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In Praise of Forest Service Fire Tactics

The U.S. Forest Service is not the same Smokey Bear Forest Service of the past. Originally, the agency sought to preserve sustainable timber harvests by preventing all fires. Wildfire experts have shown that decades of fire suppression helped create forests unnaturally dense with fuel. Today, the Forest Service is much smarter with its fuel management choices.

In the wake of the 2012 Colorado fires, which destroyed hundreds of homes and will cost an estimated $450 million in damage, PERC President and Hoover Institution fellow Terry Anderson and PERC associate Sarah Anderson take a look at the motivating forces behind Forest Service fuel management policy. While most people think of fire suppression when considering wildlife management, Terry and Sarah focus their research on fire prevention strategies.

The duo’s ongoing research at PERC looks at how the internal organizational changes and external political, economic, and ecological environments have translated into changes in the actions of Forest Service personnel. Despite the negative attention the Forest Service receives when a large fire rages, Terry and Sarah find that the Forest Service deserves some praise for their fire tactics.

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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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Could the Health Care Decision Hobble the Clean Air Act?

Sackett v. EPA was the big environmental case from this past Supreme Court term, but the Court’s decision in NFIB v. Sebelius, the health care case, could actually turn out to have the larger effect on environmental law.  While most commentators on NFIB focused on the Commerce Clause challenge to the individual mandate, the arguments against the health care reform law’s provisions expanding Medicaid turned out to be more consequential, as seven justices concluded that in trying to create incentives for states to expand Medicaid, the health care reform law went too far.  This aspect of the Court’s ruling could also have a significant impact on environmental law.

As part of the Patient Protection and Affordable Care Act, Congress sought to expand Medicaid to cover all adults at or below 133 percent of the poverty line.  As states are tasked with implementing Medicaid, Congress had to make it worth their while.  So in addition to offering generous funding (at least in the beginning), the PPACA also threatened to cut off all Medicaid funding to any state that did not go along with the expansion.  In effect, Congress made the states an offer they couldn’t refused, which is one reason over twenty states sued.

In NFIB a majority of the Supreme Court found Congress’ offer to be unconstitutional.  Congress’ use of conditional spending, seven justices concluded, crossed the line from inducement to coercion, and was constitutionally impermissible.  In the process, the Court reaffirmed that the Constitution creates a federal government of limited and enumerated powers, and that the federal government’s spending power is subject to judicially enforceable limits.

The NFIB ruling matters for environmental law because conditional spending is a staple of modern environmental law.  Most of the major federal environmental statutes adopt a “cooperative federalism” model under which states are encouraged to implement federal environmental programs.  State cooperation is encouraged through, among other things, the promise of federal financial support and, in some cases, the threat to withhold money for other programs. Under the Clean Air Act, for example, states that fail to adopt federally approved air pollution control programs risk losing federal highway funding.  This condition, combined with the threat of direct federal regulation, has been largely successful at inducing state acquiescence.  Yet after the Supreme Court’s NFIB decision, this arrangement may be unconstitutional.

The Clean Air Act would appear potentially vulnerable on several grounds.  First, the Clean Air Act conditions the receipt of money for one program (highway construction) on compliance with conditions tied to a separate program (air pollution control).  This may be problematic because a majority of the Court thought Congress was trying to leverage state reliance on funding for one program (traditional Medicaid) to induce participation in another program (the Medicaid expansion).  While the money at stake under the Clean Air Act is far less – most states receive substantially less in highway funds than in Medicaid funds – highway funding is less directly related to air pollution control (particularly from stationary sources) than traditional Medicaid is to the Medicaid expansion.

Though highway funding is less than that for Medicaid, it still may be enough to raise constitutional concerns. Highway funds are raised from a dedicated revenue source in gasoline taxes and placed in the Highway Trust Fund.  For many states, federal highway funds represent the lion’s share of their transportation budget.  As a consequence, threatening to take highway funds may strike some courts as unduly coercive under NFIB.  In the 1980s the Supreme Court upheld conditioning five percent of a state’s highway funds on setting a 21-years-old drinking age.  Under the Clean Air Act, however, a state can lose all highway funds, save those that will reduce emissions or are necessary for traffic safety, for failure to adopt a complete pollution control plan that satisfies the federal EPA.

