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Priceless Ecological Services

The problem with not putting a price on nature is that it becomes too expensive.    Landowners may dread a visit by an environmental activist.   They fear the discovery of a rare species or a sensitive ecology on their land.  Why should that be?  

Below is the Lewis & Clark monument in Charlottesville, near the Omni Hotel where our conference on ecological services was held.

Lews & Clark statue near Main Street in Charlottesville, VA on March 13, 2009

Think about what should be an analogous situation.   What if a geologist shows up at your house and says that he thinks there is gold on your land.   Do you throw him out of your house and avoid him next time he comes around?     If someone wants to show you a better way to grow pine trees or crops on your land, do you feel you have to call your lawyer to protect you?   Why not?

Of course you are delighted to find gold on your land and you are enthusiastic about making it more productive in terms of crops or timber because it makes your land more valuable and gives you more options.   Finding rare species or having local environmentalists take unusual interest in your land will have the opposite effect because the benefits of the ecological services are widely shared by the greater community, while the landowner bears the expenses and the downside risk.  This is more than unjust; it is stupid.

I am continually astonished by the passion among landowners I meet to be good stewards of their land.   Most want to leave a legacy to future generations.  They are willing to spend money and time to protect and improve the environment, but landowners need to be concerned about open-ended liability and uncertainty related to changing standards.   And they are afraid that self-appointed “stakeholders” will dictate expensive or specific solutions and that they will lose control of their land.

Charlottesville, VA on a spring day March 13, 2009

Above is spring-time coming to Charlottesville, VA on March 13

Environmental gold 

Endangered species are rare and precious, like gold.  Ecological services are valuable and useful products of the land, just like timber and crops.   But unlike gold, timber or a corn crop, we lack a good way to price most ecological goods and services.  I am not advocating that we find the price of everything and value of nothing.  But value has to have some relation in price society is ready to pay.  As it stands today, beyond the rewards of virtue, landowners have few incentives to produce ecological services and little financial support to make needed investments.  

Let me return to my gold analogy.  You discover gold on your land. The estimated value of the gold is $1,000,000 but it requires a $50,000 investment to get it. You would be foolish not to make this investment because you will make twenty times as much as you spend. Now imagine that you still are required to make that $50,000 investment and let the miners use your land, no matter how inconvenient, but all the gold that you get from your land is distributed equally to everyone in the country. How generous. Your share is less than a penny, but you also get the satisfaction that you have done something nice.  Of course, other stakeholders might still demonize you (it cost them nothing to complain) if you are less than 100% enthusiastic about paying the full costs or if you cannot come up with the $50k. 

Welcome to the priceless world of ecological services.

The incentives are wrong.  We have to change them and make it more profitable to produce or protect clean water, air, wildlife and natural beauty.  This will give the incentive and the means to those who do the work and make the decisions.  When I mentioned this incentive problem to an apartment dwelling friend, he scoffed and told me that landowners just had obligations and that we should just pass laws forcing them to comply.  Let’s overlook the totalitarian aspects implied by this statement and consider only the practical implications for our environment.  Is a command, compel and control paradigm the best way to move forward or should we try to get cooperation?   

Governments can make all sorts rules, but enforcing them is difficult w/o general support. (Many of the most environmentally degraded countries in the world have beautiful laws on their books, but nobody pays attention.  Don't be fooled by so-called international comparisons,)  This is especially true in out-of-the-way places, i.e. places like forests.  A lax & casual attitude toward rules you don't support is easy when nobody is watching.   But making one-way, difficult to enforce, rules has worse implications than simple non-compliance.  We also lose the ideas and intelligence that may solve some of our worst problems.

Enthusiasm needed, not mere compliance

Nobody is saying we should just get rid of the rules.  Anybody who remembers how things were thirty or forty years ago knows that we needed to take action and it worked.  But a generation ago, environmental protection was simpler.  Big sources were easy to identify.  You could look up to the smokestack or down to the pipe and make a rule to stop it.  We did a good job of cleaning up and we have eliminated most of the easy ones already.   I tried all day to find a dirty smokestack so that I could put the photo with this post; I couldn’t find one.  Today we not only have a challenge controlling pollution; we have even a bigger problem finding and identifying them.  More than 70% of the pollution entering Chesapeake Bay comes from non-point sources.   It is no longer the end of the pipe, or even the end of the cow, but pollution may be run–off from suburban lawns or fertilized fields.  It might be from your house or car.   Beyond that, environmental degradation can occur both from things you fail to do and from things you do.  We have a big storm water problem in Northern Virginia because people make sure water quickly runs away from their houses, but they don't provide a place to soak in.  And drivers demand that tons of salt be dropped on any ice or snow that dares form on roads.  (BTW - we essentially require people to pollute the Bay by allowing the threat of lawsuits to fall heavily on anybody who fails to salt.  Sometimes bad things happen because of not in spite of our best efforts.)

In this more complicated environment, we really need to use the power of people’s imagination and intelligence. But you cannot force people to be creative.  The rule makers cannot even know which rules to make. With the right incentives, however, individuals all across America will be actively looking for opportunities to make things better.  The best way to  harness this "people power" is through a decentralized, distributed decision-making method, where individuals are autonomous but aggregated.   That way we can take advantage of all the information available to the masses of unrelated individuals and allow those people closest, most affected and most knowledgeable to have the greatest impact.   All these things together is what we usually call a market.    We need market solutions to environmental challenges.


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