Andrew Morriss Talks Green Energy on MSNBC

PERC’s Andrew Morriss appeared on MSNBC last week to discuss green energy and Solyndra with Dylan Ratigan:

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How Property Rights and Limited Trophy Hunting Saved the African White Rhino

From PERC’s latest Case Study:

“In 1900, the southern white rhinoceros was the most endangered of the five rhinoceros species. Less than 20 rhinos remained in a single reserve in South Africa. By 2010, white rhino numbers had climbed to more than 20,000, making it the most common rhino species on the planet.

Saving the white rhino from extinction can be attributed to a change in policy that allowed private ownership of wildlife. While protecting the rhinos encouraging breeding, the ranchers were able to profit by limited trophy hunting.

Poaching for rhino horn, which is in high demand for medicinal and ornamental purposes, had also devastated the rhino population. CITES banned the commercial sale of rhino horn, which caused black market sales to sky rocket and encouraged poaching. If the ban were lifted, ranchers are ready to supply the market by harvesting the horns humanely, which then regrow just like fingernails.

Strong property rights and market incentives have provided a successful model for rhino conservation, despite the negative impact of command-and-control approaches that rely on regulations and bans that restrict wildlife use.”

The author is Michael ‘t Sas-Rolfes, who recently launched Rhino-Economics.com. See also Michael’s Q&A on rhinos and tigers from earlier this year.

The Endangered Species Act and Federalism

A new book from RFF Press features a chapter by PERC scholars Terry Anderson and Reed Watson. The Endangered Species Act and Federalism, edited by Buzz Thompson and Kaush Arha, explores the role of states and local governments in protecting biodiversity in the United States.

Anderson and Watson’s chapter provides an economic assessment of environmental federalism, focusing on the transaction costs of species management at various levels of government authority. The text is now available from RFF Press.

Is clean water for fracking the next cleantech opportunity?

Lynne Kiesling at Knowledge Problem has an interesting post that might be of interest to enviropreneurs. She picks up on a recent article that suggests clean water for fracking is the next hot cleantech sector:

“In an interview this week with VantagePoint Capital Partner and Founder Alan Salzman, he told me that he sees technology that can help solve the clean water issue for fracking as an upcoming hot area for investment. “We think the limiting factor for gas fracking is water. We’re not gas people, and we’re not oil people. But we are water people,” said Salzman…

A company called ABSMaterials has been working on the problem of cleaning liquids involved with fracking. The company uses sand-like particles to absorb chemicals, and the company says it can remove 99 percent of oil and grease from water in fracking fluid, and another 90 percent of the toxic chemicals like benzene and xylenes.”

This video shows one of their products in action. As Lynne notes, this project and others are being funded in part by the Department of Energy. Her concluding discussion asks good questions:

“If fracking really is here to stay and growing, as Mike has discussed extensively, are these research subsidies necessary to induce innovation in water cleaning technologies? If so, on what basis? Is there a Coase problem here — does legal precedent fail to define legal liability sufficiently to clarify the profits attached to the water cleaning? Or, if that’s not the case, is the water cleaning insufficiently valuable to be worth doing? That hypothesis is consistent with the argument that fracking does not actually create a lot of water supply damage. But if that’s the case, then why subsidize the research — isn’t that a waste of taxpayer funding on research that isn’t likely to be valuable enough to be worth pursuing?”

Mike Giberson, also at Knowledge Problem, has been providing diligent and extensive analysis of fracking and energy markets more broadly from a market perspective, much of which can be found here.

Saving the Spotted Owl in a Static Natural World

Protecting endangered species is hard when you view nature as static. James L. Huffman in the Wall Street Journal:

No one really expects the strategy to work—not even those who first brought attention to the plight of the spotted owl. As Forest Service biologist Eric Forsman told the New York Times last month, “If you’d asked me in 1975, ‘Can we fix this problem?’ I’d have said, ‘Oh yeah, this problem will go away.'” But he says he’s grown “much less confident as the years have gone by.”

And for good reason. Despite a 90% cutback in harvesting on federal lands (which constitute 46% of Oregon and Washington combined), the population of spotted owls continues to decline, as do rural communities that once prospered across the Northwest. In some areas, spotted owls are vanishing at a rate of 9% per year, while on average the rate is 3%…

The truth is that no one fully understands why the spotted owl continues to decline. The rise of the barred owl poses an unexpected, but not surprising, complication. If the natural world would just remain static, species preservation and ecological management would be far simpler. But Mother Nature relishes competition, and the barred owl is a fierce competitor. Are we really prepared to send armed federal agents into Northwest forests in search of barred owls?

