Q&A with Dean Lueck on Wildfire Policy and Suppression

This week’s installment in our Q&A series hits close to home. As we write, a 10,000-acre wildfire burns less than twenty miles from our office in Bozeman, Montana, a humbling reminder of the reality of large and destructive wildfires in the west.

Dean Lueck knows wildfires better than most. Before becoming an economist he was a smokejumper with the U.S. Forest Service in McCall, Idaho. Recently, Lueck combined his hands-on experience fighting fires with his impressive academic career studying property rights and natural resource economics. The result was Wildfire Policy: Law and Economics Perspectives, a volume he co-edited with Karen Bradshaw. This summer, Lueck is continuing his research on wildfire policy at PERC, along with Jonathan Yoder, as a 2012 PERC Lone Mountain Fellow.

Q: Can you highlight a few examples of major wildfires and what efforts were taken toward suppression?

A: First, there is the famous 1910 “Big Burn” in northern Idaho and western Montana. That fire, or actually a collection of fires, burned about 3 million acres, killed over 80 people, and devastated the town of Wallace, Idaho. It was fought in a disorganized manner by unskilled firefighters including convicts, vagrants, U.S. Army soldiers, timber land owners with only hand tools. Because the fire took place predominantly on national forest lands, it led to dramatic changes in federal fire policy. Also during the period between 1880-1920, there were many fires as large or larger than the Great 1910 Burn. Many of these took place in the northeast and the Great Lakes region where private timber land dominated.

In general organized wildfire suppression efforts were very limited prior to 1900 and efforts focused primarily on protecting homes, buildings, and towns, but not on putting out the fire itself. By the late 20th century fire suppression had become organized within a large centralized, coordinated and hierarchical system heavily dominated by the U.S. Forest Service. Crews had become specialized and highly mobile. The use of aircraft in transport and direct suppression with water and retardant had become routine.

More recently, the Biscuit Fire in Oregon burned nearly a half a million acres in 2002. It began on July 13, and at its zenith on July 31 there were over 2,000 firefighting personnel, 21 helicopters and 40 bulldozers assigned to the fire. The fire was not completely suppressed until December and cost more than $150 million. The fire destroyed four homes and ten other structures, forced the evacuation of 15,000 people, and destroyed or damaged thousands of acres of valuable timber. No one was killed during the suppression effort.

By contrast consider the Black Dragon Fire in 1987, which burned 18 million acres along the Amur River, which is the border between China and Russia. The fire started in China and burned 3 million acres there. The Chinese fielded over 60,000 unskilled fire fighters and hundreds died. The Russians did essentially nothing to suppress the fire, and it grew an additional 15 million acres. The disparate approaches resulted from a lack of cooperation between Russia and China and extreme differences in the relative value of timber in the two countries.

Since 1999 there have been 134 fires of more than 100,000 acres in the United States. For the last 10 years, average annual federal suppression expenditures have been over $1 billion.

Q: What does your project (with Jonathan Yoder) seek to add to the economics of wildfire policy?

A: The main goal of our project is to gain an economic understanding of the organization of wildfire suppression. Fire suppression organization today seems complex, administratively cumbersome, and often inefficient. We want to understand the causes and consequences of the current system both theoretically and empirically. We want to understand the economic foundations that have driven how fire suppression institutions developed into those that we see today, and understand how they vary across environmental, demographic, and political jurisdictions. We will then have a better foundation for understanding where inefficiencies lie, and how suppression institutions might be improved.

So, for example, we are examining the emergence of wildfire suppression among timber landowners in the northwestern and northeastern United States during the late 1800s. These private organizations pre-date the Forest Service fire crews, and this type of timberland owner association, to our knowledge, is pre-dated only by urban firefighting organizations. The federal government’s involvement in fire suppression emerged with the accumulation of federal forest lands and even stimulated expansion of the national forest system.

Q: What are some of the criticisms of modern wildfire institutions? Do the resource values justify the suppression costs?

