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Reconciling Economics and Ecology

G. Tracy Mehan offers an insight into the PERC Lone Mountain Forum: “Reconciling Economics and Ecology: The Foundation of Environmental Optimism,” currently being held at the PERC University Campus in Bozeman, Montana.

By Tracy Mehan

We are into the second session on “Reconciling Economics and Ecology,” under the guiding hand of the estimable Terry Anderson with a phalanx of experts and commentators from many disciplines. At this stage attempting any kind of synthesis would be presumptuous at best. The discussions have been informative, wide-ranging and heartfelt on the convergence and divergence of economic and ecological thinking.

The discussion on whether or not human beings are part of nature was truly stimulating if inconclusive. I recall the novelist Walker Percy’s observation that the scientist can know or understand everything but the scientist. Similarly, human beings can be both a problem and a solution to the challenges of reconciling economic growth and ecological function.

The noted writer, Matt Ridley, made what may be the one observation with which most attendees, including yours truly, might concur: both economist and ecologists, at least the right thinking ones, no longer believe in equilibria in either realm and view both systems as being dynamic, not chaotic, systems.

The conversation continues.

Update: Emma Marris, author of Rambunctious Garden, led the forum in a spirited discussion on ecology and future policy directions.  She emphasized the challenge of managing ecosystems in the face of uncertainty in a dynamic world including globalization and a changing climate.

Emma highlighted adaptive management as key along with the recognition that historic baselines no longer occupy any “moral high ground.”  She raised the question as to whether or not regulators will be as adaptive as the changing ecosystem demands which would challenge regulated property owners as well.  She also raised concerns as to whether or not “everyone gets a vote, not just every dollar” and that future generations count, too.  She expressed her bias for longer time scales in ecosystem management which drew many questions as to why this should be normative.

Many other participants raised issues of politically managed ecosystems versus private choice and management.  There was also lively debate over whether costs should be involuntarily imposed on property owners and taxpayers to involuntarily protect endangered species.

Emma expressed her agreement with the idea that richer is generally greener and that would actually impel us toward actions for the benefit of future generations which will be both.

This gives you just a taste of what was a very important discussion and debate over future policy directions.  Emma generally defended collective or community action against a preference of others for individual and voluntary actions or contractual approaches.

More to come.

Update #2: Earlier this week, Steven Hayward sat down with Charles C. Mann to discuss his work on pre-Columbian societies:

G. Tracy Mehan, III, was Assistant Administrator for Water at the U.S. Environmental Protection Agency, 2001–2003. He is a consultant in Arlington, VA, and an adjunct professor at George Mason University School of Law.

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The Adaptability of Property Rights

by Andy Hanssen, PERC Lone Mountain Fellow

What Naomi Lamoreaux has termed “The Mystery of Property Rights” has two aspects. On the one hand, secure and stable property rights are essential to economic development and growth. On the other hand, a set of property rules that cannot evolve in the face of technological and social change may be unable to adapt in ways that facilitate progress.

In this context, consider the United States. The United States is an economically successful country with well-respected enforcement of property rights – so much so that it serves as a destination for capital fleeing less stable regimes. Yet the United States also has a record of making abrupt alterations to property rights (creating losers as well as winners) in the face of new technologies and/or the availability of new resources.

When a parcel of land is taken via eminent domain for a “public use,” its owners are entitled to “just compensation.” These two requirements (public use and just compensation) are written into the U.S. federal constitution and the constitutions of most states, and ostensibly check the ability of governments to take private property. In fact, each requirement has proven sufficiently malleable so as to allow a broad range of takings. Although debates over the proper definition of public use have generated controversy, unhappiness with how just compensation is determined has also sparked much concern. That unhappiness became particularly pronounced in the 19th century when a practice known as the benefit offset was employed (see Fleck and Hanssen 2010).

The idea behind the benefit offset is simple: If an owner has land taken for a public use via eminent domain and the value of the remaining land rises as a result, the taker can “offset” required compensation by that rise in value. For example, assume a farmer loses 10 of his 100 acres to a railroad, the pre-railroad price of farmland is $100 per acre, and the price rises to $105 per acre when the railroad lays its line. The farmer is due compensation equal to $1000 (10 x $100) for taken land, less $450 (90 x $5) for the increase in the value of the remaining land, summing to a net payment of $550.