The U.S. Fish and Wildlife Service has issued its “final” spotted owl recovery plan [PDF], which calls for another 30 years of management and $127 million.

What If DeChristopher Could Bid?

Cross-posted at Grist.

Photo: 350.Before

By now you’ve probably heard the story of Tim DeChristopher, the 27-year-old activist who single-handedly shut down an entire Bureau of Land Management auction back in December 2008. DeChristopher, then a student at the University of Utah, snuck into the oil and gas leasing sale, posed as a bidder, and outbid developers on 22,500 acres of federal lands in southern Utah.

Almost overnight, he became an environmental folk hero, an eco-saboteur straight from an Edward Abbey novel. Although he was arrested, convicted for making false statements, and sentenced on Tuesday to 2 years in prison, his monkey wrenching worked. The incoming Obama administration cancelled the auction’s results and refused to reschedule the sale.

So, mission accomplished, right? DeChristopher stood up to a last-ditch effort by the Bush administration to open federal lands for drilling. Where others stood by, DeChristopher took action. And although it will land him in prison, it saved 150,000 acres of public land from fossil fuel development.

But how long will it remain protected? The incoming Obama administration, far less eager than its predecessor to open sensitive federal lands to drilling, was the crucial element in DeChristopher’s success. The lands could easily be reopened for drilling under future administrations. If monkey-wrench activism relies on fortunate shifts in political control, its long-term effectiveness is limited.

Here’s another idea: What if instead of landing him in jail, DeChristopher’s bidding was welcomed and encouraged? What if his bids were a real threat to energy developers that currently receive public lands at a discount? What if environmentalists were allowed to bid for federal land leases, win them, and protect them from development?

It’s a question no one is asking, but it’s an important one. BLM leases are often sold with little competition. What competition exists comes from other oil companies and reflects only the commodity — not the environmental — value of the land. While environmentalists can formally protest proposed lease sales, these rarely prevent drilling from occurring.

So why aren’t environmentalists bidding for leases? Part of the answer is that they can’t. The government requires leaseholders to develop their parcels, and if drilling does not occur within a certain timeframe, the lease can be cancelled by the BLM. This effectively prohibits environmentalists from holding and retiring important swaths of public land, even if they are the highest bidders.

The other part of the answer is that the political process, rather than a competitive market process, occasionally pays off for traditional environmentalism. The 1970s environmental regulatory era, for instance, was the product of a political climate favorable to environmental sentiment. Given the proper alliances, politics can be a close friend to environmentalists.

But, of course, politics can also be the environment’s biggest enemy. The very auction DeChristopher thwarted was a rushed political maneuver by the Bush administration and bypassed the usual environmental review procedure. It’s an all-too-common reminder of the limitations of political environmentalism — its success ebbs and flows with each passing administration.

Opening lease auctions to environmental groups has an important advantage over politics or monkey wrenching: Lands can be protected regardless of the political winds in Washington. Leases are held for a decade or more and constitute a formal right to the resource — out of reach from future political whims.

But could environmental groups afford to compete? Consider some of the allotments DeChristopher won. One of the first was a parcel near Moab that went for $2.25 per acre, or $500 total. While others were considerably higher, the average price was $80 per acre, totaling 22,500 acres at $1.8 million. This is a substantial amount, but hardly out of the reach of major environmental groups.

When word got out about DeChristopher’s “winnings,” donations poured in. Within a few days, supporters had raised enough for the $45,000 down payment on the land. But when it came time to submit the payment for the land, the BLM refused to accept it.

Since then, DeChristopher has focused his efforts more on climate justice than open auctions. He founded Peaceful Uprising, a group dedicated to pursuing climate action through civil disobedience. The message is inspiring, but it relies on politics to exact change. Open and fair lease auctions, by contrast, could turn passionate rhetoric into real results for climate action, independent of the political reality.

If you think such competition between environmentalists and industry is far-fetched, consider state-owned lands. States such as Arizona, Montana, and New Mexico have allowed environmental groups to bid for leases, and win them, on state trusts lands, which are often developed to provide revenue for schools. Instead of developing their leases, however, these groups hold them for non-consumptive, conservation purposes.

After pressure from local environmental groups and a federal court ruling, Idaho amended its rules in 2009 to allow conservationists to lease state grazing lands. Under the new rules, ranchers—who often pay as little as $250 annually to lease a 400-acre parcel—are no longer able to obtain below-market leases in no-competition bids. Competition from environmental groups forces ranchers to consider the environmental values of their leases.

