Friday, October 31, 1997

Terry Anderson, director, Political Economy Research Center, and senior fellow, Hoover Institution, and Carl Pope, executive director, Sierra Club, take on environmental controversies from around the country.

Recorded on Friday, October 31, 1997

ROBINSON Welcome to Uncommon Knowledge. A hundred years ago if you wanted to cut down a tree, you got yourself an ax and you cut it down. Let the chips fall where they may. Today if you want to cut down a tree, you get yourself an ax, and you- well, depending on what kind of tree it is and where it's growing, you might not be able to cut it down at all. Here in California, for example, just try to cut down an old-growth redwood. You'll be in trouble faster than you can say, "Timber". With us to talk about environmental policy today, two guests. Carl Pope is the Executive Director of the Sierra Club. He's what might be termed a traditional environmentalist. Terry Anderson is the Director of the Political Economy Research Center in Bozeman, Montana. He has a different approach. He likes to apply market solutions to environmental problems. Here at Uncommon Knowledge, we like to think of this show as "Environmental Policy at a Loggerheads". Will our guests reach a resolution? Or will they be stumped?

ROBINSON Terry, you use the term "enviro-capitalism". What does that mean?

ANDERSON "Enviro-capitalism" refers to the use of market processes to solve environmental problems. Basically, I see it as a kind of a two fold approach. One, it says that if markets are healthy and working we are a wealthier country. That's been well demonstrated with comparison to the Eastern bloc and capitalistic countries. The capitalism part is what it takes to generate wealth to solve environmental problems. We wouldn't worry about environmental problems the way we do in this country if we didn't have the wherewithal to do so. And the second part is just turning the environment into an asset instead of a liability, and if we can think of ways to harness market forces to make the environment an asset, we're more likely to save it.

ROBINSON So you tackle environmental problems by using the market.


ROBINSON And Carl, the Sierra Club has typically supported command and control regulation, or government intervention, to solve environmental problems. Is that not correct? The Clean Air Act, the Clean Water Act...

POPE We think that both regulation and market forces have their place, but they both in fact require government intervention. You could only let market forces work if you imbue the market with the right signals, the right ownership problems, and the right values. For example, we said as long ago as 1973 that we ought to be getting sulfur out of the air by taxing sulfur. Now that's a market force. If we'd done that in 1973 when we first started talking about it, we would have never gotten into the acid rain pickle we got into in the 80's. But that was a matter of forcing the electrical utilities who were burning the coal to pay the price for what they were putting out into the air instead of giving them the air for free. When we give people public goods for free they abuse them - and this is something I'm pretty sure that Terry would agree with me about. Our point is, we need to combine either regulation or a market force, whichever is most efficient in a particular situation, but the values that we put in have to protect America's environment for families in our future.

ROBINSON And your recourse is to government.

POPE Well, government is the only way you can actually make somebody pay for something they're getting for free. There's no way to make a company pay for putting stuff into the air unless the government makes it pay. The market won't charge people for common goods unless the government exercises -or gives to somebody else - the power of ownership over that air.

ROBINSON So what we have here is market solutions versus government intervention. Now, a couple of case studies.

ROBINSON Case study one: Headwaters Forest, up in the Northwestern corner of California in Humboldt County, where there are far more trees than people, and there is one chunk of trees called the Headwaters Forest which is old growth redwoods. Now it happens that the Headwaters Forest is on privately owned land and that land is owned by the Pacific Lumber Company. And the Pacific Lumber Company's opening position is, 'Let us cut these trees down and saw them up and sell them for lumber.' And environmentalist say, 'Oh, no, no, no, no. We must preserve them.' Now, Carl, how do you solve the problem?

POPE Well the first thing we should have done is-- The state of California has a law which requires that anybody who owns private forest land must manage that land on what's called a sustained yield basis. That is, by owning forest land in California you don't have the right to liquidate the forest -you have the right to harvest it's growth, but not to liquidate it. The problem is those rules are not being enforced, and Pacific Lumber was bought out by Charles Herwitz.


POPE Who is a junk bond guy from-- He's the head of Maxim Corporation. He bought it out with junk bonds in the 1980's. He changed the company from one which had managed its forest very conservatively and was worth a fortune as a result - it was a very successful company economically - and he liquidated the trees for cash. Now at this point, he's created a situation in which in order to preserve the functioning of the ecosystem we have to set aside about 60,000 acres and really protect it from harvesting -that's where the public purchase comes in.