The benefit offset was one of several “expediting doctrines” used to promote public infrastructure projects – highways and canals – in the early 19th century. The “expediting” was justified by the alleged importance of the projects to the general public.

The benefit offset was also used to subsidize railroad building. Why subsidize railroads, and if doing so, why use the benefit offset?

Various explanations for a subsidy are possible, but holdup problems were likely to have been of concern. Infrastructure projects entail large sunk investments, with returns generated over a period of years. Nonetheless, the benefit offset seems a roundabout form of dealing with a holdup problem. One possible explanation is that the benefit offset enhances the incentive to choose the most valuable route (in terms of willingness of shippers to pay).

Rail rates (as with rates for canals or highways) were regulated, which may have prevented companies from capturing the full value of a line through pricing (this would be a form of holdup). As a result, a rail company will choose the cost-minimizing route, which may not be the value-maximizing route as landowners are concerned. The benefit offset may have helped overcome this problem.

As Lone Mountain Fellows at PERC this summer, Robert Fleck and I are taking a closer look at this issue. By examining how the benefit offset was used and when it changed in different states, we highlight factors that underline the adaptability of property rules—but which don’t threaten the security promised by the property regime.

 Andy Hanssen is a 2012 PERC Lone Mountain Fellow and an associate professor of economics at Clemson University. He is the co-author, along with Robert Fleck, of the 2007 PERC Policy SeriesDo Profits Promote Pollution? The Myth of the Environmental Race to the Bottom.”

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Does Burning Ivory Save Elephants?

by Michael ‘t Sas-Rolfes

This week marks the 62nd meeting of the Standing Committee of the Convention on International Trade in Endangered Species (CITES), taking place in Geneva, Switzerland. To coincide with this meeting, the World Wildlife Fund has released a “Wildlife Crime Scorecard” report which lists 23 countries in Asia and Africa that it claims could all do more to enforce trade bans intended to protect tigers, rhinos, and elephants.

But what about WWF’s scorecard? Unlike the governments it assesses, WWF has specifically purported to protect endangered species since its inception in 1961. It has also mostly endorsed the CITES trade ban approach to saving tigers, rhinos, and elephants for more than the last two decades, but the results of this have been unimpressive. Tiger numbers have plummeted, as have rhino numbers in all but a handful of former range states; elephants have fared slightly better since the ivory ban, but poaching is on the rise again. So while WWF can claim some individual successes with certain localized conservation projects, its broader policies on wildlife trade deserve closer scrutiny to see if they make sense.

For example, last month WWF commended the government of Gabon for burning a stockpile of almost 5 tons of confiscated ivory, estimated to represent the equivalent death of 850 elephants. Presumably the architects of this event think they can repeat the performance of the Kenyan government, which famously burned a pile of ivory (and rhino horn) back in 1989.

Kenya’s dramatic gesture had three effects:  First, as a media stunt it caught the attention of many people and helped to stigmatize the use of ivory products in the West. Second, this in turn appeared to reduce consumer demand (and therefore prices and the incentive to poach elephants). And third, Kenya was able to leverage this event as a means to raise significant donor funding.  (The funding benefits did not endure and other African elephant range states did not benefit in this way; instead many had to bear the cost of forgone ivory sales harvested from sustainably-managed populations.)

That was then, this is now. Ivory demand in East Asian markets has a deeper cultural imprint and was far less impacted by any stigma effect from the 1989 ban. With the rising affluence of East Asian consumers, black market prices and elephant poaching levels are increasing significantly.

Economists may disagree about many things, but one thing we do agree on is that if you reduce the supply of a product without a corresponding reduction in demand, prices will rise. In a 1990 peer-reviewed journal article*, economist Ted Bergstrom explains clearly why: If the goal is to protect threatened species, it does not make sense to destroy confiscated stockpiles, but rather to sell them back into the market to satisfy demand and restrain prices. If trade is already banned and consumers are still buying ivory, there is no reason to believe that reducing the supply will change their preferences. So burning ivory stockpiles at this time does not seem like such a great idea. Although intended to send out a message about the acceptability of buying ivory, this gesture may simply send out a different message to the market: that ivory is an increasingly scarce resource worthy of speculative investment.

