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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.

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Q&A with PERC Enviropreneur Dave Wager on Tree Ring Pens

PERC welcomed sixteen conservationists from around the world for its 11th annual Enviropreneur Institute, June 26 through July 8, 2011. The program works with environmental entrepreneurs who seek a better understanding of how business and economic principles can be applied to environmental problems. For two weeks, participants have the opportunity to interact with leading experts in the field of free market environmentalism, including those who have researched and applied markets and property rights in their environmental work.

Dave Wager attended this year’s Enviropreneur Institute in Bozeman, MT. He is the owner, artisan, and forester for Tree Ring Pens, LLC. Prior to launching Tree Ring Pens, Dave spent ten years conducting Forest Stewardship Council (FSC) endorsed certification assessments on more than 100 forest management operations covering over 25 million acres of forestland across 16 countries.

Q: What are “Tree Ring Pens” and where does the wood supply come from?

A:  Tree Ring Pens are fine writing instruments crafted from dated tree ring cores. Each pen includes the full chronology (first through last annual ring) of a tree’s life. Through these annual growth rings, each pen shows 100+ years of natural history. As children we learned we could figure out how old a tree was by counting its rings. To foresters and scientists tree rings serve as an encyclopedia of past forest and climate conditions, providing information on tree growth rates, climate patterns,  forest fire history,  and many other ecological topics. The Tree Ring Pen was created to share this unique resource through a commonly-used object.  The wood for Tree Ring Pens comes from forest restoration projects in western Montana—specifically projects that aim to restore old growth forests.

Q: How did you come up with the idea for the Tree Ring Pen and how does it relate to forest restoration?

A:  My idea for the Tree Ring Pen was born more than a decade ago while conducting dendrochronology (tree ring) research as part of my master’s degree. People seemed fascinated by the information and history imbedded in tree ring cores, and I had been thinking of ways to share tree rings in a wood product. One evening, while working in a dendrochronology lab, it dawned on me that tree rings could be displayed in a wooden pen. The idea for Tree Ring Pens sat on a back burner until I discovered an opportunity to wed it with the need to thin overstocked forests in the western U.S. As a result of nearly 100 years of fire suppression, some forests, including rare old growth stands, are unnaturally dense, and are more susceptible to fires and insect/disease mortality. Without restoration treatments, old-growth forests in dry regions of the West are at considerable risk. Removing the encroaching conifers through forest thinning is needed to restore and help protect remaining old growth forests.

Q: Does the purchase of a Tree Ring Pen contribute to future forest restoration projects?

Dave Wager in action

A:  Tree Ring Pens are crafted out of small understory trees that are adding unnatural stress to old growth trees. Thinning out the small diameter trees improves the resiliency of the old growth stands. The aim is to direct Tree Ring Pen restoration efforts at small patches of old growth that are being ignored because they lack the economies of scale that make restoration thinning economically viable. A significant portion of the remnant old growth forests are in remote locations, steep terrain, and/or small isolated patches. Remnant old growth stands exist today, in part, because they were too inaccessible or too steep to be logged economically when widespread logging of old growth forests occurred. Ironically, the same cost challenges that explain their existence also serve as an impediment to their conservation. By crafting a fine product that displays tree ring history, the low value of the small diameter trees can be greatly enhanced to provide the necessary economic incentive to accomplish restoration. Additionally, Tree Ring Pens LLC is donating 5 percent of the purchase price of the sale of each pen to organizations working on forest conservation and restoration. [Read more…]

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A Montana State of Mind

Brett Howell is a recent graduate of PERC’s 2011 Enviropreneur Institute. The following originally appeared on Gaia Endeavors.