The Court in NFIB also stressed that conditional grants of federal funds operate much like a contract, and that the parties are limited in their ability to unilaterally revise the terms.  This could expose another vulnerability in the Clean Air Act because while the statutory requirements don’t regularly change, what states must actually do to comply with the Clean Air Act’s terms do. The requirements for state pollution control plans are constantly changing, as the EPA tightens or otherwise revises federal air quality standards and additional pollutants become subject to Clean Air Act regulation.  Were this not enough, the recent inclusion of greenhouse gases as pollutants subject to regulation under the Act has radically altered states’ obligations, such that states will now have to do many things they could not have anticipated when the Clean Air Act was last revised in 1990.

Many states are already chafing under the Clean Air Act’s requirements.  The NFIB decision may give them a tool to relieve the burden.  Specifically, the Court’s decision to limit the federal government’s authority to place conditions on the receipt of federal funds may offer states some relief from Clean Air Act requirements.

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Q & A with Godwin Nnanna on the Niger Delta and Pollution

Godwin Nnanna is the investigations editor for Business Day, Nigeria’s leading financial daily based in Lagos. He has been a journalist since 1997 and has won a number of international and local journalism awards for his writings. Godwin has spent the last week at PERC as a Media Fellow, exploring free market environmentalism and property rights.  His research at PERC focuses on the Niger Delta and the persistent issue of gas flares and oil pollution.

Q: What is a gas flare? How frequently do they occur?

A: Gas flaring is essentially the burning of the gas that comes with the crude oil that we make gasoline from.  It is often the cheapest and easiest thing to do to associated gas during exploration, but obviously not the best thing to do. In the oil producing region of Nigeria this is a common practice despite the fact that we have had laws against it for over three decades.   In most oil producing communities in the delta, the flare tunnels are quite ubiquitous endlessly pumping out huge toxic flames into the air.  You see them everywhere exploration activities take place, some on farmlands, others right behind the houses of the villagers.  Some are laid on the ground, others mounted like huge Olympic torches.  To think that this has been the order for over 40 years is worrisome, very worrisome indeed.

Last October, I did a story after visiting the region titled ‘Legacy of waste’ chronicling how a nation with the world’s sixth largest gas deposit continues to waste such a huge economic product because of a lack of genuine commitment on the part of the stakeholders.

Shell, the leading explorer in the region records that there are about 110 flare locations in the region.  I don’t know how true that is.  All I can say is that there are enough to make Nigeria the worst culprit among OPEC nations.

Q: What are some of the associated risks of gas flares? How much gas is lost every year?

A: They have very terrible health implications for the communities.  You see all kinds of strange ailments when you visit these places.  You observe people with all kinds of tumor, bronchitis, respiratory and eye problems.

Figures vary but estimates are that Nigeria loses between $3 to $10 billion annually to this act.  Again, I am not sure of the figures, but imagine what $5 billion could do for the economy of the Niger Delta suppose that’s the figure.  The price of gas has been on the rise and yet we continue to waste such an important energy source in a country where many people cook with firewood and where electricity is hard to come by.

Q: Gas flares were outlawed in 1979, and yet they continue to occur. Why is this?

A: Weak institutions, corruption.  We are not saying over-regulate, we are simply saying ensure that basic environmental standards are conformed with.  There are global best practices and it makes good business sense to conform to them.  I’ve been reading two books since my arrival here.  One of them is Why Nations Fail by two Cambridge professors, one from MIT and the other from Harvard.  As I read that book, I reflect on Nigeria.  The authors alluded to the fact that the key distinguisher between prosperous nations and poor ones are institutions.  Where institutions are weak, poverty is endemic.  Obviously, the argument of these professors won’t be surprising to anyone who knows the Nigerian situation.

Q: How does the Nigerian federal government control resources?

A: The revenue from oil goes to the central government from where it is shared.  The center retains a portion while the rest is shared among the 36 states that make up Nigeria.  The oil producing states get slightly more because of a derivation formula that gives them an additional 13% for the oil produced from their communities.  This has been a subject of huge debate over the years in Nigeria.  While the oil producing states want more, others states are saying “no, what you have is enough”.