WWF’s approach of constricting supplies is not restricted to elephants. It adopts similar policies toward tiger and rhino products. The same principles apply here and the black market values for such products only appear to be rising over time, with disastrous consequences for wild populations.

* Ted Bergstrom. “On the Economics of Crime and Confiscation.” Journal of Economic Perspectives 4.3 (1990): 171-178.

Michael ‘t Sas-Rolfes is an environmental economist based in South Africa and a 2012 PERC Lone Mountain Fellow. He is the author of Who Will Save the Wild Tiger? (1998, PERC Policy Series), a contributor to Tigers of the World: The Science, Politics, and Conservation of Panthera tigris (2010, Academic Press), and author of the recent PERC Case Study “Saving African Rhinos: A Market Success Story.” For more, visit his website: rhino-economics.com.

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Planned Obsolescence: The Good and the Bad

by Addison Del Mastro

Just like good and bad cholesterol, there is good and bad planned obsolescence – the business practice of consciously limiting a product’s lifespan. This may come as a surprise to many people, since planned obsolescence usually has a negative connotation. As with cholesterol, it’s important that we understand what planned obsolescence is, how it can be good and bad, and what we can do to fight the bad kind.

The good types of planned obsolescence are “value engineering” and “functional obsolescence.” Value engineering is a design process that seeks to use as little material as possible in a product while still delivering an acceptable lifespan. It also suggests that all the parts in a product should fail at about the same time, so that none are “overbuilt” relative to the rest. Functional obsolescence is when a genuinely superior product is introduced, making the old one comparatively less desirable.

The bad kind of planned obsolescence consists of the introduction of superfluous changes in a product that don’t improve utility or performance. This might best be described as “pseudo-functional obsolescence.”

Value engineering

Cell phones don’t last for 20 years. If they wanted to, cell phone manufacturers could make phones much more durable than they currently are. Is this bad planned obsolescence? No. This is value engineering.

The useful life of a cell phone is limited to only a few years due to the rapid rate of technological improvement in the field. This means that it’s wasteful to build a cell phone with a physical lifespan much longer than its useful life. It makes sense that cell phones are built out of inexpensive plastic parts; this ensures a more affordable product. If a cell phone were not value engineered – if it were made out of titanium, for example – it would last longer than anyone would want it to, would cost more, and would use up more resources.

Designing certain products to be less durable than they could be actually conserves resources and delivers a more affordable product to the consumer.

Functional obsolescence

Functional obsolescence occurs when an innovation is introduced into the marketplace, making an older product obsolete. A classic example is the automobile replacing the horse and buggy, or the transition from simple cell phones to more functional smartphones. Functional obsolescence creates waste, but the trade-off is that consumers get a superior product. In many cases functional obsolescence takes place because the new product requires less time and work, meaning an increase in the resource of human time.  [Read more…]

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What in the world is a ZEC?

Written by Dylan Brewer, PERC Summer Intern

Québec’s zones d’exploitation contrôlée (ZECs) are one of the best kept secrets of conservation. Created in 1978 with the Ministère des Ressources naturelles et de la Faune’s (MRNF) launch of “Opération gestion faune,” ZECs are non-profit organizations in charge of managing wildlife resources. Each zone is headed by supervisors elected by paying members. In 1991, Terry Anderson and Donald Leal’s book Free Market Environmentalism looked at ZECs, praising their pricing system as “instrumental in maintaining high quality recreation.” Today, as the program nears its 35th year, ZECs are thriving and now serve more than 250,000 visitors per year.

When ZECs were started in 1978, each zone was charged with managing hunting and fishing within a certain domain. Prior to ZECs, public lands were managed by private clubs. The main criticism of the club system was that it was too restrictive on community involvement — many of the clubs were controlled by non-Canadians and non-residents, and poaching was widespread. The ZEC program began with the instrumental requirement that each ZEC obtain the necessary resources to cover their costs. Because the ZECs must be self-sustaining, there is an incentive to charge a reasonable and profitable price to users. Further, managers are incentivized to protect the flora and fauna of the area as a future revenue stream.