I am just back from an incredible 2+ weeks in beautiful Bozeman, Montana, at PERC’s Enviropreneur Institute (PEI). The experience was life- changing for me. Through the program I greatly advanced an idea I have been developing around self-financing marine conservation using markets, I was both physically refreshed and emotionally restored, and I made a lasting group of friends with both my peers and mentors at the program. Highlights for me included late-night conversations around the campfire, bocci ball and lectures at Ted Turner’s Flying D Ranch, epic barbeques, floating down the river, living in the Montana State University dorms, an impromptu graduation dinner in downtown Bozeman, bonding with my peers, and intense brainstorming sessions with mentors.

PEI 2011 culminated on Friday, July 8th, with “I have a dream” presentations during which each enviropreneur had seven minutes to describe his or her dream for the future of the project that had been developing during the program. These ideas ranged from applying property rights to coral reefs, to turning trees into pens to drive forest conservation, to nutrient trading schemes, among others. Each of these presentations dealt with a free market environmentalism (FME)-based concept. PERC’s version of FME is “dedicated to improving environmental quality through property rights and markets,” focusing on the creation of property rights to make markets work so that entrepreneurs can step in to solve environmental challenges.” FME is an idea that excites some people while raising red flags for others (e.g. can and should nature be turned into a market?).

While there are multiple perspectives on FME, PERC is not the only way to get involved in the discussion. All that is required is a group of people, either physically connected or tied through social media, willing to debate the pros and cons of various issues. For example, while the PEI 2011 Fellows are once again spread throughout the world, we will continue to have phone calls to discuss and advance our projects.

Even though PEI is now over and each of us is dealing with the first “reentry” week differently, I find myself in an exuberant mood despite the challenges. I look forward to seeing what impact the FME approach will have on my career and the places it will take me. With some strong perseverance and a bit of luck, I believe that all of the PEI 2011 Fellows will succeed at our endeavors. In honor of the “idea seeds” that PEI 2011 started, the class made a donation to the Coral Restoration Foundation so that a coral named “PEI 2011” could be placed into a nursery in the Florida Keys and eventually planted out on the reef to help seed other corals in Florida.

While some of the relationships and memories will inevitably fade as the weeks, months, and years go by, the Montana state-of-mind that PERC helped create never will, at least for me.

Check out the PEI program and/or make a donation with the Coral Restoration Foundation to help restore Florida’s reefs.

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What does it mean to be an environmentalist?

by Michael H. Higuera

Environmentalism is commonly thought of as a social movement. Social movements consist of a group of people with a common ideology who try together to achieve certain goals. Broadly speaking, environmentalists try to promote conservation and protection of the environment. I’ve identified myself with this movement since I was about fourteen years old. At some point I began to ask, “How can I best help protect the environment?” If I could wave a wand and get everyone to be an environmentalist, the problem would be a lot closer to being solved. Unfortunately, I have not found that wand yet.

When I was approached with an opportunity to work at The Nature Conservancy (TNC), I quickly realized that the organization’s emphasis on creating win-win solutions and avoiding confrontation was what had helped it become the largest and one of the most effective environmental organizations in the world. A hallmark of the organization has been using market transactions to create tangible results. For example, TNC has purchased conservation easements from ranchers permanently protecting important habitat from development and other threats. Ranchers often use that money to acquire more land allowing the next generation to stay on the ranch which helps agricultural communities remain viable while creating an incentive to protect the land. TNC is now pursuing similar win-win solutions such as coordinating payments from water users to protect important watersheds that are critical to providing clean drinking water.

TNC’s approach is alive and well at PERC’s Enviropreneur Institute this summer which I have been fortunate enough to attend. The participants are bright, ambitious “enviropreneurs” who are trying to create win-win solutions that will benefit the environment. There are some pretty innovative ideas like selling pens created from trees cut to enhance forest health and restoring coral reefs by tapping into the economic interests of people who make a living off of the marine environment. Some will succeed, many will fail, but more importantly a market promoting environmental protection is being developed. By appealing to peoples’ interests and letting them act on these incentives, I’m more hopeful than I’ve been in a long time that we will be able to succeed in protecting and restoring the environment.

