“People are angry about the government
and they’re tired of programs that don’t work.
They’re concerned about the intrusiveness of government.”
Environmental Defense Fund
The political upheaval that occurred in November 1994 provides an
opportunity to establish a new environmental agenda. This must be a
positive agenda There is no doubt that the congressional shift occurred in
part because people were fed up with the rising tide of federal power.
Early in 1994, environmental activists in Washington realized that they
were running into trouble. Membership and contributions were beginning to
wane. Grassroots members were disenchanted with the time activists spent
lobbying in Washington rather than actively working to increase habitat
for wildlife, improve public land management, or see that hazardous waste
was cleaned up.
Legislatively, environmental activists had hit a wall. In a
widely circulated memo, leaders of major environmental groups expressed
alarm about what they disparagingly called an “unholy trinity” of popular
demands. These demands included state and local opposition to unfunded
mandates (federal requirements that states and local communities must
meet), public insistence that regulations be assessed for costs and risks,
and demands that private property rights be respected. These pressures
forced the environmental leaders to shelve some of their legislative plans.
The Turning Point
While the immediate cause of resistance was the aggressive plans
of the Clinton administration, no recent administration has been immune
from the extension of federal power in the name of environmental
protection. Even Ronald Reagan was, indirectly, part of this trend. When
he entered office, he appeared to have an anti-environmental agenda.
Environmentalists feared the worst and masterfully publicized those fears
to mobilize citizens. Contributions mounted, and activists stormed
Washington and tightened their control of environmental regulation.
George Bush’s concerted effort to be viewed as the “environmental
president” led to another surge of federal power as the EPA tried to stop
the draining of wetlands, the Interior Department stepped up control of
land in the name of endangered species protection, and the White House
promoted a costly Clean Air Act. In 1993, the Clinton administration
arrived with heavy backing by environmental groups and ambitious plans for
“ecosystem management,” creation of the National Biological Survey, and
But these initiatives were the high-water mark of federal
environmental regulation. Virtually all ran into opposition. The 1994
election results are a signal that the public will not accept such
Now, what is needed is a serious effort to “reinvent
environmentalism” by bringing more reality and common sense to
environmental policy. In some cases, this can be done by abandoning the
excessive requirements of current laws. In others, it means introducing
common-sense adaptations that recognize the importance of incentives. In
no case does it mean allowing people to behave in ways that cause serious
harm to others.
Three Principles for a New Agenda
Our agenda reflects the insights that have guided PERC research
for well over a decade. It builds on three basic principles (see Anderson
and Leal 1991, and Gwartney and Stroup 1995).
1) Incentives matter.
When prices are determined by the government rather than the
market, they change incentives, distorting people’s decisions about how to
use resources. These distortions often have severe environmental
When prices of a good or service are low, people demand more than
they otherwise would. Low prices for federally provided water, for
example, encourage excessive water use for agriculture and reduce water
available for fish. Conversely, when prices are artificially set high by
the government, more is supplied than otherwise would be. For example,
price supports for agriculture cause farmers to expand production to land
that is only marginally suitable for crops. In spite of these harmful
effects, government-determined prices are widespread because they serve
the interests of narrow groups and the politicians those groups support.
The fact that Congress can force people to do what it wants at no
direct cost to itself also distorts the way resources are used. Congress
passed the Endangered Species Act, authorizing the U.S. Fish and Wildlife
Service to control private and public lands without compensating private
landowners or other users of public lands. With such power at their
command, Fish and Wildlife officials have little reason to think carefully
about how many acres they regulate or how severe their regulations are
Similarly, Congress can mandate costly actions by municipalities without
having to provide any funding to carry them out. Because it does not have
to pay the cost, Congress tends to make extreme demands, such as requiring
costly sewage treatment, even though they may accomplish little good.
Because incentives matter, price distortions should be removed.
Prices of commodities supplied by the federal government should be brought
more into line with market levels. And the costs that Congress and
government officials ignore because someone else is paying them should be
made explicit by putting these costs “on-budget.” The government should
pay for what it demands.
2) Secure and tradeable property rights encourage
cooperation and resource stewardship.
Many environmental problems occur because the rights to use
resources are not secure and cannot be traded. They are “up for grabs,”
determined by political clout rather than market competition.
Grazing on public lands is a classic example of insecure property
rights. Because grazing rights are controlled by government officials,
current holders of the rights know that their allotments can be reduced at
any time through political fiat. Thus, they must constantly devote
attention and resources to maintaining their political clout, waging
political war against other potential uses. Knowing that they might soon
lose control also makes them less willing to forgo benefits or make
sacrifices to preserve the value of the land. Secure ownership would
increase their interest in protecting the long-term value of the land.
Another problem on the public lands is that many rights are not
fully tradeable. Owners of grazing rights, for example, cannot lease or
sell them to environmentalists who would retire the land from grazing; the
permits can only be transferred to other livestock grazers. If permits
were fully tradeable, environmentalists could retire them or perhaps
figure out how small changes in grazing practices could accomplish their
goals of preservation. Similarly, environmental groups should be able to
bid on federal timber sales and, if they win the bids, modify or retire
the logging rights. In this way they could preserve trees or acquire
endangered species habitat, achieving their goals without the rancor and
gridlock of politics.
3) Polluters should be liable for harms they cause others
(and only for such harms).
Individuals have the right not to be seriously harmed or
threatened by pollution from others, just as they have the right not to be
assaulted. In the past, people protected their rights by going to court
when necessary to stop pollution or to obtain compensation for pollution
that had occurred.
This property rights approach to controlling pollution was not
perfect, but it had a number of advantages over regulatory programs. For
example, it focused on actual harm rather than emissions, which may not in
themselves be a problem. Also, it allowed rights to be traded when both
polluter and recipient could find a mutually beneficial solution, and it
did not require the creation of vast bureaucracies that adopt costly
approaches to address minuscule risks.
While we may not be able to go back completely to the previous
system of common law, our policies need to focus on prevention of harm
rather than prevention of waste per se. People should be accountable for
their actions when those actions are shown to be wrongful. And
environmental authorities, like all government authorities, should be
subject to budget constraints and to serious judicial review.
From these three principles, a new “common sense” agenda for
environmentalism can be built. The new agenda should be acceptable to
environmentalists because it will protect the environment where serious
environmental threats occur, and it should be welcomed by the broader
public because it will be cost-effective. Astute politicians should be
able to build new coalitions supportive of these policy changes.
Terry L. Anderson is a Senior Associate of the Political Economy Research
Center (PERC) in Bozeman, Montana.
Anderson, Terry L., and Donald R. Leal. 1991. Free Market Environmentalism. San Francisco: Pacific Research Institute.
Gwartney, James D., and Richard L. Stroup. 1995. Economics: Private and Public Choice, 7th ed. Fort Worth, TX: Dryden Press.