In 1982, the Fédération Québécoise des Gestionnaires de Zecs (FQGZ) was created to represent the ZECs before Québec’s provincial government. With this structure in place, the program grew without major change until 1999 when the FQGZ proposed to the MRNF that ZECs be given the opportunity to manage recreation beyond fishing and hunting. Following the MRNF’s approval of the proposal, activities offered by ZECs have expanded to include camping, hiking, and other activities. This expansion can be attributed to the requirement that ZECs generate their own funds. Recognizing demand for new goods, managers are able to change their business model rather than remain “frozen in time” like other government programs.

Over the course of 35 years, ZECs have been able to both make a profit as well as preserve wildlife. The question now is how to implement this system outside of Québec. While ZECs do not rely heavily on cultural norms unique to Quebec, the Québécios have had a history of paying to access recreational land. In the United States, new fees would be a barrier to the program at the local level, but giving locals the ultimate control of pricing and services may sidestep the problem.

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The Lacey Act, Certification, and Gibson Guitar: Why Trade in Forest Products Protects Forests

by Todd Myers

As a board member of Rainforest Alliance, Gibson Guitar CEO Henry Juszkiewicz didn’t expect to find himself accused of supporting illegal logging. A supporter of Forest Stewardship Council certification, Juszkiewicz is committed to doing what he believes is best for the environment and the world’s forests.

“About 80 percent of our wood is FSC certified,” Juszkiewicz explained to me when we spoke.

Given that experience, he is not the kind of person you would expect to run afoul of the chain of custody challenges that are part of the Lacey Act, a law designed to prevent trade in illegally harvested wood.

Ultimately, his complaints about the Lacey Act’s difficult chain of custody provide some insight into the challenges faced by those looking to comply with certification systems. Indeed, FSC offers itself as a way to meet the requirements of the Lacey Act. After the passage of the recent amendments to the Lacey Act covering illegal harvesting, FSC-US noted, “Forest Stewardship Council certification of wood products promises to be a pivotal tool in providing credible verification of legality for companies importing wood.”

Juszkiewicz’s primary complaint about the current structure of the Lacey Act is simple: There is “no prescription for actually obeying the law.” Gibson Guitar believed they were following the law. They found out, however, that proving it was virtually impossible.

In order to show that wood was harvested and traded legally, the Lacey Act “requires consumers to have knowledge of every piece of wood transferred across country lines,” he says. “That’s not possible for consumers to know.” He laments that even if he has certification that the wood is legal, if those certifications turn out to be inaccurate, the certifiers are not on the hook – the company is.

Juszkiewicz believes the ambiguity of the rules isn’t an accident. He argues that rather than protecting forests, the primary goal of the act is “to protect domestic jobs,” noting, “If you make things risky enough, you are effectively outlawing importation by making it ambiguous and risky.”

The combination of unclear rules and a lack of protection from supply chain certifiers means that even someone committed to sound stewardship of forests can find himself afoul of the law.

It doesn’t have to be like that, however, and Juzkiewicz told me he is working to change the law so it truly helps protect forests. Critical to that effort is providing an economic incentive to grow new forests.

“Underlying most of the positions of the greens is a belief that prohibition will solve the problems,” he laments. “[They believe] punitive laws that prevent cutting any trees will save the rainforest. I think that is poppycock. You have to understand the economic basis of the way societies work. Trees are de facto a sustainable commodity and they can be managed to be sustainable, even in the short run.”

Rather than being an enemy of the forest, international trade in wood is a force to preserve those forests.

“There is no necessity to preclude business. In fact if you understand it, the vast majority of clear cutting forests is for alternative uses, not forestry and cutting trees for guitar guys. As long as the economic benefit of an acre of forested land is higher for alternative use — conversion for agriculture or real estate — people are going to cut that forest down. No amount of armies is going to prevent that from happening. So the best thing to preserve and protect the forests is to make it valuable from an economic standpoint. As a producer of a sustainable, valuable product, the forest can compete. That can make the world better.”

And Juszkiewicz is committed to making the world’s forests better.