A: Many critical observers feel there is an excessive amount of suppression and too little fuel management or prescribed burning, especially on federal lands. There is also the concern that suppression costs may often outweigh benefits (damage reduction). We certainly know of specific cases in which suppression costs exceeded the resource value at risk. There is also a concern that suppression effectiveness is often low so that suppression expenditures have little payoff. At the same time there is strong political pressure to put out all fires so there has been a recent reversion back to the so-called “10am rule” in which fire crews and land managers are directed to put all effort into suppression even where suppression costs would be high relative to potential damages. The long-term effects of continued fire suppression are also likely to lead to fuel buildups that can result in larger, more devastating fires in the future.  [Read more…]


The Health Costs of Plastic Grocery Bag Bans

Many jurisdictions have implemented bans or taxes on plastic grocery bags based on environmental concerns. In 2007, San Francisco enacted a county-wide ban that included large grocery stores and drugstores. Los Angeles, Palo Alto, and other cities in California have followed suit.

In research carried out at PERC this summer, Jonathan Klick, a PERC Lone Mountain Fellow, argues that reusable grocery bags contain potentially harmful bacteria, especially coliform bacteria such as E. coli. Klick finds that, in the wake of San Francisco’s ban, deaths and ER visits related to these bacteria spiked as soon as the ban went into effect. For more on this ongoing research, watch our interview with Klick above.


Q&A with Matthew Turner on Road Congestion and Transportation Policy

It’s been another busy summer at PERC, with our summer fellowships bringing together an all-star cast of scholars to Montana to research topics relating to free market environmentalism. This week we continue our Q&A series with economist Matthew Turner, a leading expert on road congestion and transportation policy.

Matthew Turner is a 2012 PERC Julian Simon Fellow and professor of economics at the University of Toronto. His research focuses on the economics of land use and transportation. We thank Matthew for taking time to answer our questions. For more PERC Q&As, visit the series archive.

Q:  At your latest PERC workshop you presented new research, co-authored with Victor Couture and Gilles Duranton, entitled “Speed.” What aspect of speed are you looking at and why is it important?

A:  Bakeries in the Soviet Union used to hand out bread for free to the first in line while those at the back wait for the next batch. This was wasteful. It meant time was spent waiting that could otherwise be used for something else, and it gave bread to people with the most time on their hands rather than to the hungriest or the hardest working. We allocate highway space in much the same way. The commuter who arrives on the road at 7:00am gets to travel, but the one who arrives at 7:30am needs to waits in a traffic jam until road capacity becomes available. Just as for the old Soviet bakery, this leads to a lot of time wasted in traffic jams and assigns scarce rush-hour capacity to people willing to wait in traffic, who might not be the people who value rush hour travel most highly.

In our research we are try to understand the determinants of  driving speed in order to estimate the value of time lost to waiting in traffic. Since road travel, one way or another, accounts for about 18% of gdp, the value of this waste is a big number. We also want to develop a basis for making guesses about what a good road pricing system would look like.

Q You claim there are sizable welfare gains to be had from more sensible transportation policies? What sorts of policies are we talking about? Taxes on driving?

A:  Our research suggests that the failure to price access to roads leads Americans to waste tens of billions of dollars worth of time each year sitting in traffic. Yet roads are congested only part of the time and even our biggest and busiest cities have unused road capacity off peak. If we impose tolls on congested roads at congested times, we give people an incentive to shift their travel to an uncongested time when we have surplus road capacity. This saves people from waiting in traffic and will likely increase the capacity of our road network.

QAre there areas where congestion pricing has worked? Could it be implemented on a wide scale in the United States?

A:  Stockholm, London, and Singapore, and a handful of U.S. roads and bridges have congestion pricing programs. In these places we see big increases in travel speed in response to pretty small charges for peak hour road use. With that said, the devil is in the details. So far, these programs are expensive to administer and it is easy to imagine ways that they could create problems. Rather than aiming for wide scale application to the United States we ought to encourage pilot programs in congested cities like New York, Miami, Seattle, Boston and Portland. As we gain experience administering congestion pricing programs we can apply them more widely.

Q In earlier research you find that widening and building more roads actually creates more traffic. What is “The Fundamental Law of Road Congestion” and what are its implications for transportation policy?

A:  In this project we examine the relationship between the stock of highways and arterial roads in large U.S. cities and the total amount of road travel in these cities. More precisely, it examines the relationship between a city’s total lane kilometers of highway and arterial road and total miles driven within the city in a year. We find that a one percent increase in road lane kilometers causes almost exactly a one percent increase in driving. We also find that changes to the stock of buses in a city’s public transit network do not affect driving.