Mike Higuera is a 2011 PERC Enviropreneur Institute Fellow and a conservationist at The Nature Conservancy.

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Perspectives from PERC’s Enviropreneur Institute

Brett Howell is attending PERC’s Enviropreneur Institute program taking place in the Bozeman, Montana area from June 25th to July 8th. Below we are posting some time-delayed blogs that Brett wrote while at Ted Turner’s remote Flying D Ranch. In addition to reading Brett’s blogs, follow his tweets @BrettWHowell and @gaiaendeavors.

Ted Turner’s Flying D Ranch and Wolf Conservation

I’m sitting by a stream at Ted Turner’s Flying D Ranch as I ponder my first experiences with the Property and Environment Research Center (PERC) Enviropreneur Institute (known as PEI). I’ve been in Montana since Sunday, June 25th for PEI. We have an incredibly diverse group from across the US, Israel, the Galapagos, and South Africa. Each of us was selected through a highly competitive application process so that we could gain hands-on training in free-market environmentalism (FME). PERC’s version of FME is “dedicated to improving environmental quality through property rights and markets,” focusing on the creation of property rights to make markets work so that entrepreneurs can step in to solve environmental challenges.

On Monday, June 27th, we drove approximately 45 minutes from Bozeman to The Flying D Ranch, a 116,000 acre property that Ted Turner purchased 20 years ago. We are staying in rustic cabins alongside a small creek. From here we can see snow-covered peaks, beautiful green rolling hills, and perhaps most stunning, thousands of buffalo (also called bison).

This morning we heard from Danny Johnson, the Flying D’s ranch manger. I now know more about bison farming than I ever thought possible. Ted Turner, a name originally synonymous with CNN, is well known in Montana and throughout the US for his bison herds. He owns more than 54,000 head of bison throughout the US, approximately 5,600 of which are somewhere on the ranch where I’m currently sitting. Bison meat prices dropped in the mid 90s. To help create a market and drive demand, Ted’s Montana Grill was created to help introduce people to bison meat and provide a distribution channel through which his Turner’s meat could be sold.

Along with being a media entrepreneur and rancher, Turner is a committed conservationist. He controls more land holdings than the total size of Yellowstone National Park, and he has committed to putting conservation easements on every property he owns so that the natural state can be protected in perpetuity. Turner also supports a pack of 25 wolves (18 adults, 7 pups) that moved onto Flying D Ranch recently despite significant impacts on ranch operations. Turner’s decision to maintain wolves on his property is in sharp contrast to the wolf debate raging on public lands where farmers, hunters, environmentalists, and the park service, among others, are deliberating about the predators’ future in Montana.

The decision to allow wolves on the property has a clear impact on Flying D’s bottom line. For example, approximately 30 bison have been killed by wolves so far this year at Flying D Ranch, despite the fact that the wolves primarily feast on elk. Each bull bison sells for approximately $2,300. Elk hunting costs $14,500 for four and half days on Flying D Ranch. Given wolf impact on elk populations, the number of permitted elk hunters is being reduced to 24 from 30 for the upcoming season. Flying D has also hired a full-time wolf biologist to keep an eye on the pack.

The experience at Flying D Ranch has been an incredible opportunity to get out of the city and really connect with fellow PEI participants and see a model of FME at work. Our discussions are wide-ranging and truly inspiring!

Short Insights and Quotes from the first three days of PEI

  • There is no silver bullet yet for why biodiversity is important to markets
  • Property rights can help you create markets vs. moral persuasion
  • If you put a price on something, at what point are social norms holding us back from a market?
  • “But for analysis” – where would people be today, but for an incident that created the harm
  • Do fish have rights (e.g. under the US Endangered Species Act)?
  • Is a product that accounts for the cost of production externalities (e.g. polluting a stream) really a luxury good vs. the same product that is priced to ignore such externality costs?
  • “Sustainability is risk management”

Wildlife Tour on Flying D Ranch

The PEI Fellows woke up at 4:45am on Wednesday, June 29th, for an early morning tour of the Flying D Ranch. In three hours we had the incredible opportunity to see bear, moose, bald eagle, golden eagle, elk, white tail deer, coyote, beaver, and of course, farmed buffalo. At almost three times the size of my current home, the District of Columbia, the 116,000 acre ranch is a vast expanse that we barely began to explore on our drive. [Read more…]

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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.