When I pointed out that some of the concerns he had with the Lacey Act echoed complaints about FSC certification, he acknowledged it but argued that rather than throw them out, we need to get the Lacey Act and FSC certification “right.”

Speaking of FSC, he says, “I’ve seen the impact on indigenous peoples that has been very positive.” One reason he continues to support certification systems is his belief that non-government organizations have to be part of the effort.

After his experience with the Lacey Act and the Justice Department, it shouldn’t be surprising when he says “I frankly don’t think government does a great job.” He doubts the ability of business to “police itself,” and believes an independent assessment can be useful. That’s why he supported FSC in the first place.

But he wants any system, whether it is certification by an NGO or a law like the Lacey Act, to be clear and to promote good forestry practices rather than punish first. “I want to see a carrot.”

Over the next several months, Juszkiewicz says will be working with Congress to clarify the law and ensure it achieves its intended goal. Whatever the outcome, he believes any system that looks to protect forests must protect the value of forest products.

“If you can’t use the product from an acre of forest, owning that forest as forestland becomes zero value and any alternative use becomes better.” That, he believes, is the worst thing any system of forest rules can do for the forests that provide wood for the plant and his legendary guitars.

Originally posted at Forest Certification Audit.
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What a difference a year makes

by Brett Howell

As I sit here in Atlanta fully engaged in my Conservation Fellowship at Georgia Aquarium, I am constantly amazed at how much difference a year has made in my state-of-mind, life perspective, and daily activity.  This time last year I had just submitted my application to the PERC’s Enviropreneur Institute, and I spent my professional time doing management consulting work for one government client.  By comparison, so far this week I:

  • Had a Skype conversation with an entrepreneur in Jamaica
  • Talked with a CFO/mentor about the potential for creating coral mitigation banks in Florida
  • Organized a trip to SCUBA dive with The Nature Conservancy in the Dry Tortugas
  • Was invited to speak to an undergraduate class at Georgia State University and to present a seminar at Florida Atlantic University
  • Attended an info session about a social entrepreneurship incubator
  • Strategized about how to design a cutting edge coral planting scientific study
  • Talked about launching a new company with an enviropreneur from PERC’s 2007 class

Last week, I was humbled to have an article about a workshop I had organized as part of my project published in Nature, one of the most influential scientific publications, entitled “Conservation meets capitalism in Florida.”  One participant offered in congratulations: “The fact that you, or someone, got Nature to cover a meeting that may lead to a plan that may lead to action is a little mind boggling, but I suppose it’s a testament to the timeliness and novelty of the approach, and I’m very happy to see it.”

What changed, you might ask?  I became a full-time “enviropreneur” as the Walker Conservation Fellow at Georgia Aquarium.  Wondering what that means?  An “enviropreneur” is dedicated to improving environmental quality through property rights and markets.

PERC is accepting applications right now for their 2012 Enviropreneur Institute.  Not a day goes by when I’m not amazed at how my experience at PERC directly impacts my day-to-day work.  I have a network of peers and mentors to advise me, and I have been fortunate to receive ongoing support from PERC, including for the workshop “Market Approaches to Coral Reef Restoration: Investigating the Viability” that I co-directed with them in Florida and that led to the article in Nature.

Check out the Enviropreneur Institute today. Applications are due March 12th (deadline just extended)!  The application can be accessed here.

Brett Howell is a graduate of PERC’s 2011 Enviropreneur Institute and a Conservation Fellow at the Georgia Aquarium. Visit his blog on environmental entrepreneurship.

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Should the Forest Service Promote Biomass Heating?

by Steve Bick

James Kellogg calls on National Forests supply wood to replace fossil fuels for thermal energy and boost the use of biomass heating in Western states. In a recent article in the Glenwood Springs (CO) Post Independent, Kellog explains how National Forests hold the promise of green energy. We’ve seen how heating facilities with woody biomass has taken hold in Vermont and other cold locales. Biomass heating could provide markets to facilitate forest fire fuel reduction and salvage of beetle-killed wood in Colorado and other western states.

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Valentin Abe is spawning fish farmers in Haiti, lack of formal property rights be damned

by Tate Watkins

“Everything here in Haiti,” says Dr. Valentin Abe, “takes time.” Which is a comment as insightful as it is tautological.

