Protecting the Environment Through the Ownership Society — Part I

Studies | Environment

No. 282
Wednesday, January 25, 2006
by H. Sterling Burnett, Ph.D.


Introduction

The "Ownership Society" is a recurring, overarching policy theme of the George W. Bush presidency. The idea behind the ownership society is that the welfare of individuals (and thus the nation) is best served by and directly related to, the ability of people to control their own lives and chart their own course toward goals they have chosen. David Boaz, executive vice president of the Cato Institute, explained the concept thusly: "An ownership society values responsibility, liberty, and property. Individuals are empowered by freeing them from dependence on government handouts and making them owners instead, in control of their own lives and destinies." 1

"Ownership is a solution to environmental problems."

The President has promoted ownership as a solution to a variety of public policy issues including health care, housing and retirement. But thus far he has not, at least publicly, extended the ownership society concept to environmental issues. This oversight needs correction. Government programs and policies, some begun over a century ago, have created perverse incentives that are causing environmental harm. By removing these distortions and empowering individuals, we can greatly improve environmental management.

Among the policies that encourage environmental destruction are: agriculture subsidies, subsidized flood insurance and the Endangered Species Act. Each of these policies, enacted with the best of intentions, has routinely resulted in environmental destruction.

Protecting the Environment with Common Law. 2 Building on the British legal tradition, Americans traditionally have used three bodies of the common law (trespass, tort and riparian law) in defense of themselves, their property and the environment surrounding their property. Historically, individuals used laws against trespass, nuisance and common law rulings on water use to stop individual, industrial and even government activities that polluted their land, harmed their livestock, fouled the waters they used and made them sick. Under the common law, even unintentional and non-negligent violations of property rights were sanctioned, and led courts both to award damages to those harmed and to issue injunctions against the harmful activity.

"The common law protected owners' rights."

The courts found that injuring someone's enjoyment of his property creates a cause for recovery regardless of the legitimate social value, reasonableness or utility of the action. For instance, in Hay v. Cohoes Co., 3 the defendants blasted a canal. The blasting tossed rocks onto the plaintiff's land, depriving him of the safe use of his property. The court held that although the defendants' activity was a lawful and non-negligent use of their property, they caused a nuisance and a nuisance cannot be allowed, "even for the purpose of lawful trade," and thus the "offending use had to be barred regardless of the detrimental effects upon industrial development."

Regulation During the Progressive Era. The common law as a guardian of individual rights and the environment was largely subverted during the Progressive Era. Progressivism and conservationism stood for rationally planned industrial development and nationally coordinated natural resource use. 4 Resources were to be used for the greatest good of the greatest number and where respect for rights interfered with the pursuit of the "general welfare," rights were to be overridden. In the pursuit of economic growth and increased employment, companies were allowed to pollute air, water and private land to the detriment of the lives and property of individuals and often at the expense of the environment as well.

"Progressive regulations subverted owners' rights."

The first generation of federal agencies created to address "environmental" problems arose in the late 19th century during the Progressive Era. In response to environmental destruction and overuse of natural resources and species, they managed public lands and natural resources, such as declining forests and wildlife populations. A second generation of environmental laws and agencies were instituted in the 1960s and 1970s. These responded to environmental problems that are arguably more complex and intractable, but for which the causes and solutions are not readily apparent — like air and water pollution. Arguably, many of these problems were the result of decisions made during the Progressive Era to override the protection of individuals and their property in pursuit of the "general welfare." 5

The genesis of both generations of environmental laws and agencies was a faulty analysis of the causes, the seriousness of the threats and the range of solutions available to solve the perceived problems.

For instance, the destruction and waste evident in forests in the upper mid-west during the latter part of the 19th century were attributed to foresters' greed. This is one of the assumptions that led to the "Withdrawal Act of 1891" — seemingly innocent legislation that established the U.S. Forest Service to "scientifically manage" the "nation's" forests. Ironically, these government policies actually encouraged forest destruction. Under various homestead acts, federal land could only be claimed for farming — so forested lands that weren't good for crop production or grazing went unclaimed. Though the timber on forested land was valuable, it was considered "unowned" until it was harvested. Had individuals or companies been allowed to claim or purchase land for any productive use on the same basis as those claiming lands for agriculture, the millions of acres now encompassed by the national forest system might have been managed for sustained yield over the long-term, as they have been on private holdings elsewhere in the United States.

Rediscovering the Benefits of Ownership. After more than 100 years of federal management of natural resources and legislative dominance of environmental law, it is time to re-explore the extent to which ownership can improve the environment. 6 History cannot be changed, but policies can be. We need not continue to expand the scope and size of government to fix environmental problems created by previous government "fixes." Indeed, the Bush administration could boldly apply the ownership society concept to a range of environmental policy issues. This could improve both environmental quality and the government's finances.

The idea that private ownership of natural resources improves their management is not new. Its intellectual lineage can be traced as far back as Aristotle, who noted in Politics, "What belongs in common to the most people is accorded the least care: they take thought for their own things above all else, and less about things common, or only so much as falls to each individually." 7 Much later, Locke argued that ownership, tied to property rights, was necessary for individual and social well-being and to restrain government — thus ensuring personal liberty. 8 Today, President Bush has echoed their understanding, saying ". . . if you own something, you have a vital stake in the future of our country. The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country." 9

"Land owned in common has no protector or defender."

Garret Hardin provided a modern economic analysis of this point, using the example of herders who share common grazing land. Herders who overgraze commonly owned land get the benefits of doing so. Yet all herders share the cost of the resulting land degradation, whether or not they contributed to its cause. Consequently, herders who overgraze get the full benefit of their actions but bear only part of the cost. On the other hand, herders who resist the temptation to overgraze in order to protect the land bear the immediate cost of their forbearance, but realize only a fraction of the benefits. This is because the benefits of their good behavior (long-term preservation) are shared by all herders, not just those who act so as to preserve the land. Indeed, their selfless actions may have no effect on overgrazing — except to increase the share of the common pasture available to the others. Everyone, therefore, faces perverse incentives to overgraze. To the degree that they act on those incentives, environmental destruction results.

The source of these perverse incentives is lack of ownership. Land that has no owner has no protector or defender. As a result, self-interested behavior may reduce its value. 10

This analysis of the fundamental problem underlying environmental destruction has wide applications. Most of us would not consider dumping trash in our neighbor's backyard. But since we all have free access to air and water, many of us use them as dumping grounds for all manner of waste. Air, water, public lands and most species of mammals and fish have no clearly defined owners and therefore no protectors or defenders. When people use these resources, they derive private benefits, but collectively share their costs.

Some environmental problems can be solved by making rights and responsibilities explicit. For example, if grazing land is converted from common property to private property, the owners have a personal interest in preserving it from degradation. This interest motivates them to balance current land use against long-term preservation.

Even where strict private property rights cannot be established, either for technological or political reasons, new markets can be created or economic incentives can be brought to bear on the management of the resources in question in order to improve the environment.


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