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Q&A with Richard Rice of Save Your World

It is officially summer and that means PERC is welcoming dozens of visiting fellows ranging from scholars and students to journalists and entrepreneurs. Last week we welcomed Richard Rice, the co-founder and president of the Save Your World Foundation—a nonprofit whose mission is to protect globally significant areas through incentive-based conservation agreements.

Richard has more than 25 years of experience in natural resource and public policy analysis, most recently at Conservation International where he served as chief economist. While at CI, he conducted extensive research on the costs and effectiveness of different approaches to biodiversity conservation in the tropics and supervised projects in Africa, Asia, and Latin America. He has published widely on the viability of sustainable forest management and has worked on the development and implementation of a unique approach to conservation.

Richard is a 2011 Lone Mountain Fellow at PERC. We thank him for participating in our new Q&A series for The Percolator.

Q: In 2010, you founded the Save Your World Foundation with Scott Cecil. What is Save Your World and how does it work?

A:  We are the only non-profit devoted exclusively to supporting conservation agreements in developing countries. We serve as a kind of “mother ship” for our projects, providing technical assistance as needed and connecting them to funding sources here in the U.S.

One of the things we focus on is hosting project-level endowments. Endowments are a common approach to conservation funding here in the U.S. but are beyond the reach of many projects abroad. They can be an extremely useful tool for project finance. Our projects, for example, have very well-defined recurrent annual costs and matching those costs to an inevitably uneven flow of funding is much easier to accomplish with an endowment.

Q: Save Your World advocates a unique approach to conservation—one that uses incentive-based agreements. How do these agreements work?

A: Conservation agreements are just that, agreements negotiated with resource owners that define a concrete conservation outcome—usually the protection of a particular habitat or species—in exchange for benefits designed to give resource owners an ongoing incentive to conserve. The type of benefits provided vary but can include technical assistance, support for social services, employment in resource protection, or direct cash payments.

How a particular agreement is structured, of course, depends on the setting. One of our projects compensates Maasai herdsman for livestock lost to predators in exchange for their commitment to not kill lions. In effect, it’s an insurance program for the Maasai and it has been tremendously successful in protecting lions. It now covers more than 1 million acres of communal grazing lands.

Another agreement provides support for traditional landowners in the Solomon Islands, protecting the largest uninhabited island in the South Pacific. In that case, our benefits include employment as rangers and a scholarship program for school children.

Q: What role do property rights play in these incentive-based agreements?

A: The property rights involved are absolutely key. It’s really no different abroad than it is here in the U.S. in that respect. It’s all about devising the proper incentives to make conservation happen. The novelty is that until recently these kinds of agreements were not considered possible in developing countries. But in fact, they have proven to be very well suited to that context.

It is a bit of a paradigm shift, though, since past efforts have typically sought to benefit resource owners indirectly through markets for so-called “green” products.

With conservation agreements you’re paying for conservation directly rather than as a by-product of something else—say some activity that uses the resource you’re trying to protect but in a less damaging way. The problem is that markets for the kind of products that do that are pretty small, and pretty uncertain. And at the end of the day, they’re not really necessary.

It is much better to devise agreements to give people things they need in exchange for exactly what you want in return, which in this case is straight-ahead conservation. That way conservation becomes the thing that stimulates local economies by competing with destructive development.

All of this, of course, requires that you think about conservation as something that you pay for, just like everything else. That’s important because people in developing countries support conservation for the same reasons we do, but as a practical matter they can’t afford to forgo development anymore than we can. They are happy, though, to accept compensation in exchange for conservation.