ROBINSON All those 60,000 acres are on private land.

POPE They're all on private land.

ROBINSON Alright. Why, for example, is old growth timber any more valuable or should it be any more valuable than more recent growth?

POPE Because it sustains a host of species in ecosystem services which more recent trees don't. I mean, there are functions which take place in old growth redwoods that don't take place in second growth redwoods that are important, for example, for the help of the coho salmon. And the fishermen who depend on the coho salmon fishery are adversely affected. Their livelihoods are damaged if the owners of old growth redwood are allowed to liquidate them.

ROBINSON Okay. Now, I still want to get to this-- On one side of the scale it's quite clear to me what you put in it -you put in jobs. You put in lumber. You put in profits for Mr. Herwitz and whoever any other stock holders in his company may be. And on the other side, exactly what are you putting into the other side of the scale? Coho salmon...

POPE We're putting in the maintenance of the eco-system for future generations, and the thing you have to realize--

ROBINSON Why should future generations want that ecosystem maintained?

POPE Because we don't have the right to liquidate the planet. We didn't create those trees. We didn't grow those trees. That's not Mr. Herwitz' intellectual property. It's not a symphony he wrote. He does not, under the law, have the right to liquidate that forest.

ROBINSON And you want to preserve it for future generations... So there's a kind of, this simple ennoblement of sharing the planet with these old trees. There's a kind of spiritual value you were getting at here?

POPE Yes, definitely a series of values. One of which is a spiritual value.It is not our right to wipe out part of the biological inheritance we have from the planet. We didn't create those species and we don't have the right to deprive our children of the right to enjoy them.

ROBINSON Okay, so there are certain axiomatic rights. That's what it comes down to in your view.

POPE In this case, there's an axiomatic right to -an axiomatic duty. It's not a right, it's an obligation to steward the creation and hand it on with as much diversity as we got it with.

ROBINSON Okay. Terry, one thing I want to know is, do you share the values that Carl asserts? Is it somehow ennobling to share the planet with old trees?

ANDERSON My guess is that Carl and I probably do share many of those same values in the sense that we value the environmental amenities that come with these. We value knowing that there are coho salmon and so on.

ROBINSON You're an outdoors man who lives in Montana by choice.

ANDERSON Yeah, you don't live there if you don't like the outdoors and the environment and the amenities that come with it. I think the old growth is a classic case where environmental capitalism can be applied. It is a case where you have privately owned land. It may have some government regulations attached to it, and that's fine, but it's still privately owned land. And it's a classic case where it's a simple problem to solve, really. If indeed the values that Carl's been laying out are greater than the value of the trees it ought to be a simple process to buy out those values. We ought to be able to buy the land and set them aside.

ROBINSON Who? The state of California?

ANDERSON That's the crucial question and I suspect this is where Carl and I would divert. I think that the "we" should be those of us who have those values because not everybody does. Some people would rather go and watch roller derby than hike in a redwood - or even think about a redwood forest. So, I think that groups like the Sierra Club, the Nature Conservancy, and so on, ought to be groups that should put their money where their forests are. They ought to be out there buying these, not having the government do it.

ROBINSON Put your money where your forests are. What exactly does that mean?

ROBINSON As a practical matter the notion would be the Sierra Club - Carl - would establish a fund, take out ads in the newspapers tomorrow, and anyone who shares those values could just contribute money to the fund, and then Carl would go buy the forest from Mr. Herwitz. Is that the idea?

ANDERSON That's what these groups do now -they ask people to give money. The difference is that they, in general, lobby congress to put the money up to buy the redwood forests. The problem that I see with that is that it forces those people who may not share Carl's and the Sierra Club's values to pony up whether they want to or not. Oftentimes, the environmental issues - as I said in the outset here - are very much correlated with wealth. And so, to the extent that the relatively less well off people are taxed to provide these goods for the relatively well off people, then I think we have an injustice as well. Now you can make the argument that these people ought to have those values - I'm not willing to push that; not willing to tell them what their values ought to be - or you can make the argument that somehow if they really knew then they would share these values. I'm not so sanguine about the ability of government to do that.

