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New Environmentalism
How Should Collective Decisions Be Made?
Environmentalists face a dilemma: when property rights are not well defined,
private voluntary action can lead to environmental degradation. And even
when property rights are well defined, managing property to maximize the
return on investment sometimes produces environmental impacts on neighboring
ecosystems. Yet transferring decision-making power to government creates
new problems because the political system is a commons. And governments
typically produce one-size-fits-all policies, even though environmental
problems vary by circumstance and location.
To solve this dilemma and improve collective decision making, we propose
a covenant between citizens and government. Such a covenant would
help to "fence in" collective decision making, to ensure that
decisions promote environmental goals as well as other goals and that such
decisions are fair and reasonable.
Principles for Collective Decision Making
In the marketplace, property rights and market prices create constraints
on the choices people make. They link decisions about resource use to the
consequences of those decisions. Poor decisions reduce property values and
lower returns on investment. Good decisions improve the long-term value
of assets and increase returns on investment. The principles offered here
create a similar though less self-sustaining set of constraints on decision
makers. Because they reflect widely held environmental value, the constraints
reduce conflict and produce desirable benefits at affordable prices. Individualism Principle: Other things being equal, when individuals make their own decisions about what values to pursue, conflict is reduced and the well-being of society is enhanced. Before thrusting a problem or environmental issue into an arena of collective decision making, we must first ask whether the problem can be resolved spontaneously by individuals or through market arrangements. Do we need, for example, a single rule demanding that people eat butter, not margarine? Do we need a single rule dictating that all packaging be recyclable? Or reusable? Or made of glass? Is a universal rule likely to lead to the best results?
Decentralization Principle: When decisions must be collective, the best place to make them is at the lowest possible level of government. When collective rule making is necessary, we should ask whether the problem is local, regional, national or international.
In contrast to tobacco smoke, consider ground-level smog generated largely through vehicle emissions. Smog often disperses widely over an air basin. It is not possible for me to have one level of smog while my neighbor has another. And traditional tort remedies probably are not adequate to address this problem, since it is difficult to identify the polluter. Indeed, the polluter is often "everyone," since people drive cars and cars now account for as much as half of remaining air emissions. Hence, some form of collective decision may be required. But must the rule that emerges become national? Or is it feasible for different locales, in different air basins, to establish their own rules?
The principle of decentralization requires that the decision be made by those directly affected by it. For example, hazardous waste sites demonstrate the importance of decentralization. So-called brownfields are sites identified as having some toxic contamination; many are abandoned factory locations. Under current federal law a number of these sites are in limbo, no longer used for their former purposes but unavailable for new uses. They are local blights.
Often, local communities would like to see these sites redeveloped. Many of them have low levels of contamination or problems that could be remedied quickly and cheaply. But current federal cleanup standards deter redevelopment because they don't take into account realistic potential uses of these sites. Bringing cleanup decisions back home allows local people to consider local conditions, evaluate the potential harms and benefits from redevelopment and devise their own cleanup plans.
Decentralization improves environmental policy in at least two ways. First, those closest to the problem have the most relevant information about it. Second, the harms it causes, the benefits resulting from the remedies and the trade-offs or costs associated with different remedies are felt by people at the point of impact. Bureaucrats in Washington - or even in state governments - are too remote to be personally affected.
The solution is to eliminate input and output regulations. For many input and output decisions, price signals in the marketplace already function rather effectively. For others - for example, air emissions - command-and-control mandates may be inappropriate. Emission charges, an alternative approach, would allow firms to decide whether to respond with a single control technology in all their plants or to tailor their remedies to specific locations. And sometimes, where a potential harm is well understood, poses acute dangers and varies little by location, a universal federal rule establishing acceptable levels may be appropriate.
Do No Harm Principle: Action should be taken only where it is clear that more good than harm will result. This principle is common sense, but it is often violated. The reason is that the principle often requires us to do nothing, especially where the cause and effect are uncertain. The principle defies the natural human inclination to do something, even if it is the wrong thing, in the face of a problem.
For example, both the USFWS and the FDA regulate the use of pesticides and residues in food, on the theory that they are carcinogenic and thus a threat to human health. Evidence suggests that the risks are trivial, and the regulations are costly. They lower the output of fruits and vegetables and raise their costs to consumers. Further, fruit and vegetable consumption is a major weapon in the war against lung, stomach and colorectal cancer and other illnesses. The National Research Council's Committee on Diet and Health has emphasized that the increased risk of exposure to pesticides is much lower than the potential benefits from greater consumption of fruits and vegetables.33
Some people still worry about even these small risks. For them, the marketplace provides options, since an unmet need is an invitation for an entrepreneur to succeed. In the realm of pesticide-free food, farmers are responding with organic produce. Also, labeling programs are helping consumers know what they are buying and agricultural extension programs are helping farmers reduce pesticide use without jeopardizing productivity or food quality.