On federal lands, oil companies have little reason to consider such values, a fact that DeChristopher recognized. The morning before he bid in the auction, he took a final exam in an economics class. One question asked whether the auction taking place in Utah would reflect the true value of the land if the only bidders were from the oil and gas industry. It was a question that motivated him to act later that day.

It’s not too late to act to change the way our federal lands are leased. The action taken by Tim DeChristopher should be legal and encouraged, but it isn’t. Federal leasing rules need to change to allow environmentalists to participate and to hold leases without developing them. While open auctions are not a silver bullet, they can be an effective and secure means of protecting important federal lands.

Let’s not stand by while the status quo continues on federal lands. Let’s free up the auctions and prevent oil and gas developers from doing our bidding for us.

Ownership Encourages Stewardship: A Look at Stream Access in the West

High Country News reports on stream access laws in the West and provides the updated chart below, which originally appeared in PERC Reports:

Recent attempts to limit Montana’s Stream Access Law, the most permissive in the West, have reignited debates over the impact of access laws. The Michell Slough in Montana’s Bitterroot Valley, once considered an irrigation ditch, has featured prominently in this debate:

The bill was backed by deep pockets in the Bitterroot, opponents say, but singer Huey Lewis says they weren’t his. Still, he laments that the Mitchell Slough is now public. He and his neighbors tried to restore it into a healthy fishery, he says: They narrowed the channel, dredged out silt, added streamside vegetation, and worked with irrigators to increase stream flow. But when the state Supreme Court said it was a natural and publicly accessible stream, their incentive to continue restoration efforts slipped downstream…

That’s because ownership encourages stewardship, says Reed Watson, of the Bozeman-based free-market think tank Property and Environment Research Center, or PERC. We tend to take better care of our own cars than we might of rentals, he adds, because we bear the consequences of our good — or bad — treatment.

“There are some positive things that can happen for restoration or the quality of streams from the environmental perspective that I think might go away if every single waterway is open to public access, including irrigation ditches,” Watson says. He notes that landowners in Utah also halted stream restoration work when the state Supreme Court, in 2008, ruled in favor of public access.

As Reed Watson wrote in 2009:

Whether riparian landowners can legally limit public access to non-navigable streams is a key determinant in whether those landowners view those streams as assets or liabilities. In states that limit public access to non-navigable streams, landowners have an incentive to improve fish habitat and the stream’s natural hydrology. Those states that allow near limitless public access do so at the expense of private stewardship efforts that often create valuable public benefits. States that have yet to directly address the issue of non-navigable stream access would be wise to consider the incentives to private riparian landowners and the positive impact they can make on the state’s stream resources.

Note: The chart above is for summary purposes only. Ask before you access.

Lessons Learned in Rights-Based Fisheries Management

PERC’s latest workshop begins today on the lessons learned in rights-based fisheries management. Fisheries experts from around the world have arrived to discuss the most recent research being conducted on rights-based approaches to fisheries management — approaches that have proven to halt, or even reverse, the global trends toward overfishing.

For the past few decades, PERC’s Donald Leal has researched and written extensively on the topic of property rights to fisheries. He will co-direct, along with Kurt Schnier, the latest workshop. Don described the impact PERC has made promoting rights-based fisheries management in a recent video documentary:

Rights-based fisheries management has become a hot topic lately. Congress recently prohibited the creation of new catch share programs in the United States. Don Leal writes on the recent legislation here. Catch shares are the very rights-based programs that have encouraged stewardship of marine resources and saved many fisheries from collapse.

Bootleggers, Baptists, and Global Warming Revisited

Bjørn Lomborg draws upon the work of Bruce Yandle of PERC to warn against climate solutions touted by emerging green activist/big business alliances:

This sort of reaction—activists and big energy companies uniting to applaud anything that suggests a need for increased subsidies to alternative energy—has been famously described as the so-called “bootleggers and Baptists” theory of politics. The phrase comes from the South, where many jurisdictions required stores to close on Sunday, thus preventing the sale of alcohol. The regulation was supported by religious groups for moral reasons and by bootleggers for market reasons. Politicians would adopt the Baptists’ pious rhetoric, while quietly taking campaign contributions from the bootleggers.