This means that we should not expect either road or transit expansions to alleviate traffic congestion in the long run. The only policy that we know to be effective at reducing traffic congestion is congestion pricing.

QWhen might investments in public transportation or road building be worthwhile?

A:  Even though road and transit expansions probably won’t reduce congestion on our roads and highways, they will allow more people to move around. We want to evaluate transportation infrastructure on the basis of the value of these extra trips. If a new subway line allows an extra 50,000 people to work downtown, we need to decide if the extra economic activity downtown justifies the cost of the train. The same is true of road expansions. We don’t have good answers to this question yet. Generally, it looks like expansions of highway and subway capacity are so expensive that it is going to be difficult to pass this test, especially in the countryside where rural state senators like to send federal highway funding. On the other hand, making investments that squeeze more capacity out of existing roads and tracks in big cities is going to be easier to justify.

For more from Matthew Turner on transportation policy, read his article in the Fall 2010 edition of PERC Reports.


Meet Jeremy Gingerich, PERC Enviropreneur

After two weeks of workshops, mentoring sessions, and networking, this year’s 14 enviropreneurs head home to implement the innovative market-based conservation strategies they explored at PERC’s 2012 Enviropreneur Institute. Check out what one enviropreneur, Jeremy Gingerich, has to say about protecting open landscapes in the west and how his time at the Enviropreneur Institute will help him achieve his goals.


For more on PERC’s Enviropreneur Institute, visit our Facebook page for pictures from this year’s incredible group.

Don’t know what an enviropreneur is? Find out here.


Growth is Green

“Economic growth is green,” says Dino Falaschetti, PERC’s new executive director. Growth occurs only when markets are allowed to work to move goods and services from low-productivity uses to high-productivity uses. “Making more with less is conservation. Making more with less is sustainable,” adds Falaschetti. “When environmental policy puts growth at risk, it is brown, not green.”

So why is environmental policy often at odds with economic opportunity? Falaschetti will explore this question and present the case for free market environmentalism at FreedomFest on Thursday, July 12th.

The costs of transacting over environmental services can be considerable, opening the door for policy makers (and even some economists) to push for a more centralized direction of resources. As Paul Krugman wrote in 2010:

When there are “negative externalities” — costs that economic actors impose on others without paying a price for their actions — any presumption that the market economy, left to its own devices, will do the right thing goes out the window. So what should we do? Environmental economics is all about answering that question.

But, as Falaschetti will show, environmental economics is not, as professor Krugman argues, all about answering that question. Instead, the very premise of the argument is flawed. As Nobel laureate Ronald Coase explained, the fundamental problem for law and economics is not “negative externalities,” but rather transaction costs. While these costs can be considerable for environmental services, it’s not accurate to say markets fail. After all, we don’t say markets fail when transportation is costly. So why do so when transacting is costly?

Markets don’t fail. The political-legal services that are necessary for economic efficiency fail.

Going to FreedomFest? Check out Dino Falaschetti’s speech on Thursday, July 12th at 2:30 PM, and follow PERC on Twitter.


Saving Patagonian Grasslands with Market Incentives

Meet Carlos Fernandez, PERC Board Member and the Nature Conservancy’s Patagonia Grasslands Manager. The following is an excerpt from our interview with Carlos in Bariloche, Patagonia:

I am the Patagonia Grasslands Argentina Project Manager for the Nature Conservancy and a PERC Board Member. I had my first encounter with PERC in 2005 when I met Don Leal at a workshop in the Galapagos Islands. Don and I started talking about our passion for fly fishing, both in Patagonia and in Montana. I began receiving PERC Reports and sure enough in July 2005 I attend PERC’s Enviropreneur Institute. It was here that I started to think more seriously about how important markets, contracts, and property rights are if we really want to improve environmental quality.

I moved to Patagonia from Washington D.C. in 2008 to launch TNC’s grasslands program. The purpose of this program is to conserve grasslands on a large scale. Given the fact that here in Patagonia about 75 percent of the land is in private hands, our team is doing a lot of work with private land owners aiming to halt or reverse the desertification of grassland ecosystems. We are working with ranchers, businesses, policy makers, universities, and think tanks. TNC and our partners have a pretty big goal, which is to try to bring sustainable conservation to between 30 and 40 million acres in the next 10 to 15 years.