ROBINSON Is there the remotest chance in the world that Terry's plan would work? Could you raise the money to buy that forest from Mr. Herwitz?

ANDERSON Let me just interject before he answers. The top ten environmental groups have annual budgets that now approach a billion dollars a year, so we are not talking about poor folks here. Read the magazines that are published by these groups and the ads are for Rolex and BMWs, not for Timex and Volkswagens. So you're talking about people who could pony up.


POPE Well, let me respond to a couple of things. First of all we - environmental groups - do buy land, and there are lots of cases where they do, and they should, and that's perfectly appropriate. It's also perfectly appropriate for the people of the United States, by majority vote, to decide that they want to buy this forest.

ROBINSON Let me close out this case study -this Headwaters case study. Now, Terry, you say that if the Sierra Club and other environmentalists groups are serious about preserving that land the proper recourse for them is to raise the money on their own and engage in a private transaction with the current owner of that land. The current owner of the land has already put a price tag of about $400 million on a mere 75 acres, so let's assume that to preserve all 60,000 acres would cost, say, a billion dollars. Now let's further assume that's just a little outside the grasp of the Sierra Club's budget. If they can't raise the money, you say that's the test - not enough people care about it, 'Let the trees get cut down.'

ANDERSON That's exactly my position. I would add one more point. If they buy the land, they get to call the shots - they get to call the tune - and I think that's another important part here. If these lands get turned into political lands - and I think it's a misnomer to call them "public" lands - then I think that we get all kinds of other pressures, some of which groups like the Sierra Club won't like. They may come under multiple use management, for example, and heaven knows there are problems with that on the political lands that we now have. So I prefer the private ownership scenario where the nature conservancy - the best case - purchases lands, purchases easements, sits on those things -they call the tune. I like that much better than the political process.

ROBINSON Okay. Carl, here's what's happened with the Headwaters Forest: In September 1996 the Pacific Lumber Company agreed with federal negotiators to sell 7,500 acres. I know that doesn't satisfy you - you want 60,000 - but let's talk about these 7,500. Purchase price $380 million... federal government kicks in $250 million... the remaining $130 million is to be paid by the state of California and it'll probably have to be approved as a parkland bond measure. Now, Californians haven't approved a parkland bond measure in a decade, and, as far as I'm able to ascertain talking to people who know the politics of this state, there's considerable doubt that they'll approve this one. What I'm saying is, or what I'm suggesting to you is, one, the market has failed you. The market wants to cut those trees down and turn them into lumber. And, two, the political system is not exactly leaping to defend those trees either. What do you do?

POPE Well, what we are doing is to mobilize people who do want to save these trees to speak out both at the state level and the federal level. And if there is a bond act in California, we will need to campaign for it very vigorously. We'll need to explain to people... and I think it will pass. The park bonds that have failed--

ROBINSON You wouldn't want to raise that $130 million on your own, would you?

POPE We in the Sierra Club, and an overwhelming majority of the American people when you poll them, believe that one of the most important things government can do is to secure our natural heritage and the health of our air and water for our children.

ROBINSON So your recourse is still to government. What you guys want to do is gear up to win the bond measure.

On to the next case-study.

ROBINSON Case study number two: The air we breath -the air we, in California, breath. But the problem affects people in various urban areas around the country. In order to comply with federally mandated air quality standards- that is to say, the Environmental Protection Agency in Washington tells California, 'You have to meet certain standards', and then it becomes the job of the California Air Resources Board to figure out how to meet those standards. The California Air Resources Board has two measures that it has undertaken with regard to vehicles -I'm talking now about automobiles. One, it has established fleet emission standards which are going to get tighter and tighter and tighter until the year 2003. Ford Motor Company... Toyota... whatever the company, you get sell various kinds of cars as long as the average emission from the cars you sell in California meets a certain level. And two, this board has said, 'Beginning in the year 2003, 10 percent of all vehicles sold in California must have zero emissions.' Now, Carl, my notion is that this is a little known and unelected regulatory body telling people in California what kinds of cars they can purchase, and telling auto manufacturers what kinds of cars they're going to have to figure out how to design and sell. Are you happy with that state of affairs?