Bruce Yandle has written extensively on the “bootleggers and Baptists” theory of regulation in a variety of contexts, including this PERC Policy Series on global warming. Lomborg succinctly describes how the theory relates to climate change policy:

The climate-change “Baptists” provide the moral cover that politicians can use to sell regulation, along with scary stories that the media can use to attract readers or viewers. Businesses see opportunities for taxpayer-funded subsidies, and to pass on inevitable cost growth to consumers. Unfortunately, this convergence of interests can push us to focus on ineffective, expensive responses to climate change. Whenever opposite political forces attract, as activists and big business have in the case of global warming, there is a high risk that the public interest will be caught in the middle.

Case in point: the ethanol boondoggle? Lomborg also describes the dire, yet poorly sourced, claims of rising food prices caused by global warming. Such predictions have led to a recent Oxfam report calling for collective political climate action to combat rising food prices. Yet even the rosiest scenario, in which all politicians agree to reduce carbon emissions by 80 percent by 2050, would result in almost immeasureable reductions in temperatures by 2030. Lomborg has a better idea:

If we want to help the world’s poor avoid the pain of higher food prices, we should focus on developing better and more nutritional crop varieties, getting more fertilizer to farmers, fighting for freer trade, and, of course, the elimination of biofuel support. Those are the policies that would make a real impact on food prices.

Is the Common Law the Solution to Pollution?

Common law legal actions can easily handle the simple case in which one property owner causes obvious harm to another, what about the not-so-simple case?.

That’s the question Jonathan H. Adler addresses in the “tough questions” issue of PERC Reports. You can read Jonathan’s article as well as the entire “tough questions” edition of PERC Reports here.

The Fundamental Law of Road Congestion

Photo: Minesweeper on en.wikipedia

Matthew Turner, a visiting 2011 PERC Julian Simon Fellow, was interviewed on All Things Considered this weekend about road congestion:

For decades, urban areas across the country have been adding lanes and building roads to fight congestion, but a recent study by University of Toronto researchers finds that widening and building more roads actually creates more traffic.

“What we found was that in cities where there was more roads, there was more driving,” economist Matthew Turner, a co-author of the study, tells weekends on All Things Considered host Guy Raz. “In particular, if you had 1 percent more roads, you had 1 percent more driving in those cities.”

Turner’s study also looked at public transportation, and the results were similar: More buses and trains create more riders, but generally don’t make a dent in traffic problems.

“As you increased a city’s stock of light rail or bus cars, there’s no impact on the amount of driving,” Turner says.

The one-to-one relationship between roads and vehicle miles driven is what Turner and his co-author Gilles Duranton refer to as “the fundamental law of road congestion” [PDF]. And since increases in road capacity and expansions to public transit do not reduce miles drive, the authors claim congestion pricing is the only effective tool to curb traffic problems.

This is certainly not what Los Angeles residents wanted to hear as they prepare for this weekend’s “Carmageddon” — a $1 billion widening project that will close Interstate 405 for more than 50 hours and is expected to create traffic jams more than 30 miles long.

The Call (or Cull?) of the Wild

In the latest PERC Reports, James Workman lays out a provocative plan for wolf management in the West:

As a hunter, lifelong environmentalist, and wolf advocate at the U.S. Department of the Interior during the 1990s, I have a modest proposal: de-politicize the warmblooded wolf by trusting its fate to cold market forces; let Montana and Idaho sell their peer-reviewed scientific quota of wolf hunting permits but ensure each license can be bought and sold on an auction block open to all U.S. citizens.

Central to Workman’s proposal is that licenses must not only be auctioned to in-state hunters, but to any U.S. citizen:

Indeed, an out of state “tree-hugger” or “animal rights nut” could bid $351 or, hell, $9,351 for that same permit in order to let the formerly marked wolf run free for another year. The extra $1 (or $9,001) raised could help endow a national fund to compensate livestock owners.

Just as cash bounties (often from the government) largely killed off the wolf, cash brought wolves back. When Defenders of Wildlife, led by the efforts of Hank Fischer, began offering compensation to livestock owners for documented wolf kills, they paved the way for wolf reintroduction in the West. Workman continues:

Couldn’t an open auction just trigger a nationwide bidding war between hunters and howlers? Wouldn’t competing groups and individuals start offering tens of thousands of dollars to decide whether a single wolf lives or dies? Might it unleash a crass commercial value on whether we stop or spread the call of the wild? Should amoral transactions determine how much an untamed howl is worth to us as a nation?

Yes, yes, yes and, absolutely and emphatically—yes.

Read the article here and let us know what you think.