Market Strategies Beneficial to Nature

Market Strategies Beneficial to Nature

August 22, 1999
Originally published in The Washington Times

 

There is a growing consensus among academics and policy makers that U.S. environmental policy needs dramatic change. While environmental reform remains at a standstill, there is a growing chorus of experts lamenting the failings of an overly rigid and bureaucratic system that crowds out innovation and effective conservation.

University of Minnesota law professor Daniel A. Farber adds his voice to the reform redondo in Eco-Pragmatism: Making Sensible Environmental Decisions in an Uncertain World (University of Chicago Press, $23, 210 pages). "Eco-Pragmatism" is a moderate book, as the title might suggest. Mr. Farber presents a soft critique of the status quo and recommends only modest "pragmatic" change. In particular, he wants "feasible" regulation of all "reasonably ascertainable" risks, economic analyses to inform decision making (so long as a low discount rate is used), and an "environmental baseline" that prevents substantial ecological decline.

Mr. Farber highlights the need to address scientific uncertainty in environmental policy. The impacts of many regulated activities are unknown in advance, mandating a choice between costly preventive action and risky forbearance; neither approach is wholly satisfying. Moreover, our understanding of environmental issues advances more rapidly than Washington's ability to enact reforms. The author's primary solution is to grant more autonomy to the Environmental Protection Agency to revise its policies on its own, without legislative acquiescence.

I, for one, am not eager to grant greater control to unelected experts, which is the ultimate reason that Mt Farber's "pragmatic" reforms seem insufficient. As the author notes, "if we cannot trust [EPA] to exercise ... discretion responsibly, we have a problem that goes well beyond the question of the EPA's involvement in regulatory reform." Exactly.

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Most consumer guides to environmental protection provide lit, tle more than gross oversimplifi cations and feel-good platitudes. Given this norm, The Consumer's Guide to Effective Environmental Choices by Michael Brower and Warren Leon (Three Rivers Press, $15 paper, 292 pages)is a pleasant surprise.

A product of the Union of Concerned Scientists, a "public interest" group focused on environmental issues and nuclear disarmament, this book is more informative and nuanced than most books of the type — particularly those produced by environmentalist advocacy groups. lime to their genre, the authors provide handy lists for consumers —the four most significant problems, the seven most damaging spending categories, and seven rules for "responsible consumption?'

The authors want consumers to "stop worrying about insignificant things" and focus on the personal decisions that have the greatest ecological effect. Consumers should stop worrying about paper or plastic in the supermarket checkout lane, and instead reduce their driving and energy consumption at home and avoid eating meat. Then, consumers should lobby the government for greater regulation to force the behavior changes that will not be made voluntarily. The problem is that the writers' recommendations are not entirely benign.

Mandating greater automotive fuel economy will make cars less safe, and avoiding the purchase of products made from endangered species, as the authors recommend, can deprive conservation programs in developing nations of the funds they need to continue. Despite these flaws, the book represents substantial progress. At this rate, a truly valuable environmental guide may be written within the next decade.

Chemicals, Cancer and Choices by Peter Van Doren (Cato Institute, $16.95, 99 pages) approaches the issue of consumers and the environment from an entirely different perspective. Rather than give consumers a few simplistic rules to guide their behavior, Mr. Van Doren seeks to explain how consumer-driven markets can, and already do, influence environmental issues, cancer risks from synthetic chemicals in particular. The author focuses first on "private risks:' those posed to individuals.

For starters, information in the marketplace enables consumers to vote with their dollars for the level of risk each finds acceptable. Of course, consumers may not pick products based upon the risk any given item does or does not pose, but liability rules, including common-law torts, discipline producers to reduce risks. And while such market pressures can fail, Mr. Van Doren notes it is unclear that government regulations do any better.

The question for policy makers, in many ways, is which policies are least inequitable or inefficient. "Public risks:' such as those from air pollution, are more difficult to 'address. Insurance can play a role, but in the case of cancer, the author argues, risks are too uncertain and longterm for insurance to do much good. In the end, some government regulation may be necessary - a conclusion not found in many Cato Institute books -- but it will be regulation that only supplements, rather than supplants, marketplace decisions.

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Mr. Van Doren's clear-eyed assessment of markets contrasts sharply with that provided by David Malin Roodman in The Natural Wealth of Nations: Harnessing the Market for the Environment (Norton, $13 paper, 303 pages). Mr. Roodman, an analyst with the Worldwatch Institute, seeks to advance Worldwatch's environmentalist agenda through economic measures, but there is little that is "market"-oriented in his agenda.

For every political intervention in the marketplace the author wants to erase, he dreams up another to take its place. Subsidies are not an environmental problem, though they distort economic decision making, encouraging waste and resource misuse. The problem is that someone other than Mr. Roodman decided what to subsidize. He eschews any rigorous definition of what constitutes a subsidy. Instead, he approves of subsidies, and other economic interventions, to the extent they further his ultimate aim: "major per capita reductions in energy, wood, minerals, and water user

Markets that are, not founded on property rights are illusory, and thus the "market" in Mr. Rood-man's agenda has little in common with the capitalist system. By not recognizing the foundational role that property plays ine establishing markets, Mr. Roodman plays the role of master planner, seeking to utilize "market instruments" for a preset list of environmental goals. The author does not want to "harness" the market, he wants to plan it from above. Regulations may be replaced with taxes and quotas, but the central  planning remains.

Mr. Roodman's read enough to know that regulators "are not _up to the task of reengineering indus- 'trial society on their own." Yet for some reason he believes the drafter of the tax code is. This, in the end, is his book's fatal conceit.

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In contrast to Mr. Roodman, most proponents of "free market environmentalism" point to property rights as the basis for environmental stewardship and market-based environmental protection. This is the theme of

Who Owns the Environment, edited by Peter J. Hill and Roger E. Meiners (Rowman & Littlefield, $29.95 paper, 368 pages) the latest in a series of books produced by the Political Economy Research Center in Bozeman, Montana.

The book makes a tremendous contribution to the literature of environmental reform. Essays by Terry Anderson, Louis De Alessi, Richard Epstein, Vernon Smith, and Bruce Yandle, among others, highlight the importance of property-based institutions in addressing environmental concerns. This is an academic volume, and some readers may find it a difficult read. But for the serious analyst, it is an essential addition.