ENVIRONMENT:
Free Market Environmentalism

By Terry Anderson

Hoover fellow Terry l. Anderson knows how to break the gridlock in environmental policy. (A two-word hint: "property rights.")

How can we break the gridlock in environmental policy? We must move away from calls for a mystical reverence for nature and toward policies that reward good stewardship. The first inhabitants of North America, the Native Americans, pursued good stewardship by recognizing the private ownership of natural resources. American Indians recognized property rights in a wide array of natural resources, including land, piñon forests, hunting territories, and salmon fishing streams. Free market environmentalism follows this ancient tradition by turning a clean environment and healthy natural resources into economic assets.

The following specific policy recommendations, based on common sense, can be made politically palatable to voters across the political spectrum and can provide a starting point for breaking the environmental policy gridlock in Washington:

• Clearly specify the goals of ecosystem management as they relate to federal land and water managers so that those managers can be held accountable, in keeping with streamlining government and making it more effective.
• Allow long-term leasing of federal lands for purposes other than traditional commodity production. Specifically allow environmental organizations, for profit or not for profit, to lease federal lands for environmental amenities such as endangered species habitat.
• Follow the lead of school trust lands by earmarking net revenues from federal lands for specific uses so that the recipients of those funds will have an incentive to monitor and encourage improved efficiency in land management.
• Require federal land management agencies to cover costs out of user fees and designate any "profits" above costs for specific uses such as financing infrastructure in national parks, leasing private land for endangered species habitat, or financing Social Security deficits.
• Make permitted uses of federal lands, such as grazing permits, long term (for example, ninety-nine years) and allow permit holders to transfer their permits to anyone including nonusers.
• Create a program wherein private landowners can bid to have their land leased by the government as endangered species habitat. Funding could come from recreational user fees on federal lands.
• Require compensation to landowners in all cases where property use is regulated to protect endangered species.
• Strictly follow the "polluter pays" principle but insist that federal agencies adhere to evidentiary rules before requiring a suspected polluter to pay.
• Require that all air- and water-quality regulations be specified in terms of performance standards rather than technology-based standards.
• Devolve authority for maintaining or improving air and water quality to states or even lower levels of government wherever the problems are confined to those jurisdictions.

Clearly there will be opposition to such reforms. Some environmentalists will argue that ecosystem management should be sufficiently vague to accommodate preservation agendas; that federal lands are theirs to use without charge; that private landowners have an obligation to provide endangered species habitat; or that all industrial waste should be reduced or eliminated regardless of demonstrated damage. On the other side, some producers will argue that leasing federal lands for environmental amenity production will destroy agricultural or logging communities; that endangered species should always take a backseat to jobs and the economy; or that technology-based standards are better because such standards can be manipulated to regulate competitors.

We should require compensation for landowners when their use of their property is regulated to protect endangered species.

Despite these arguments, mustering a coalition for commonsense environmental reform should be feasible. Win-win approaches relying on positive incentives reduce acrimony and allow environmental gains at less cost to the economy. Free market environmentalism is about two things: promoting economic growth that gives us the wealth, the technical capabilities, and the demand to promote environmental quality and using positive incentives to get environmental quality produced. Selling reforms that achieve these two goals, properly packaged, should not be difficult.

Terry Anderson, the John and Jean DeNault Senior Fellow at the Hoover Institution, is the executive director of PERC—the Property and Environment Research Center—a think tank in Bozeman, Montana, that focuses on market solutions to environmental problems. His research helped launch the idea of free market environmentalism and has prompted public debate over the proper role of government in managing natural resources. He is the cochair of Hoover's Property Rights, Freedom, and Prosperity Task Force.