Disagreement with the world's environmentalist wackos doesn't mean that one is for dirty air and water, against conservation and for species extinction. Richard Stroup, Montana State University professor of economics and senior associate of the Center for Free Market Environmentalism, explains common-sense approaches to environmental issues in his new book, "Eco-nomics: What Everyone Should Know About Economics and the Environment."
Stroup starts out with the first lesson of economics: There's scarcity. That means more of one thing means less of another.
California's San Bernardino County was just about ready to build a new hospital. That was until the U.S. Fish and Wildlife Department discovered that the endangered flower-loving Delhi Sands fly was found on the site. The county had to spend $4.5 million to move the hospital 250 feet; it also had to divert funds from its medical mission to pay for mandated Delhi Sands fly studies.
Question: Was it worth it? On the benefit side, we have the survival of some Delhi Sands flies, but what about the cost side? How much pain and suffering and perhaps loss of human life was there because millions of dollars were diverted from the hospital's medical mission?
Stroup's analysis warns us that we must always attend to a regulation's unanticipated side effects. In other words, beneficiaries of a regulation tend always to be easily detected, but the victims are invisible.
David Lucas owned shoreline property that the South Carolina government told him he couldn't develop, even though his next-door neighbors developed their property. South Carolina's regulation made his shoreline property virtually worthless. Lucas sued, and the U.S. Supreme Court forced the South Carolina government to pay him $1 million. Once the state was forced to pay Lucas $1 million, it changed its mind about the worth of keeping the shoreline undeveloped. In fact, it sold it to a developer.
South Carolina's actions demonstrate that incentives matter. Costs borne by others will have less of an effect on our choices than when we bear them directly. Environmentalists love it when the government can force private citizens to bear the burden of their agenda, as opposed to requiring that government pay landowners for property losses due to one regulation or another. It's cheaper, and that means government officials will more readily cave in to environmentalists' demands.
In other words, regulations that stop a landowner from using his land because of the red-cockaded woodpecker, or prevent a farmer from tilling his land because of an endangered mouse, or prevent a homeowner from building a firebreak to protect his home, produce costs that are privately borne. If government had to compensate people for regulations that reduce the value of their property, more intelligent decisions would be made. Besides, if a particular measure will benefit the public, why should its cost be borne privately?
Environmentalists go berserk whenever there's talk of drilling for the tens of billions of dollars' worth of oil in Alaska's National Wildlife Refuge. Why? It doesn't cost them anything.
Here's what I predict. If we gave environmentalists Alaska's National Wildlife Refuge, you can bet your last dollar that there'd be oil drilling. Why? It would now cost them something to keep the oil in the ground. The Audubon Society owns the Rainey Preserve in Louisiana, a wildlife refuge. There's oil and natural gas on its property, and it has allowed drilling for over half a century. Not allowing drilling, in the name of saving the environment, would have cost it millions of dollars in revenue.
Stroup's "Eco-nomics," available at stores and the Washington-based Cato Institute, is fewer than 100 pages long but contains powerful lessons for sensible approaches to the world's environmental issues.