Balancing Principle: Where decisions must be made collectively, the benefits of a chosen policy should always exceed the social costs. The world is full of opportunity costs. If we undertake x, we cannot do y at the same time with the same resources. This is why people compare benefits and costs (if only subconsciously) almost continuously. Society as a whole should do the same.
Cost-benefit analysis is a comparison of the estimated costs of an action with the estimated benefits it is likely or intended to produce.34 Almost all business decisions involve some measures of cost vs. benefits. Yet many government decisions are taken without adequate consideration of either.35
Many critics argue that one cannot place a dollar value on a human life or a natural resource. But that is not the intent of cost-benefit analysis. Rather, such analysis permits comparison of various options, all of which may be beneficial in some way but not all of which can be undertaken simultaneously.
- Brandt Child of Moab, Utah, hoped to develop campgrounds and a golf
course on his property; the federal government used the Endangered Species
Act to block his plans because the rare Kanab ambersnail resided in the
springs on his land.
- A Baptist congregation in Florida wanted to build a new church and
adjacent parking lot; federal officials determined that the site was more
important as a wetland.
- Retiree Margaret Rector of Austin, Texas, sought to sell 15 acres of land; the government blocked the sale because the land was a potential habitat for the black-capped vireo and the golden-cheeked warbler.
These are examples of policies establishing certain public amenities or public goods. Yet the government offered these people no compensation. It simply ordered them to leave their property in its original condition and thereby provide ecological benefits to the rest of us. No matter how vital or important the activity, it is improper to impose the costs of providing a public amenity on a single individual or small group. Instead, the cost should be spread over all who benefit from the policy. This is what we do in virtually all other cases where government uses private property to provide public goods such as schools, roads, airports and defense facilities.
The compensation principle is more than an issue of fairness. It gives property owners a financial self-interest in protecting habitat and preserving endangered species. In the absence of compensation, property owners are penalized by preservation and rewarded by extinction.
The idea of compensation is not about paying people not to pollute. Compensation is for situations in which laws result in "taking" (sequestering or withdrawing) land from usage, with the burden falling on the landowner and the benefits accruing to the public. Compensation for takings also is not intended to apply to health and safety regulations.41 The long tradition of nuisance law and property rights protections precludes one property owner from imposing harm on others unless those harmed agree to that nuisance in exchange for a benefit.42 Air, water and other pollution effects fall into the age-old common law categories of nuisance or trespass. The default rule is that producers don't have a right to pollute. Hence, regulations to limit pollution are not a matter for compensation.
Filters for Collective Decision Making
Other things being equal, we should all prefer policies whose benefits exceed
their costs. When the reverse is true, there is an undesirable waste of
resources. However, we do not get good public policy if cost-benefit rules
are imposed inappropriately. For example, it is unwise for the federal government
to try to make cost-benefit decisions in cases where local individuals or
businesses have all the relevant information. Conversely, we do not want
individuals or local businesses imposing their own cost-benefit calculations
in circumstances that are national or worldwide.
Consensus filters partition problems based on whether a consensus exists. Lack of a national consensus creates a presumption in favor of the decentralization principle and local decision making.Divisibility filters partition problems based on the degree of divisibility. Problems that have no national or global effects and that lack a national consensus also fall to local decision makers.
Knowledge filters group problems based on society's knowledge of cause and effect of a problem. If the knowledge is limited, the do no harm principle suggests that the justification for acting on those problems is also limited.
Risk filters group problems based on the degree of risk they pose. When the threat to health or safety is high, then the flexibility and balancing principles suggest a strong case for strict regulation. If the threat is low, the same principles indicate that government should set standards and let companies decide how to meet them.
Strategy filters partition problems based on the potential for different types of solutions. For example, to reduce a pollutant we could regulate it, use the tort system, impose taxes or fines or create tradable property rights. Once potential solution strategies are identified, we could employ the balancing and flexibility principles to choose among them.
Ownership filters partition problems based on the degree to which property rights are defined and protected. If resources are owned, using the individualism and compensation principles can improve social well-being by clarifying and enforcing responsibilities for environmental wrongs and by rewarding individuals that positively contribute to environmental quality. Where resources are unowned or property rights are not well-defined, it is appropriate to apply other filters and principles that follow from their application.
Information flow filters separate problems based on the potential for enhancing channels of information. Many problems can be solved by improving the flow of information so that individuals can make wise decisions. Once opportunities are identified, the principles can be used to help choose among them. When information flow solutions do not exist, it is appropriate to look at other filters.