Q: Prior to establishing Save Your World, you worked for more than 20 years as the chief economist at Conservation International. What did your time at CI teach you about conservation and how have you applied to your new position?

A: Well, one thing I learned is that one person can make a big difference. That goes equally for people negotiating these kinds of agreements, as well as those helping to fund them. One medium-sized foundation or high net-worth individual, for example, could easily “own” saving the African lion in a large part of its remaining range.

These are very affordable agreements and they can be put in place quite rapidly. Someone once called this “warp-speed conservation.” Put another way, the problem is not nearly as daunting as many believe. It is certainly a lot easier to fix than I once thought. That is a very hopeful and important lesson.

[Read more…]

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Q&A with Michael ‘t Sas-Rolfes on Rhino and Tiger Economics

Editor’s Note: Summers are an exciting time at PERC as we welcome dozens of visiting scholars to our summer fellowships programs. Throughout the summer, The PERColator will be bringing you a new Q&A series with many of our outstanding visiting fellows.    

Michael 't Sas-Rolfes

Michael ‘t Sas-Rolfes is an environmental economist with a focus on the role of markets for biodiversity conservation. He has been actively involved in various private conservation initiatives for 25 years, starting as a financial manager of a private game reserve in South Africa and later conducting research on the role of private markets for wildlife conservation in Africa.

Michael worked with Francis Vorhies to set up Eco Plus, an innovative consultancy on business, economics, and the environment. His consulting experience includes work on trans-frontier conservation areas, wildlife trade policy, and institutional reform in protected area management. He has written extensively on various conservation issues, especially relating to trade in endangered species.

Michael is a 2011 PERC Lone Mountain Fellow researching international wildlife trade policy. Thanks to Michael for taking time to answer our questions.

Q: In 1998, you authored a PERC Policy Series called “Who Will Save the Wild Tiger?” What has changed in the world of tigers since you wrote the paper?

A:  A lot has been done. There have been many conservation initiatives, much money spent, and many, many meetings. A wide range of conservation NGOs and even the World Bank established initiatives, culminating in last year’s grand “Tiger Summit” in St. Petersburg in Russia. Unfortunately, however, wild tiger numbers have continued to decline. When I wrote the PERC Policy Series paper, the most recent estimate of wild tiger numbers was between 4,800 and 7,300. Last year the official World Wildlife Fund estimate was 3,200. So in another sense, not much has changed at all – the wild tiger remains in trouble.

Interestingly, during this time the Chinese government also announced plans to investigate the feasibility of using farmed tigers to provide a legal supply of tiger bone medicines to their domestic market, citing my PERC Policy Series as a partial justification for this. Conservation NGOs (and the World Bank) reacted in a very hostile way to these proposals and the Chinese have not pursued them any further.

Q: In your paper you wrote, “Tiger conservation is, ultimately, an issue of incentives.” What are the incentives and who faces them?

A:   Conservation NGOs benefit from the tiger’s charismatic high profile as a means to raise funds, and conservation scientists like to study tigers, so one could argue that they have an incentive to prevent them from becoming extinct. By contrast, rural people living near tigers have to deal with threats to their livestock and children, and human-tiger conflict is a serious problem over most of the wild tiger’s range. Rural people have less of an incentive to conserve tigers, especially when offered large sums of money for tiger carcasses.

I believe that the main challenge for tiger conservation is that people living next to wild tigers are the ones who actually control their destiny, and right now those people typically don’t benefit much from the presence of wild tigers. The people who do benefit are mostly far away and don’t have much real control over what happens to tigers. There is a mismatch between who pays the costs and who gets to benefit from tiger conservation.

Q: How can tigers become assets instead of liabilities?