POPE Well, first, if we don't-- If we let anybody buy whatever kind of car they want -we all breath what they put out. So I would characterize it as an admittedly, not terribly well known, highly respected agency created by the elective representatives to people - the government and the legislature - to protect my lungs and to protect your lungs from the possible consequences of what we or other people drive. The fact is the auto industry has made it very clear: They want consistent standards. They want to have rules because they're mass producing a product and they want to have clear rules. Now they would like to have the clear rules allow more pollution than we would, but both sides of this debate believe that setting clear standards is essential to make it possible. Now, right now in cities overseas where we don't have these kinds of rules, in Delhi for example, 40 percent of the population suffers from asthma. The California Air Resources Board, and the fact that the air in Los Angeles is much cleaner than it was 20 years ago, is one of the great success stories of environmental policy.

ROBINSON Carl says it has worked. This business of command and control regulations, setting up EPA in Washington, another regulatory body here in California... 'It works!' Are you pleased with that?

ANDERSON I think that command and control can work to achieve goals when you know exactly what those goals are. And if we specify that the goals are to reduce auto emissions, put a pistol to people's heads and say reduce auto emissions and you'll get it done. Where I think we are going to run into the problems - and are running into problems - with the command and control approach is that it works best for picking the low apples from the tree -that is, the easy ones. If you have a river burning and people look at it, they agree, 'Let's clean this thing up.' They want it done, and they want it done now and command and control can do that. If you're eyes are literally tearing on that freeway, you want it done now. What we are doing, however, is moving far beyond the low apples. We're trying to reach for those high apples and those are costly ones to reach, and they're not going to be reached easily with command and control. And when people start to see the cost of it, they are going to become less environmentally oriented. One final point I want to make because you brought up the India case... This is exactly what I was talking about at the outset here. We in the United States can worry about clean air because we're wealthy enough to. People in India have lots of things that they want - education, healthcare, food, housing, and so on - that get a much higher priority than clean air even though it causes asthma, and even though none of us would want to live with that, they don't have the wherewithal -we do, and that's why we can afford these kinds of things. Even here, however, we have to find the most efficient ways to do it. And it's not clear that mandating zero emissions from 10 percent of the cars makes good sense.

ROBINSON Now our last case-study.

ROBINSON And that is, dirty water. And the EPA now says that the number one cause of water pollution is agricultural run-off. Now, this is a problem wherever cows congregate. This is a problem in Texas, in Kansas, in New Mexico, and here in California, in the central valley, where there is a population of some 900,000 cows, each of which produces as much as about 24 human beings which means there's as much of that stuff being produced in California's central valley as in the greater New York metropolitan area -include chunks of New Jersey and Pennsylvania. And here's the particular problem: There is in the central valley something called the Central Valley Regional Water Quality Control Board - not easy to say three times fast, unless you're a member of the Sierra Club - and it says that there are about 1,600 dairies. The law tells each dairy that it has to pool its waste in a leak-proof lagoon, and then recycle it on it's own land. Problem: Only a couple of inspectors. Very few dairies ever get inspected and the best testaments are that only half - if that many - dairy farms in the central valley are obeying the law. Now, dairy farms are private property. The sludge that they're producing in overflow form runs off into ditches, sinks down into ground water, sloshes into waterways which are not private property. My question to you Terry is, how do you solve the problem of bull and cow effluvium?

ANDERSON One thing that we've lost sight of in this country, that could be used more, is the common law. That is, the ability of people to sue others who have infringed on their environment, generally. In England where the common law is still very active, environmental groups, fishing groups... actually own streams. And when they own those streams, if those streams get polluted - be it by agriculture, by industry, by municipalities - those owners (environmental groups, fishing groups) go to the polluters and say, 'Cease and desist, or we'll see you in court.' There's such a clear record that almost none of these get to court. It's like a car accident. When you have a little fender-bender, you don't usually end up in court because it's pretty clear. In these cases it's clear. We need to go back and use more common law. That's not going to happen quickly. In this case, I think the key is to worry more about the standard. And here again we agree, I think. If we can set the standard of what we want the water quality to be, then we measure it at that point and we go back up to the people who haven't met it and say, 'Fix it.'

ROBINSON The government says, 'Fix it'.

ANDERSON It has to be in this case.

ROBINSON Command and control.

ANDERSON Again, I think you can do much more with common law. I would prefer that solution.