Abe (pronounced AH-bay), originally from Côte d’Ivoire, first came to Haiti in 1997 on a six month contract to assess potential aquaculture sites. He’d recently earned a PhD in aquaculture from Auburn University, and before he knew it the contract spiraled into two years. He’s been working with fish farmers in Haiti ever since.

In 2005, he started Caribbean Harvest, a program that turns terra farmers into aqua farmers using startup aquaculture kits and fingerlings from Abe’s hatchery in Croix-des-Bouquets, in the outskirts of the capital. Potential fish farmers rely mainly on donations to provide startup costs, but the idea is that once a farmer has a kit—two cages, 2,400 fingerlings for each cage, and feed—his operation will sustain itself once the first harvest goes to market. The 150 or so farmers Abe works with have had varying degrees of success so far.

Haiti’s lack of formal property rights—the Hernando de Soto-backed international property rights index doesn’t even bother to include the country—has been cited ad infinitum, especially during the reconstruction tumult since the earthquake two years ago. But Abe and his partner farmers have had surprisingly few property rights-related problems when it comes to the waters that hold their fish.

“In the lakes and reservoirs,” he says, “[farmers] do the monitoring, provide security for the cages themselves. They do all the work.”

The Haitian constitution provides that “water resources are the domain of the state; the right to property does not extend to any springs, rivers, or water courses.” But in practice, informal customary law reigns, and farmers provide their own enforcement.

Land, however, is a different story.

“We’re trying to locate land and go build a processing plant,” says Abe. “The owner of the land, we know that he’s the owner of the land, but he doesn’t have the proper documentation because land has been handed down from generations, from father to son. So they’ve never felt the need to do the paperwork on the land, and we cannot build infrastructure on land that doesn’t have titles.”

Abe plans to build the fish processing plant near Lake Azuéi, Haiti’s largest lake and the site of many of Caribbean Harvest’s farmers. Eventually, he also wants to build fish ponds, a more efficient way to farm. But he faces the same hurdles when it comes to securing proper title for land on which he wants to build ponds. He guesses that it will take six months at best just for all parties to acquire the proper paperwork.

For now, he waits.

Tate Watkins is a freelance writer based in Washington, D.C. He writes about economic development, foreign aid, and immigration, among other things. Currently in Port-au-Prince, Haiti. Visit his website here. Photo via Caribbean Harvest.

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Between a rock and a hard place: The Mining Law of 1872

by Brennan Jorgensen

In the New York Times, Robert M. Hughes and Carol Ann Woody call for the end of the Mining Law of 1872 as a means to protect fragile ecosystems from invasive mining practices. They cite the Environmental Protection Agency’s estimates that headwater streams in 40 percent of Western watersheds are polluted by mining.

Originally established in response to the California Gold Rush, the Mining Law allows United States citizens and firms to explore for minerals and establish rights to federal lands without authorization from any government agency. The only cost to mining companies is an annual $100 holding fee for each claim, with a maximum claim size of 20 acres. Claimants may then acquire outright title to the land by obtaining a patent, at a per-acre cost of $2.50-$5. Mining firms do not pay royalty taxes on the minerals taken from federal land.

While environmental activists call for the end of the Mining Law and stricter regulations on mineral exploration and development, a PERC Policy Series by David Gerard offers a more comprehensive summary of the problem, as well as an alternative solution:

Reform advocates often imply that since the Mining Law contains no environmental protection measures, mining is unregulated. Of course, this is not the case. Mining activities on federal land are subject to federal, state and local regulations for air and water quality, solid waste, public safety and fire control. The Forest Service and BLM have their own regulations. Although regulations such as the National Environmental Policy Act, the Clean Air Act, and the Clean Water Act are not mining-specific, mining firms must comply with them.

Hughes and Woody claim that the mining industry’s track record on environmental protection, “hardly inspires confidence,” but as Gerard points out, the majority of environmental degradation is a byproduct of abandoned sites, which were mined before environmental regulations went into effect.