Q: What are the effects of this centralized control?

A: One of the biggest injuries oil has inflicted on the Nigerian system is that it has created a large dependency culture.  Most of the states do nothing but wait for monthly allocation from Abuja. Same with the local governments.  This has crippled innovation and the results are obvious in the huge unemployment and poverty rates in these states.

Nigeria was not always this way.  In the 50s and 60s when oil wasn’t much in the scheme of things, the regions thrived on the basis of their agricultural strengths.  Each region had its comparative advantage and there was deliberate effort to build on it.  You might have heard of the Kano groundnut pyramid in the north, and the cocoa and palm oil production in western and eastern Nigeria respectively.  These regions were economically strong on the basis of what they produced.  Today, except perhaps for Lagos, I doubt if there is any state that can survive without oil money. No prosperous nation anywhere in the world that I know or have read about operates such a monolithic economy.

Q: How can these gas flares be put to better use? What will need to occur to turn this pollution into economic prosperity?

A: We must reduce the flares drastically if they cannot be entirely stopped.  I read a BBC report recently that went by the title ‘Nigerian gas profit up in smoke’.  There is a huge energy deficit in the country and it is time genuine commitments are made to solve that problem.

Power is the key to stimulating entrepreneurship.  At the moment we are a ‘generator generation’.  Every average Nigerian, as a matter of necessity, makes an investment into a generator no matter how small.  So we have the biggest market for generators.  Visit any place in Lagos and you’ll see a block of four flats with at least four generating plants.  Some households have 2 or 3. It is not so even in some smaller countries in the region.  I lived in Accra, Ghana for almost 5 years without needing to buy a generator, but in Lagos, everyone owns one.  You can achieve real economic development this way.

Nigerians are very entrepreneurial; all they yearn for is basic infrastructure.  This presents a challenge as well as a huge investment opportunity.  We’ve seen in states like Lagos, attempts to forge public-private partnerships in infrastructure development.  That needs to be expanded.  Such opening up is required in many other sectors.  One of our challenges is that we have so much government yet so much less of the basics that that institution ought to do partly because of too many leakages.

Q: What have you taken away from your time at PERC?

A: I think what strikes me about PERC is the philosophy I see at work here.  Here is a group of people who essentially see opportunities in places where many out there see huge problems.  I have been covering the environment for a while and the widely held perspective out there is that economic growth and the environment  don’t go together.  PERC thinks differently.   I had a chance to speak with Dino Falaschetti and I like his perspectives on one of his papers “Growth is Green,” which in many ways is an expansion of the concept of free market environmentalism for which PERC is known.   This is a thought pattern that isn’t common.  The other thing quite fascinating is the warmness of the people here.  It’s remarkably amazing.

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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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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.

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Whose Fracking Rights?

Denis and Barbara Prager fear the day that hydraulic fracturing takes place on their land in the Shields Valley of Montana. The threat of ‘fracking’ is real and there is nothing they can do. While the Prager’s own the surface rights to their property, the state owns the subsurface and mineral rights. The state has the right to use the land as is ‘reasonably necessary’ for drilling or can lease the mineral rights to a private company. Those rights are presently open for bid.

Hundreds of millions of acres of property across the nation have secure property rights that are split; different entities own the surface and subsurface rights. Battles over split estate rights emphasize the importance of well specified and defined rights. Perhaps most important is the knowledge of what rights the surface owner does and does not have.

Under split estate rules, subsurface owners have the right to use surface land as is ‘reasonably necessary’ to develop subsurface assets. Private oil and gas companies often lease rights from subsurface owners regardless of whether the estate is split or under single ownership. Either way, drilling and extraction companies are responsible for unnecessary harm done, impacting water quality, for example.

Though hydraulic fracturing has been going on for more than 60 years, it has gained recent attention due to its affordability in the current global economic and technological climate. It is interesting that while many environmentalists vie to decrease carbon emissions, they are also opposed to fracking. In truth, natural gas may be one of the greatest boons to keep America energized at low cost with fewer emissions. Given secure property rights and market transparency it can be environmentally friendly, to boot.

Cross-posted at Environmental Trends.

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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.