ROBINSON So the common law solution would be... You and I have adjoining dairy farms... I wake up one morning and find sludge seeping onto my fields from your farm and I go sue you.


ROBINSON That's the common law solution.

ANDERSON And again, I want to quickly point out here, though, that everybody says, 'Oh, that's the good ol' American way. Sue them. But it doesn't result in lots of court actions. In England these are not consistently found in the courts because people settle out of court very quickly. If it's clear it's your gunk on my land or vice versa--

ROBINSON You and I can come to some arrangement.

POPE Can I ask Terry a question?

ROBINSON Sure. Go ahead.

POPE I think that he and I may have another agreement. In Oregon-- Under the common law, if you cut trees down above my house and as a result of you cutting down trees you have a mud slide off your land, then your mudslide comes down and wipes out my house, I can sue you.


POPE In Oregon the legislature passed a bill which said that if timber companies do that to private people, they don't have their common law rights to sue. I'll bet you don't like that law.

ANDERSON Let's team up!

POPE Let's team up... ha-ha-ha...

ANDERSON No, I mean that's a perfect case in point. You do not want to eliminate liability. We do this all the time with liability.

ROBINSON Addressing environmental problems, Terry and Carl managed to find a few points of agreement. But when they addressed each other's ideas?

Let me close the show this way, by putting to you Anderson's rules. Rule number one, when it comes to managing the environment push responsibility down from the federal government to the states, to the local government, to individual users, to the greatest extent that you can. You go for that?

POPE Push responsibility for achieving goals down. Set the goals at the level where the interests are affected, which can be globally in the case of global climate. You have to save the global rules but push responsibility for achieving it down.

ROBINSON Okay. You shake your head on that. You don't go for that.

ANDERSON Clean air is a classic point. Most of the clean air issues are local issues. They are not national. They are not international. They are local. And we in Montana bear the same kind of rules - live under the same kind of emission rules - that you do in California and we don't have the same problem.

ROBINSON Anderson's rule number two, wherever possible use common law, not federal government... telling people how to behave. Private action in courts of law. You go for that?

POPE I think you have to look at the situation. I think in the case where you're talking about property rights - protecting property, which the common law evolved to do that - makes sense. When you're talking about protecting public health, the common law doesn't have an adequate framework to achieve the job as well as some simple regulations. So I don't agree when it comes to health issues. But the common law is a useful tool and we should use it more.

ANDERSON It certainly works on health issues though. If those health issues involve your pollution entering my ground water basin, my land and contaminating me, then again, it's a property right kind of thing.

POPE Yeah, but where there's property versus property, the common law works well.

ANDERSON What it is-- It's a matter of me being able to prove that your actions harmed me. That's what the common law's about.

ROBINSON And Anderson's rule number three, wherever money gets involved - collected from the private individuals wherever possible... If the Sierra Club wants parklands - trees to be put into parkland - let the Sierra Club buy the land. If somebody wants to go hiking in Yosemite, let that person pay the 25 bucks day fee. You go for that? Don't tax the general population for environmental. Wherever you can, raise the money and spend it privately.

POPE No, I wouldn't go for that one because I think you have to distinguish between those activities which are classically and correctly the function of government. And one of them is there are beneficiary users who are not the present users. They are the future generation. And they're not here to act on their own behalf, so you have to have government to create some community standards and some community values which are going to exercise whether it's a national defense, public education, or the environment. However, I think I would agree with him that there are a lot of situations in which you can get the neighbors to do the job, and when you can do that - when the neighbors are going to be the ones who reap the benefits - you should do that.

ANDERSON Governments are terrible at trying to set community standards and create community values -communities can do that, governments can't. Secondly, governments are terrible about worrying about future generations. People, be they Mr. Clinton, Mr. Reagan, or anybody else who has a 4 year term - or a 6 year term, if it's a senator - do not have long-term goals in mind. I'm very skeptical of the political process to protect the future.

ROBINSON Terry Anderson, Carl Pope, thank you very much.

Terry Anderson and Carl Pope both place a tremendous amount of value on natural heritage. But whereas Carl Pope emphasizes a collective, government approach to preserving the heritage, Terry Anderson emphasizes private property rights instead. To Carl Pope you might say, "This land is your land." But to Terry Anderson, "This land is my land." I'm Peter Robinson. Thanks for joining us.

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