinding up five pounds of other fish to raise one pound of salmon). Farms begin to proliferate – and begin to be seen by fishermen as externality-generating machines: farmed salmon become plagued with sea lice, which spreads to migrating wild populations, concentrations of salmon pollute neighboring waters, wild salmon populations begin to fall drastically, and other “feed stocks” of salmon are adversely affected.

Alarmed local people and adversely affected fishermen and natives organize, try to get consumers to stop buying farmed salmon, and go, hat in hand, to petition (1) governments to stop licensing new “farms” and (2) farms to adopt much more expensive methods that would seal of the farms from the wild environment. Salmon farming companies assert that they have rights to pollute, and no legal responsibility for damages suffered by others – that licensing regimes eliminated common-law rights to sue for nuisance, etc. Farmers tell governments to be “fair” and that governments should “co-invest” to subsidize any new farming methods.

Predictably, as wild salmon dwindle and temperatures rise, no one seems to wonder what things would be like if governments stopped trying to “manage” the salmon and playing the middleman, but found some way to recognize property/harvesting rights and to enforce basic common law rights against nuisance, and stepped out of the way.

I made some of these points in an email I sent today to some parties at interest:

Ladies/Gentlemen:
 
I sent the following note to WildSalmonCircle.com when I joined their mailing list; some of you might be interested:
  
Yes, one of your chief enemies are the salmon farmers, but the
real reason for the problem is that the government – and not the First
Nation or any other fishermen – owns the wild salmon.
 
As a result, the First Nations, commercial and sports fisherment
and other supporters of wild slmon and natural ecosystems have NO
direct rights to protect the wild salmon and are largely relegated to
feebly petitioning government (and the farming companies, whose
managers are obliged to care first and foremost for profits generated
for owners), and have little or no ability to directly sue the
salmon-farming interlopers whose pollution is damaging your livelihood
and the greater Northwest ecosystem.
 
This is exactly the problem we see with many other
government-owned/managed resources – in Canada, the US, China, the
Amazon, developing countries – and it’s why Elinor Ostrom was given the
2009 Nobel Prize in Economics
. Solutions regarding common resources lie
in resource users having recognized rights and an ability to bargain
with others in the community. Where governments own resources, then
they deny to those whose livelihoods and ways of life are at stake a
voice in their own present and future. (In the case of salmon, this has
deep, “Avatar”-like roots in the historical pushing aside of native
rights
and resource management practices in favor of new,
Western-dominated governments.)
 
So, to First Nations and fishermen, I say – sue the farmers
directly for nuisance pollution – assert your rights! Don’t leave them
simply as another interest group petitioning government.
But also start pushing for direct, recognized property rights
in the wild salmon, which would end the “tragedy of the
commons” resulting from a free-for-all ocean take. Ending ocean take
and replacing it with traditional river-mouth-based harvests will
better protect the wild resource and give you stronger rights to make
claims on those upstream who poison and damage habitat. And take a page
out of the book of Target US, and organize a CONSUMER BOYCOTT OF ALL
FARMED SALMON. And work to eliminate all legislative grants to insiders of immunity to lawsuits for activities that damage the economic interests of others (i.e., that produce “nuisances”).
Sincerely,
 
Tom
 

Breaking the impasse on ANWR and OCS exploration and development Part II; a response to Bob Murphy

July 29th, 2008 No comments

On the main Mises blog, Bob Murphy has just advocated opening ANWR and the OCS to oil and natural gas exploration and development, for the purpose of providing “rapid relief at the pump”.  As my comment has been held up – it only had two links for Pete’s sake! – I’ve decided to post a back-up copy here.

My comment (with minor tweaks) follows:

Bob, I agree generally with your analysis, but you really fail to address or answer the question of WHY the government should open up ANWR or the OCS – you state that the best reason to do so is because opening up more federal lands for drilling will “alter current behavior, leading to rapid relief at the pump.”