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Let Freedom Ring

While June brings a great group of students to Montana each year, July brings thoughts of freedom. The two have much in common. Every year PERC and Liberty Fund co-sponsor a program for students. It is a weeklong seminar that provides an opportunity for a group of undergraduate college students to become immersed in ideas about the environment and its connection to property rights, freedoms, markets, and liberty.

Together, these ideas are sometimes considered oxymoronic. But that is, in fact, not the case at all. In concert they create a path toward enhanced environmental stewardship. Secure property rights motivate investment. To steward the environment requires an investment — an investment to maintain conditions or to restore them to a previous state.  And it is the signals from market interactions that demonstrate the environmental quality that is desired.

In the end, freedom is a key. Free to act while not reducing the freedoms of others. Free to interact in the marketplace. These freedoms have enabled our country to be among the richest in the world. Freedoms that have helped us become wealthier and healthier. Freedoms that have motivated a cleaner and more pristine environment. Our ancestors fought to earn us these freedoms hundreds of years ago.

The best way to protect our future freedoms is to ensure generations from today and tomorrow understand how important they are. Help make a difference by imparting the value of freedom.

Go to www.perc.org/support2.php if you would like to help PERC share the value of freedom.

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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 D.C. Circuit’s Greenhouse Gas Decision

Today’s decision by the U.S. Court of Appeals for the D.C. Circuit in Coalition for Responsible Regulation v. EPA is quite significant for environmental law. The court turned away the state and industry challenges to the EPA’s decision to begin regulating greenhouse gases under the Clean Air Act. The only element of the decision that is at all surprising is the court’s dismissal of the challenges to the EPA’s “tailoring rule” due to a lack of standing.

On the merits, the court rejected challenges to the EPA’s determination that the emission of greenhouse gases causes or contributes to air pollution that which may be reasonably anticipated to endanger public health or welfare (the “endangerment finding”) and rejected claims that the EPA’s new standards for GHG emissions from mobile sources were arbitrary and capricious. This was to be expected. As I’ve noted before, judicial review of these sorts of decisions is highly deferential, and the EPA did not have to do much to support its decision. Even if the industry challengers had been able to convince the court that climate change is not that big of a deal, this would not have been enough to overturn the endangerment finding, provided the EPA gave a sufficient explanation of its conclusions — which it did.

The more interesting parts of the opinion concern whether the petitioners could challenge the EPA’s decision to regulate stationary source GHG emissions generally, and the EPA’s adoption of the tailoring rule in particular. On the former question, the court concluded that industry petitioners could challenge a decades-old EPA determination that the regulation of a pollutant from mobile sources under Section 202 of the Act triggers stationary source regulations. This was because there were some plaintiffs who had never-before been subject to stationary source regulation under the Clean Air Act because it was not until carbon dioxide was treated as a pollutant that these plantiffs emitted enough of a regulated substance to fall within the Act’s controls.

This small victory on ripeness was but a prelude to a loss on a larger question: Whether large emitters of greenhouse gases could challenge the EPA’s decision to forego regulation of smaller sources. No, the court concluded, because the industry petitioners did not satisfy the requirements for Article III standing to challenge the EPA’s failure to regulate someone else. However great the injury some industry groups may suffer from GHG regulation, the court reasoned, forcing the EPA to regulate additional sources would provide no meaningful redress. It does not matter that the EPA’s tailoring rule flatly contradicts the plain text of the Clean Air Act and represents a dramatic assertion of agency discretion over a detailed, legislatively crafted scheme. If there’s no standing, the suit cannot proceed.

This decision will be the last stop for most, if not all, of the industry challenges to the GHG rules. En banc and cert petitions may get filed, but I can’t see either the full D.C. Circuit or the Supreme Court having much interest in the endangerment finding or the EPA’s mobile source rules. If any claim has a chance to go on, it would be the standing argument. If there’s an issue in this case that could catch the Supreme Court’s attention, this would be it. Among other things, it could giver the Supreme Court the opportunity to address how recent standing decisions affect standing claims based upon alleged competitive harm (i.e. the harm suffered by company A due to the government’s favorable treatment of company B). Still, I would not bet on it. In all likelihood those who oppose GHG regulation under the Clean Air Act will have to direct their attention to Congress. They’re done in the courts.

Cross-posted at the Volokh Conspiracy.