In 2010, I was lucky enough to be invited to become one of PERC’s Board Members — the first board member representing the enviropreneurs and the first international board member, both of which make me very proud. The Patagonia grasslands program is just one venture where free market environmentalism is working on the ground. PERC’s 2012 Enviropreneur Institute will kick off this weekend. Stay tuned for more innovative ideas from the field.


Guest Blogging on Environmental Policy for The Atlantic

For the past ten days PERC’s Jonathan Adler been one of the guest bloggers on Megan McArdle’s blog on The Atlantic‘s website. During this time he has written five posts on environmental policy:

– Property Rights and the Tragedy of the Commons

– Property Rights and Fishery Conservation

– How Property Rights Could Help Save the Environment

– Is Washington, D.C., Really the Environment’s Savior?

– A Conservative’s Approach to Combating Climate Change


Aquanomics: Water Markets and the Environment

The increasing scarcity of water around the world prompts heated debate over the effectiveness of conservation efforts and policy initiatives.

Is water becoming increasingly scarce? If recent usage trends continue, many people believe that shortages are inevitable. Aquanomics, edited by B. Delworth Gardner and  PERC Senior Fellow Randy Simmons, comprehensively examines a full range of water problems. Authors, including PERC Fellows Brandon Scarborough and P.J. Hill, reveal measures that should be implemented to avoid the onset of possible “water crises.” These policies include establishing secure and transferable private water rights and extending these rights to uses that traditionally have not been allowed, including altering in-stream flows and ecosystem operations. The authors argue that such policies will help maximize water quantity and quality even if water becomes scarcer and more valuable.

Mark Twain once quipped, “Whiskey is for drinkin’, water is for fightin’ over.” However, the authors of Aquanomics now provide proven solutions to such potential conflicts by establishing the validity of market-based approaches.

Buy Aquanomics here from The Independent Institute.


Earth Day Reflections

Many would argue the modern environmental movement was catapulted into fame 50 years ago by Rachel Carson’s seminal book Silent Spring. Although it is now rarely read outside of the classroom, it remains one the most highly cited works of environmental writing. However, in Silent Spring at 50: Reflections on an Environmental Classic, Roger E. Meiners and Andrew P. Morriss reanalyze Carson’s science and question its influence on environmental thought.

As Laura Huggins notes in an op-ed in The Washington Times, “[Carson’s] caution that we should be wary of misuse of pesticides is praiseworthy, but there were major oversights in her work – errors that have played a role in shaping environmental policies that have cost millions of lives and dollars.”

In Forbes, Stanford University’s Hoover Institution Fellow Henry Miller remarks that Carson exploited her reputation as a popular nature writer to legitimize an unfounded scientific treatise. “Carson’s proselytizing and advocacy led to the virtual banning of DDT and to restrictions on other chemical pesticides in spite of the fact that Silent Spring was replete with gross misrepresentations and scholarship so atrocious that if Carson were an academic, she would be guilty of egregious academic misconduct.”

Soon after Silent Spring was released, Carson was accused of alarmism and ignoring the science of the day. These facets, of course, have been forgotten in the Earth Day craze. Meiners and Morriss, on the other hand, offer a clear perspective on her work and conclude that Carson’s celebrated scholarship was, at best, sloppy, and, at worst, an intentional deceit. As Huggins suggests, “Thanks to human ingenuity, we are much healthier and wealthier in 2012 than in 1962, and the birds are still singing – all real reasons to celebrate.”

As the United States celebrates another Earth Day, PERC Scholars call for science and reason, not more emotionally charged rhetoric.


Scourge: Illegal Aliens in our Midst

Federal and local government spending on invasive flora and fauna amounts to almost $3 billion annually. That’s over three times the $830 million in actual damages caused by these non-natives. As the battle against invasive species mounts, PERC Enviropreneur Institute alum Paul Schwennesen, asks, “might our fascination with biotic menace be somewhat overblown?”

As a rancher in the Southwest, Schwennesen has seen his fair share of invasive species. Instead of upsetting the “delicate” natural balance of his land, however, he argues the Salt Cedar and Buffelgrass, amongst other non-natives, are a part of a fluid and dynamic equilibrium defined by competing and cooperating species.

