Environmental economics is steeped in standard neoclassical theories of efficiency and Pigouvian welfare economics. Austrians offer an alternative approach to the environmental that does not depend on having to define or measure what is conceptually indefinable or unmeasurable. The challenge for Austrians is to explain how we apply the theory in certain tough cases, not to explain, in reality, how it can be applied at all. [Full Article]
Source link: http://blog.mises.org/3282/an-austrian-theory-of-environmental-economics/
An Austrian Theory of Environmental Economics
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Anyone remember when the Ohio (?) River caught on fire? The factories clean up their act, efficiency increased, the working people got jobs, and the “Rust Belt” disappeared.
How would Austrian economists deal with scenarios where the polluter is no longer solvent? This happens in groundwater contamination which migrates off-site, sometimes years after the release of contaminants. It also happens in some third party sites (landfills/waste disposal sites).
Companies would probably have to get insurance for such events. In the event that they didn’t have it, those responsible (within the now insolvent corporation) could be held strictly liable.
Also, people can get injunctive relief against such down-the-road occurences, and require companies to take measures to contain the pollution to their property, if it could be demonstrated that it would migrate off-site over time.
> Anyone remember when the Ohio (?) River caught on fire?
well before my time and in an unfamiliar part of the country for me, but i believe you are thinking of the Cuyahoga River fire in 1969. Randy Newman wrote a song about the incident.
How would the Austrian approach to property rights be applied to the ocean – not only for ownwership purposes, but also for compensation of victims of a polluting activity.
Thanks
Mr. Vache Folle wrote:
“This happens in groundwater contamination which migrates off-site, sometimes years after the release of contaminants.”
It depends on what was the situation originaly, since many companies over the years dumped their contaminants on what amounted to “public” (i.e. not privately owned) property. A tragedy of the commons scenario would be at play here, where a clearly defined property ownership would have limited the amount of contaminant dumping done over the years, as companies avoided litigation. One has to take into account that the worst polluters are those companies operating under the protective umbrella of the FedGov.
Mr. Billwald wrote:
“Anyone remember when the Ohio (?) River caught on fire? The factories clean up their act, efficiency increased, the working people got jobs, and the “Rust Belt” disappeared.”
Well, the story was exaggerated to grotesque proportions. The fact is the river was already in a decades old clean up process by local efforts, nor was the fire that big to begin with. Two earlier fires were extremely more destructive but received almost nill publicity compared to the 1969 fire. Also the fuel that sparked the fire came from the usual debris any big river carries in the US, and not primarily from industrial activity. Please take a look at:
http://www.case.edu/news/2004/6-04/fire.htm
http://www.fee.org/vnews.php?nid=4627
The uber-hyped burning river myth did spark legislation to standardize the water quality of the US, bringing with it an avalanche of regulation, red tape and “permititis”.
Francisco Torres
The Rouge River was on fire once too…
so say there is land unclaimed within the borders of a country. Who owns it? can someone put a fence around it and then it’s theirs? What about a river? does someone have a right to pollute a river? what if i want to drink the water in the river? just questions : )
Andy:
If a piece of land is unclaimed, then nobody owns it. The popular approach to property rights was first formulated by Locke, and later refined by Nozick. It states that one cannot merely verbally ‘claim’ any piece of land they wish. They must mix their labor with the land to make it theirs. Same goes for rivers. And yes, you can pollute every river you own, so long as it does not damage the property of anyone else. You can also drink water out of every river you own. Although, I don’t suggest it if you have already polluted it.
Saying that a “river is on fire” is repeating media hype, rather like the clarion call to “save the planet.” It will consistently improve our thinking if we avoid such nonsensical phrases.
To clarify: what is a river? It is a long, narrow, flowing body of water, usually confined within a more-or-less-persistent bed, as it’s called. Now, was the WATER burning? No – we know the water was NOT burning – hydrocarbons floating on top of the river were burning. Was the burning pollutant IN the water? No, not if it was burning – nothing burns underwater but sodium, and that in a reaction WITH the water.
Had the pollutant(s) DISPLACED the water, or even most of it? Again, no. Was the WHOLE LENGTH of the river afire? No, not even close. During World War II when German submarines would torpedo tankers off the coast of South Florida, news reports did NOT report the Atlantic Ocean being on fire. I swam among the pollutants most of my childhood.
Saying the river caught fire is a spin designed to attract attention and sell newspapers. Don’t say it. It didn’t happen.
I believe one major difference between the main-stream and “libertarian” answers to pollution is also the difference between collective and individual liability.
The “mainstream” talks about a company being liable for pollution. Libertarians talk about individuals who make the decision to pollute being held liable. It does not occur to a libertarian to ask about pollution discovered after the dissolution of a company because the individuals responsible can still be tracked down and punished.
Remember also that many of the “pollution” problems, such as Love Canal and the abominable pollution problems on military bases, are perfectly legal. The problem exists entirely within the existing law at the time, there is no prosecution possible under the government we have.
Something for the rabid-Greens to think about.
the quote “humans cannot hurt the environment” is false. I have yet to be convinced that if we cut down an entire forest, kill every animal that we can’t find a profitable use for, that there is nothing inherantly wrong with that. What if we just happen to be too ignorant scientifically to find a use for such environments?
Andy:
Indeed, humans can harm the planet. However, if we consider the fact that, once an individual owns a piece of property it is in his foremost interest to use it efficiently, it becomes near obvious that property rights are the answer. What is the incentive to respect unowned property?
Also, the tenor of your statement “I have yet to be convinced that if we cut down an entire forest, kill every animal that we can’t find a profitable use for, that there is nothing inherantly wrong with that” leads me to think you regard nature as having an intrinsic value. Would you mind elaborating?