A:  For something to be an asset, it has to be owned by someone. Right now most wild tigers are typically ‘owned’ by governments, but that is a weak and dispersed form of ownership, which does not benefit or incentivize specific people who control the wild tiger’s destiny. Those people are typically rural subsistence farmers and poorly paid government employees. By creating stronger property rights – i.e. more direct ownership of tigers – one could create ways for more specific groups, communities or agencies to control and benefit directly from tigers. Ways to benefit could include genuine “adopt-a-tiger” schemes, contractual agreements with local people, tourist viewing, and possibly trophy hunting (although this is currently banned). This would give tigers much greater asset value.

Q: Should conservationists look toward tiger farming as a viable solution to the decline in wild tiger populations?

A:  Tiger farming is one of a range of options to consider. It has the potential to satisfy some of the persisting demand for products such as tiger bone, thereby competing with the black market, which currently provides the only channel of supply. It is not a panacea, but it is also not the threat that some conservation groups claim it to be. The Chinese captive tiger population already exceeds the world’s wild tiger population, and conservation groups worry that some products are ‘leaking’ illegally into the marketplace. However, if market demand for these products persists, it would be a bad idea to try to stop this leakage, because it will simply drive up the value of poached tiger products and stimulate poaching even further.

Q: You have also done similar work on protecting wild rhino populations in Africa. You recently launched a website called Rhino Economics. What is the purpose of the website?

A:  Rhino Economics provides an information source to a wide audience on all of the economic issues relating to rhino conservation, especially the rhino horn trade. The public tends to be poorly informed on this issue. Most people still think that rhino horn is used as an aphrodisiac and that the rhino horn trade ban is a good idea. My research over the past 22 years shows that the smartest way to protect rhinos is to create strong property rights and market incentives, and the example of the southern white rhino success story provides concrete proof. My research also suggests that the greatest threat to rhinos today is in fact the ban on rhino horn trade. The ban is causing an artificial supply shortage that is driving the price up to outrageous levels and thereby attracting highly-sophisticated organized crime syndicates into the trade.

The website aims to provide information at three different levels: 1) a quick overview of the issues for the general public, 2) a more detailed explanation of the issues for those who are more interested or involved in rhino conservation and 3) a comprehensive listing of past academic and policy work I have done for students and practitioners of wildlife policy.

[Read more…]

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The Prius Premium and Other Sensible Nonsense

Photo: Toyota

As this working paper by Steven and Alison Sexton explains, there is a substantial, and important, price premium that Toyota Prius buyers are willing to pay to drive a Prius. They are clearly buying something other than mere transportation. To some—indeed many—this waste of resources seems silly. To others it seems wonderful. The comparable gasoline-powered Toyota costs several thousand dollars less. Why would anybody do this? After all, the Prius buyer could purchase the equivalent gas Toyota and use the savings to donate to an environmental organization, or to pay the local boy or girl scouts to pick up litter? Or donate the money to some climate change cause?

For the economist, there is a deeper rationality that generalizes about this type of behavior. And there is a rich and full academic literature in economics that speaks on the topic of commitment via waste, the Prius being just one recent example of that principle in practice. The idea is simple. You and I want a friend or a customer to do a particular thing, yet it’s hard to know what they might do next. If they can pre-commit to a course of action then we might act differently toward them, making us both better off.

Wasting money can do the same thing. Spending money to buy things which are by themselves unproductive or of no value can commit the buyer to a course of action. Once convinced, this will lead others to treat them differently. Economists argue that, other things equal, the more an engagement ring costs, the longer a couple will stay married. Not because the ring cost a lot of money, but instead, the person most deeply committed to the relationship might invest the most in the ring. And, the money wasted on the ring only repays itself if the relationship persists. Therein the waste has rewards. It signals, bonds, and commits, and by doing so gets the spouse to act differently. This explains the custom of why prospective brides are not obliged to return rings to suitors who break off wedding plans or why divorcees are not required, usually, to return rings to their former husbands. If the ring could come back, its expenditure would not have been a waste and of no value.