Interesting, but unexamined.  Is it the government’s job to open up lands that political decisions, on the basis of competing values, have kept off the market, simply to provide relief to the complaining parts of the market (fuel users)?  If so, should the government also open up the SPR whenever markets climb and users complain?  Are there other markets that the government should also try to manage for the benefit of consumers?  And how do we choose between what markets and market segments to listen to – what happens if, say, environmental demands rise suddenly after an oil spill – should the government then rapidly move producing areas off lease and into reserves?

You also conclusorily state that it is an “absurd situation where 94 percent of federal land, and 97 percent of federal offshore waters, are not being leased by energy companies.”  How is it that you have the wisdom to know how much and where the unidentified oil and gas resources lie, so you know what percentage of federal lands SHOULD be under an energy company lease?  And what about the small consideration of other values for the land in question – have you decided that energy trumps all?

Finally you conclude that “the ideal solution would be to completely privatize federal lands, so that the decision of whether or not to drill would no longer be a political one.”  As my initial questions to you may indicate, I actually agree with you on this, but the reason for privatization is NOT to provide relief to consumers and other users at the pump, but in order to end incompetent and politicized and sometimes logjammed federal management, while improving management of both environmental and other resource values.

Not only have I done a more thorough job of explaining WHY the feds and our Congresscritters ought to open up ANWR and the OCS, I’ve also explained HOW we can move past the existing deadlock – in a proposal I laid out last week in my blog here:  “Breaking the senseless impasse on ANWR and OCS exploration and development – a tax and rebate proposal”.

A deal on OCS seems easier to do than ANWR, because all that is needed to get the coastal states to agree is greater revenue-sharing with the states.

An ANWR deal should happen just out of fairness to the Inuit who own some land that is now bottled up in ANWR. [If they were given fee simple, then they could start drilling immediately, and while they’d have a right to access and transport across the wildlife reserve, they’d carry the liability for all environmental damage.  Sitting on ANWR makes it more likely that environmentally riskier OCS exploration and development in the Arctic Ocean will proceeed.]

By the way, has it ever occurred to you to wonder how much COAL leasing would occur if private parties and not the federal (and state) government owned the Western lands on which production is occurring?  With all of the royalties flowing into the coffers of federal and state governments?

Or to wonder how much extremely destructive coal production would occur in West Virgina and the rest of the Appalachians, if the governments were not being paid tremendous sums to turn a blind eye and to deny justice to those who are suffering all of the costs of the ongoing violation of private health and property rights and the transfer of costs and risks?  I addressed some of those issues here:  Almost levelled, West Virginia: Crooked justice allows mountain-top removal practices to freely injure homes and health“.

Regards,

Tom

As I noted on my related post, enviros should move on ANWR because they can get a better deal – on federal resource management generally, and even on climate change – than by sitting pat.  And Austrians and others ought to support both such movement, and the type of changes in federal resource management that I’ve outlined.

Breaking the senseless impasse on ANWR and OCS exploration and development – a tax and rebate proposal

July 16th, 2008 10 comments

It’s long been obvious that:

(1) government policy concerning the use of public lands is highly bureaucratized, often inept and subject to behind the scenes sweet deals favoring insiders;

(2) discussions about how the public lands should be used often very politicized;

(3) politicization is especially prominent with respect to public lands that have potentially high commercial value but where development requires additional approvals from legislators or others outside of the Administration/regulatory bureaucracy – such as the Arctic National Wildlife Refuge (ANWR) and the native lands within it, which cannot be explored without Congressional approval, and the Outer Continental Shelf (OCS), further development of which has been blocked both by Executive Order and by annual moratoria imposed by Congress, with the strong backing of many coastal states that wish to protect their tourism industries; and

(4) supporters on both sides – whether for development of ANWR and OCS or for the continued preservation of wildlife, recreation or tourism values or protection of other objectives – have perfectly legitimate interests, and excellent arguments to make (and some not so excellent) in support of those interests.