While environmentalists speak as though polluters should be liable for the harm they cause others, a number of deficiencies in federal laws violate this principle. These deficiencies are not found in the Mining Law but, rather, in environmental laws such as Superfund and the Clean Water Act. In particular, the requirement that mining companies take on responsibility for others’ damages is hindering cleanup, not helping it. Superfund and the Clean Water Act are keeping both mining companies and state governments, which have an increasing role in environmental-protection matters, from active reclamation of abandoned sites.

The Mining Law as it now stands is not without merit. The holding fee was enacted in 1992 under the Clinton Administration, which cut the number of claims reported to BLM from one million each year down to an estimated 340,000. Additionally, the holding fee allows claimants to hold marginal sites in anticipation of changing market conditions. “Market forces rather than a statutory time constraint may determine if and when production begins,” writes Gerard.

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How Not to Save Wild Tigers

by Michael ‘t Sas-Rolfes

Captive tigers in the U.S. have become the latest target of a misguided campaign aimed at saving their wild brethren. According to the World Wildlife Fund, perhaps 5,000 captive tigers live in the U.S., many of which are privately-owned pets – more than the estimated 3,200 that survive in Asia in the wild. WWF has called for a ban on private ownership of tigers and proposed various other laws at both federal and state levels to control the U.S. captive tiger population. Why? Because WWF fears that body parts from captive U.S. tigers may enter the illegal trade and “stimulate demand” in Asia, leading to further poaching of wild tigers.

WWF will no doubt celebrate the recent passing of a New Jersey Senate bill that establishes new strict in-state permitting requirements for captive tigers “to prevent their illegal trade.” This measure is being held up as a model for the rest of the country to follow. However, some New Jersey residents are skeptical about this bill and wonder whether this is not a misguided allocation of the state’s resources (see comments here). They are right to be skeptical.

First, a 2008 survey by TRAFFIC, the WWF-affiliated trade monitoring network, did not find any evidence whatsoever that U.S. captive tigers were involved in illegal trade in tiger parts. Second, a recent census by the U.S. Feline Conservation Federation documents only 2,884 tigers, most of which are found in licensed zoos and sanctuaries. Third, of those, only 24 are found in New Jersey, spread over 5 zoos. Even if body parts from those tigers did enter the trade (highly unlikely) the effect would be trivial.

Not only is the New Jersey bill of questionable relevance, its basic premise is also flawed. WWF’s assertion that body parts from U.S. captive tigers must be kept away from the market to protect wild tigers is in fact illogical. It assumes that if the supply of a product to the market is increased, the demand will automatically increase by an even larger amount, thereby leading to a price increase. This would make tiger products a retailer’s dream — a unique product that actually rises in price as supply increases.

In reality, if body parts from captive tigers were supplied to the market, their price would most likely drop (in line with basic principles of supply and demand). And lower prices would mean reduced rewards and incentives for poaching and illegal trade. The theoretical argument for trade stimulating demand is phony. What about empirical evidence?  Conservationist Brendan Moyle analyzes data from the commercially-exploited Louisiana alligator population and finds no correlation to support WWF’s claimed relationship.

The argument that the U.S. captive tiger population poses any sort of threat to Asia’s wild tiger population is based on nothing more than dubious conjecture and WWF’s campaign probably amounts to little more than a waste of donors’ and taxpayers’ money.

Michael ‘t Sas-Rolfes is an environmental economist based in South Africa and a 2011 PERC Lone Mountain Fellow. He is the author of Who Will Save the Wild Tiger? (1998, PERC Policy Series), a contributor to Tigers of the World: The Science, Politics, and Conservation of Panthera tigris (2010, Academic Press), and coauthor with Kirsten Conrad of the recent paper “Making Sense of the Tiger Farming Debate.” For more information visit his website: rhino-economics.com.

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Can New Mexico turn blue into green?

By Chris Corbin

Tomorrow morning, I will board a plane for the 2011 American Water Resources Association Conference in Albuquerque, New Mexico. At this event, I will present my vision for turning blue into green through water marketing to both the conference and the local Business Water Task Force.

An example of this vision was highlighted in an Ecosystem Marketplace article published last week: Can his Water Bank help Montana Solve its Water Troubles?

While at this conference, I intend to tweet the highlights (in my eyes) from @loticwater with the hashtag #AWRA2011.

It should be a fun one in the world of water; I hope to see you there.