I have an acquaintance who likes to pay the dinner bill when he goes out with close friends out of respect and love for their relationship. Naturally, the other couple often feels the same way. Occasionally they split the tab, but other times he insists on paying. When he does, the other friends have brandished a $100 bill, torn it into small pieces, and tossed it into the air because they wouldn’t let him pay. Having watched him do this several times, his past behavior of tearing up $100 bills has since convinced them of his earnestness. The past waste has rewarded him as he gets his way.

And this is why Priuses have to look ugly. If they looked like other Toyotas or similar cars, then no one could observe the waste of resources.

A prediction emerges: Hybrids and electric cars will look like regular vehicles once the price of gasoline makes them cost effective. Once there is no waste to buying a hybrid, there need be no signal of the waste, because there isn’t one.

So what is it that Prius owners are getting for the money they waste at the time of the purchase? They are almost instantly recognized as an environmentalist. That can pay dividends in many dimensions. For instance, sales people who want to impress environmentally-sensitive clients who drive a Prius have a leg up. Simply calling yourself an environmentalist is not nearly as effective as driving a Prius and proving that you are. The money wasted at purchase is returned via potentially enhanced sales.

Here are a couple of guesses. People that buy environmentally-certified products such as sustainable lumber or green energy need ways to reveal that behavior to others. The ugliness of the Prius performs that task. Yet there is no similar way for home remodelers to signal that they have bought sustainable lumber or for buyers of green electricity to alert their neighbors, friends, and business customers. The thoughtful enviropreneur will realize this is a profit opportunity. If you can figure out a way for buyers of green energy to let the world know they have spent 20 cents per kilowatt hour on electricity, I predict that a lot more people will buy green electricity. Solar panels on roofs are sometimes visible and help reveal the waste, but only when seen from the street and only then by a small number of people who are important to the buyer. The enviropreneur who finds the answer will make a lot of money, as Toyota has, and also get more power produced from alternative sources of energy.

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Results not rhetoric for wilderness protection

No politics. No advocacy. Just boots-on-the-ground work.

That’s the motto of the Selway-Bitterroot Frank Church Foundation, a nonprofit wilderness conservation group based in Idaho and Montana, about which Rocky Barker (former PERC media fellow) writes in the Idaho Statesman. The group focuses its efforts on protecting two wilderness areas in Idaho: the 1.3 million-acre Selway-Bitterroot wilderness and the 2.3 million-acre Frank Church-River of No Return wilderness.

But unlike many other environmental groups, the foundation doesn’t engage in litigation, lobbying, or activist rhetoric to protect wilderness. They partner with communities, businesses, universities, tribes, and the Forest Service to promote the stewardship of existing wilderness areas:

“They’re taking care of what they’ve already got instead of asking for more,” said Idaho County Commissioner Skip Brandt.

The foundation’s staff, interns and volunteers have rebuilt and cleared hundreds of miles of trails, cleaned up hot springs and campgrounds, and helped clear invasive weeds from acres of wilderness. In 2010 alone, they cleared 49 miles of trails, removed 37,000 pounds of trash and restored or eradicated 146 campsites.

The foundation managed 13,353 hours of volunteer work that would have otherwise cost the U.S. Forest Service $278,410.

The amount of land designated as wilderness has increased in recent decades, but funding for wilderness land management projects has often lagged behind. Wilderness areas now make up nearly 20 percent of federal public lands, but only 1 percent of the Forest Service budget is spent on wilderness management projects. Volunteer groups like the Selway-Bitterroot Frank Church Foundation help fill that void.

Some contend that such work causes federal agencies to ignore their management responsibilities under the 1964 Wilderness Act. But consider the costs of providing management for trail systems, campsites, and invasive species in wilderness areas. The Wilderness Act largely forbids the use of power tools, motorized vehicles, helicopters, etc. As a result, routine management is labor intensive, costly, and is often left undone.