Just an example that comes to find is the rain forest. I understand completely the people need to eat, but since it is more profitable to cut down the trees and start planting for them in the short run, they will do so. They don’t see the hidden costs of exterminating specific plants and animals that we may not be sophisticated enough to comprhend their value medicinally.
Also I think that exterminating an animal/plant is inherently wrong too. There is an intristic value to thier existance, we just may not have discovered a profitable way to deal with them yet.
It is impossible, without understanding the context to the entire world economy and every use that could possibly be garnered from any given piece of rain forest property, to say with certainty that, if an individual were to obtain such a piece of property, he would proceed to level the forest and begin producing food. In fact, there are far more profitable uses for such land, and individuals who recognize this fact would be the first to jump at purchasing it. One of the fantastic things about a free economy is that, not only is there division-of-labor, but there is a division of land usage that allows for the specialization of property usage according to the greatest utility to be gained.
Another point I would like to make is that, if we allow the criterion for cost to be defined by ‘human imagination’, then there is no logical bound to the amount of regulation we will wish to enact. I am referring specifically to your statement “They don’t see the hidden costs of exterminating specific plants and animals that we may not be sophisticated enough to comprhend (sic) their value medicinally.” If we cannot objectively quantify the costs of an action, then we need not consider such costs. We cannot accurately act upon information that we do not have.
It seems also that, by focusing on the medicinal value of particular elements of nature and the “costs” that would occur through their elimination, you are referring to cost as a social phenomenon. To justify this view, you would have to posit the legitimacy of collective ownership. To my knowledge, none have yet succeeded in such a task, nor do I think they ever will.
On intrinsic value you stated, “There is an intristic (sic) value to thier (sic) existance (sic), we just may not have discovered a profitable way to deal with them yet.” To state that they have intrinsic value is to state that they have value divorced from any human context. Our dealing with these elements of existence would constitute a value to individuals; therefore, you are not making a statement about intrinsic value.
I would like to aply for the fellowship and any way send me the information regarding this
It’s not a problem but an opportunity for more papers, hopefully.
How to avoid X being or becoming the government. On the tenth page, two paragraphs before the conclusion, he notes that property rights need to be vested in either A, B or X where A and B are the polluter and the victim of the pollution respectively, but X remains undefined. In most modern societies X becomes the government or some level of government. The paper provides no formula to avoid X being government. Where X represents a geographical representation of all possible users of a resource we rapidly create some form of government agency.
In the case of many land uses predefined property rights do exist in the form of zoning, building regulations and covenants. Yet many Austrians often condemn these as an imposition on the private land ownership rights of the freeholder. Roy Cordato has argued in favour of such things in paragraph 5 of the ‘first come first served’ section of his paper. Zoning is by definition a first come system. Assuming some fool government has not allocated land without first deciding its zoning. Yet that’s precisely what has happened in most of the world.
The Austrian opposition to it is not a product of Zoning as a working system; it is a product of the fact that politicians and Bureaucrats often cut their greedy teeth on zoning manipulation for the benefit of their friends and financial backers.
Zoning also runs into a problem where the property is on the edge of a zone. When is a wetlands a wetlands and when is it just a puddle? What of the house that is only inches below the hundred year flood zone? There is also a problem evident where zoning or more often building regulations don’t keep up technology and taste changes.
It is possible for Zoning to be a product of insurance regulations. The catch is in many cases a check of the original legislation often reveals that it already is. Regularly oversight has drifted from private insurer to insurer association and then drifted to the government, often after a scandal or a financial collapse of the private entity.
In America and many other western countries many towns and cities began as private entities. The town council being its board, its taxes once being membership dues or fees for communal services [strata title]. Over the years the process of population growth and higher government intervention have turned many private towns and city corporations in to semi-accountable entities with large bureaucracies.
The zoning that was a product of free market agreement among the city fathers may remain intact, yet our generation not being party to its negotiation, find it restrictive. Since we can’t bulldoze the lot and become a new generation of city fathers we are forced to work through a system of representative government to decide how to modernise and enforce the zoning laws.
If Roy is right then if the ‘society for the protection of wetlands’ [SPW] can’t come up with the money to pay the landowner to retain his swamp its doomed. The catch is that every dollar raised to save the frogs is much more effective paying politicians electoral expenses than paying all the farmers, etc to keep their little bit of swamp wet. If SPW had to buy, fence, maintain etc the wetlands the expense would be even greater.
In the case of fisheries, ‘A’ might be the fishermen harvesting the stock, ‘B’ might be the lone ecologist concerned that the stock is going extinct. Since B can’t out bid A for the stock, B must lobby to create some entity X that can afford to match A in its bid for the stock. The only known X available is a popular charity, ie green groups that are generally condemned by Austrian economists or governments with a geopolitical claim on the territory.
A court or parliament could allocate the resource to B for protection but since neither B nor the court has the money to pay for B’s management expenses then some way must be found for B to bill A for access to the stock and exclude A from the stock. Thus the form of resulting fisheries regulation resembles government run fisheries financed by fishing taxes and excises. This is particularly the case where the fisheries regulators are given other government regulatory powers, ie. Boat safety and registration, coastguard watch and smuggling control. A tendency in most places because it saves government funds.
Where the Fishery is allocated to A via a co-operative fishery ownership system there is still a need for some entity B or X to monitor the co-op. In this case a court or parliament, with B as a consultant may be required. Again this consultancy, particularly where continous monitoring is needed, becomes identical to the government entities that cause problems today.
I’m an Australian Austrian honest. Someone’s got to play the devils advocate.
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