Schwennesen notes that the helicopter-borne chemical raids employed to fight the intruders may be worse than the disease and calls for a reevaluation of nature’s natural processes:

Ralph Waldo Emerson famously declared weeds to be “plants whose virtues had yet to be discovered.” I have to agree. The frantic hand-wringing that accompanies most descriptions of “invasives” betrays a glaring lack of faith in the resilience of our natural world. More to point, perhaps, is the curiously rare recognition that life, in its perennial pursuit to fill vacuums, generally creates abundance and profusion. Attempts to artificially prevent this usually cost more than the supposed damage to be mitigated.

Read the full article here in the Huffington Post.


Where Free Markets Meet Faith

In contrast to the historical ideal of Manifest Destiny, in which the conquest of the land was held to be a biblical right imbued to God’s loyal followers, a contemporary breed of religious practitioners are working to combine faith and ecology in new ways. Often found under the movements entitled “ecotheology” or “green faith,” religious practitioners of all denominations and creeds are acting to conserve what they consider to be God’s creation, following tenets many believe are already in line with their religious practices.

PERC Enviropreneur Institute graduates Fletcher Harper (‘07) and Stacey Kennealy (‘10) are looking to these religious groups to take action and work toward improving environmental quality. While there doesn’t seem to be much in common between those placing their faith in markets and those putting faith in the divine, Harper and Kennealy’s interfaith coalition, GreenFaith, recognizes that incentives matter.

GreenFaith’s mission is to inspire, educate, and mobilize people of religious backgrounds to protect the earth as a moral and sacred responsibility. As Paul Schwennesen writes in the latest issue of PERC Reports, however, “simply insisting that people ‘do what’s right’ doesn’t capture the full measure of GreenFaith’s work; the group calls for their members to address the mundane as well as the celestial. Values need to be specific and actionable.”

Thus, GreenFaith has used lessons garnered from PEI to attract new congregations to their Certification Program by touting the benefits of financial savings, as well as engaging new and younger members. The major force driving GreenFaith’s success, therefore, has not been morals, but the promise of growth – and this strategy is having success.

“In the end, GreenFaith isn’t just about teaching people that God wants a healthy environment,” said Harper. “It’s about mobilizing the faith-based sector – one of the largest social networks in the country – to make it actually happen. PERC has helped us understand new tools and perspectives on how to achieve this goal.”

Read the full article here in the spring issue of PERC Reports.


Making green by going green

The California red-legged frog, Delhi Sands flower-loving fly, San Joaquin kit fox – these are just a few of the endangered species PERC Enviropreneur Institute Alum Kent Carter is ecstatic to have found on his California ranch.

In 1973 the Endangered Species Act set out to prevent threatened animals and plants from going extinct. A contentious component of the act allows the U.S. Fish and Wildlife Service to unilaterally designate private property as ecologically valuable critical habitat, limiting freedom to develop it. In the face of these heavy regulations, many landowners have created their own mantra: “shoot, shovel, and shut up.”

And so it is surprising to see early-career, entrepreneur-minded Kent Carter celebrate the discovery of endangered species on his 1,500 acre ranch. Instead of fighting the ESA, however, Carter is working to use incentives such as mitigation credits to protect critical habitat and earn profits.

As PEI Alum James Workman notes:

Spend enough time with Carter and you see a savvy new breed of capitalist, one who is planning to make green by going green, squeezing profits from the ragged margins of both spreadsheets and landscapes. Carter readily acknowledges that the Endangered Species Act has its flaws. He’s seen it polarize older patriarchs, who fume that modern Americans value wild, rare, vermin species like coyotes or bobcats more than the domesticated plants and animals these ranches and farms produce.

As development continues to hem in endangered species and critical habitat, mitigation credits actively provide a market solution for achieving environmental goals. Mitigation credit markets have cap-and-trade at their foundation. For example, a regulatory cap is placed on the quantity of an environmental good, such as riparian lands, that must be present in a defined geographic area. By encouraging the growth of riparian lands on an acre of his land, Carter can then sell his earned credit to a neighbor who plans to destroy an acre. Profits Carter earns from trade in credits can be reinvested into improving the environmental quality of the land.

As an environmentalist with entrepreneurial skills, Carter is striving to partner landowners and non-profits to design land use strategies that generate revenue and achieve stewardship goals. Read more about his efforts here in the latest issue of PERC Reports.