By focusing on results instead of rhetoric, the Selway-Bitterroot Frank Church Foundation is finding ways to improve wilderness lands without promoting more government, and that should be applauded. In the process, they are proving that effective conservation doesn’t simply mean advocating for more public land, but protecting the lands that are already set aside.

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Barcoding trees to save them

A property rights solution to tree poaching in Liberia:

[T]he elected government of Harvard-trained President Ellen Johnson Sirleaf has signed a deal with the European Union to place timber sales on a permanently legal footing. The deal, agreed to this month, makes use of a unique national timber-tracking system that requires every legally harvestable tree and every cut log to carry a barcode that will enable it to be tracked from its origin to its final destination.

…Every tree in a forest with a logging concession must be tagged with a unique barcode. When that tree is cut, the action is recorded and new tags are attached to each log. Every log that turns up at a port has to be traceable back to a stump in a forest. It’s as simple and as foolproof as checking out at the supermarket, says Ivan Muir, the local boss of SGS, the Swiss specialists in forest certification systems who are in charge of making it happen. Muir also issues export permits for the timber — which mostly gets turned into furniture and paneling — and monitors royalty payments to the government.

More at YaleE360.

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Same Old Song and Dance Over CA Parks

Once again California is threatening to close state parks. Seventy (out of 270) parks are on the chopping block this time around (see an interactive map of the planned closures). The plan is to place the parks in “caretaker status,” which means gates would be closed and people would not be allowed to enter.

What a dismal idea from a state known for its entrepreneurial energy.

There are a few ideas being tossed around to keep parks open but they lack luster. There was Proposition 21, the regressive car tax that was rejected by voters last year. Now there is Senate Bill 356, which would require the state to give counties and cities a chance to take over operations of closed state parks in their areas. And there are plenty of statements such as those by State Assemblyman Jared Huffman (D-San Rafael) who said that park closures were inevitable, but that he would work to allow nonprofits to take over park operations in appropriate situations.

Why is this outcome inevitable and why only consider nonprofits? As Harris Kenny recently wrote in the Orange County Register:

There are private companies out there that will see California’s parks wasting away and envision a way to bring them back to life. Some facilities, like Tecopa Hot Springs County Park in Death Valley, operate under whole-park concession agreements, a remnant of California’s once-innovative past where the state leased some parks to private companies….Under these lease agreements, recreation companies manage and maintain the parks. The government can set any quality and maintenance standards it desires and hold the private company accountable to them with a performance-based contract.

Other states are already moving to protect their parks through lease agreements. Last year, Arizona asked private companies to present creative proposals on how they would enhance operations at state parks. The state is currently reviewing ideas submitted by six companies.

One of these companies is Recreation Resource Management, which offered to lease six Arizona state parks targeted for closure amid budget cuts. The company proposed to collect the same visitor fees the state charges today, while taking the operations and maintenance costs of these parks off the state’s books. Moreover, the concessionaire would pay the state an annual lease payment based on a percentage of the fees collected. The state would retain full ownership of the land, and the company would be subject to strict state controls on operations, visitor fees, and maintenance. As Leonard Gilroy wrote in PERC Reports last year, “the private sector is offering to take over the operations and management of cash-strapped Arizona state parks, keeping them open at no cost to the state.”

When the federal government threatened to close the gates to the Presidio due to budget constraints in the mid-1990s, Californians didn’t just stand by and let it happen. People got creative and pushed for the Presidio Trust. This innovative idea included separating the management of the Presidio from politics, with the goal of self-sufficiency providing  an incentive to earn revenue. The revenue earned, primarily by leasing properties, then goes toward operating the park, preserving its natural and cultural resources, and ensuring its long-term care.

The Presido Trust arrangement has not been without road bumps, but the point is the Presido is still open and is one of the most stunning urban parks in the nation. Rather than simply closing parks, bureaucrats in Sacramento should step aside and let creative entrepreneurs and private companies do what they do best—produce products (e.g. parks) that people want.