But it has not been so obvious that the different interests are in fact irreconcilable, especially when one notes how well conservation groups that own land have been able to balance their conservation objectives with active resource extraction – which can be done carefully while providing revenues for other activities.  In fact, I suppose that if any of the major environmental groups had been given title to ANWR, development would have been well underway years ago (as I have previously suggested).  Likewise, the states that have until now blocked further OCS development have done so in good part because the federal government takes the lion’s share of the royalty revenues, while leaving the states and local communities with the short end of the stick and the risks of feared development disasters.

So – for the rather simple reason that there is no private owner of the resources at stake, but instead a politically-controlled legal owner (the U.S. citizens via their government) and an array of shadow owners (the various interest groups and bureaucrats) who have been unable either to conclude any deals or to force their preferences down the throats of those they disagree with – we have deadlock, with valuable resources sitting in the ground, and possibilities for mutually beneficial deals lost.  This is a rather basic analysis that has been recognized by libertarian thinkers and free market environmentalists like John Baden for quite some time.

Recently, in response to a proposal by Iain Murray of CEI that ANWR and the OCS be opened to development, I indicated some further thoughts on possible paths forward:

The key is to end politicized control, not to run roughshod over conservationists.  If we are serious about ANWR, we ought to simply cede it to the Sierra Club or The Nature Conservancy.  They would certainly pump from it AND protect it, and use the revenues to support more important conservation projects.   As for the OCS, exploration is limited only because states don`t want to bear the burden of pollution risks with a slim share of revenues.  With more generous revenue sharing, more OCS development will occur.

However, I’d like to change tack a little bit, as these disputes are part of the bigger problem of federalized management, and we are unlikely to see Congress act in the near future to privatize ANWR or other federal lands, or even to turn them over to environmental groups to manage.  We face a real problem with respect to most of federal lands that revenues from resource extraction go into the big black hole of general funds, with very little ability of the resource managers to capture the benefit of managing well, and very little incentive by American taxpayers to make sure that resources are well-managed, priced to receive good returns and do not leave taxpayers generally holding the bag for environmental risks.  A litany of horror stories could easily be assembled on these points. 

How can we get started on improving incentives on our government resource management projects?  Well, a small idea occurs to me:

I’ve recently reviewed a slew of recent arguments on the climate change front and noted wide-ranging support (driven by equity, efficiency and expedience) for a federal carbon pricing scheme (whether by carbon taxes or by emission rights under a cap and trade scheme), particularly if all of the funds raised by the tax or permit sale are passed through to Americans on a per capita basisWhy couldn’t we apply the same concept to ANWR and the OCS lands, with a small percentage being kept by the relevant oversight agency to fund and incentivize oversight? 

If royalty revenues are passed through to citizens, Americans will directly benefit from moving ahead (without encouraging government bloat), so that development will not be seen as simply a giveaway by politicians to evil oil and gas companies.  Further, citizens (and entrepreneurial prosecutors) will have greater incentives to monitor government performance (as in not giving away the resources too cheaply, and actually collecting revenues owed), and will able use the dividend checks to fund, to their hearts’ content, further environmental protection.  In the case of the OCS, clearly a greater cut of the royalties ought to go to citizens in the relevant coastal states to compensate them for the relatively higher environmnetal risks they bear.

To incentivize the environmental groups to support this type of approach, as well as to provide better assurance of environmental oversight, I would suggest that new leases to explore or develop in ANWR and the OCS include as a contracting party an environmental group, either as the direct lessee (subcontracting to a preferred oil and gas company) or as environmental risk manager, in either case capturing a share of the royalty.  The environmental groups will reap some benefit (that they can use for other projects) and will be subject to oversight by their members, and to competition from other environmental groups to protect wildlife and other values.

Such schemes would incentivize all stakeholders to work together in a win-win manner, while minimizing environmental risk, and directly rewarding citizens and leading to improved resource management.

Maybe the strong desire of many to see carbon pricing at the federal level can be leveraged to enhance both environmental protection AND economic growth, while streamline government and rewarding good resource management, at least in the case of ANWR and the OCS.  (Next up, federal lands – forests, hard rock mining and oil and gas – generally!)

Just a thought.