Let Environmentalists Bid

A guest post by Shawn Regan*.

When it comes to environmental politics, conflict is the norm. Environmentalists have a reputation for being more likely to try to regulate, legislate, or litigate than to bargain with competing users or to simply pay to protect the land and resources they value. Why don’t environmentalists pay to protect what they value? One reason is that they often can’t. Many of the laws and institutions that govern the use of natural resources have the practical effect of prohibiting environmentalists from holding rights to natural resources—thus forcing them to pursue other tactics to achieve their ends.

This is especially true in the American West, where federal and state agencies control much of the land and natural resources. In these cases, environmentalists are more likely to “raid” instead of trade. I explore these issues in a new essay in Reason (based in part on a more-detailed paper that I co-authored with Arizona State University economist Bryan Leonard in the Natural Resources Journal): Technically, any U.S. citizen can bid for and hold leases for energy, grazing, or timber resources on public lands. But legal requirements often preclude environmentalists from participating in such markets. Federal and state rules typically require leaseholders to harvest, extract, or otherwise develop the resources, effectively shutting those who want to conserve resources out of the bidding process. In other words, to acquire rights to natural resources in the West, rights holders must use the resource.

This is an obvious barrier to many would-be environmentalist bidders who may want to acquire such rights for non-use conservation purposes. But, as my essay describes, some environmental activists still attempt to bid. The article includes several case studies and interviews with environmental activists who have tried to pay to protect what they value—only to encounter myriad legal barriers that either prevent them from doing so or significantly raise the costs of such transactions.

One interesting example is the case of environmental activist Terry Tempest Williams. In 2016, she and her husband Brooke attended a protest of an oil and gas lease auction in Utah administered by the Bureau of Land Management. When they learned that some of parcels of public land that were put up for sale didn’t receive any bids, they decided to bid themselves,  with the intention of preserving the land instead of developing it. “So we signed up and bought them,” Brooke says. “We paid with our debit card.” All it took was $1.50 an acre (plus an $820 processing fee) to secure the drilling rights to two leases comprising 1,120 acres near Arches National Park. The couple even created an “energy company,” Tempest Exploration Co. LLC, and began paying the annual rental fees associated with the lease. “We have every intention of complying with the law, even as we challenge it,” Tempest Williams later wrote in a New York Times op-ed. “We will pay the annual rent for the duration of the 10-year lease and keep whatever oil and gas lies beneath these lands in the ground.” It didn’t work. The BLM canceled the leases, alleging that Tempest Williams violated the “diligent development requirement” of the 1920 Mineral Leasing Act, which requires lessees to “exercise reasonable diligence in developing and producing” their energy resources.

In an October 2016 letter, the BLM told Tempest Williams that “since you have stated publicly that you intend to keep the oil and gas resources in the ground,” referring to her comments in the Times, “the lease offers are hereby rejected.” Others have experienced similar challenges. Jon Marvel, founder of the anti-livestock group Western Watersheds Project, made a name for himself by becoming the high bidder on several state grazing leases in Idaho. Even though the state has a mandate to maximize revenues from such lands, Marvel was often denied the leases because he did not intend to graze livestock.

And WildEarth Guardians, a group known for its litigation-prone approach, has recently pursued voluntary buyouts of ranchers’ grazing permits—that is, if federal agencies don’t prevent them from doing so. (There is currently no formal legal mechanism that enables environmentalists to acquire or retire federal grazing permits, so the group is only able to negotiate them on a tenuous ad hoc basis). Why shouldn’t environmentalists be able to spend their money on the things they value, just like anyone else?

This article discusses several reasons why reforms to enable conservation-oriented bidding have been so elusive. Some of the opposition is based on the practical difficulties associated with allowing “non-use” of natural resources when “use” is considered an important form of management. Some of the opposition, however, is also rooted in efforts by industry groups to limit competition. And in many cases, environmentalists may simply find it easier to “raid” through political or legal means than to pay the market value of what they want to protect.

In some areas, however, environmental market solutions are beginning to emerge. Many environmental groups are now calling for federal legislation that would enable voluntary buyouts of federal grazing permits. And many western states now allow water rights to be acquired for non-use purposes, such as for instream flows to conserve fish and wildlife habitat.

Last month Audubon Society negotiated an agricultural water rights lease in New Mexico for non-use purposes to enhance stream flows on the Chama River—the first lease of its kind in the state. “The lesson,” I conclude in the Reason essay, “is not that energy development, logging, or livestock grazing is bad, or that every effort to stop such activities should prevail. Rather, it’s that environmental values are real and legitimate, and they are best expressed in ways that acknowledge existing property rights, seek an honest bargain, and reflect the opportunity costs of the other forgone values associated with the land.” Environmentalists have proven they are often willing and able to pay to protect the lands and resources they value, which suggests there is one simple way to reduce land-use conflicts in the American West: Let ‘em bid.

*Shawn Regan is a research fellow and the director of publications at the Property and Environment Research Center (PERC), a free-market environmental institute in Bozeman, Montana.

Trump’s ESA Changes: A Good Start

Don’t let them tell you the Endangered Species Act has been a success.

 

Environmentalists’ knee-jerk reactions to the Trump administration’s regulatory  changes under the 1973 Endangered Species Act (ESA) were as predictable as they were misguided. Environmentalists claimed the changes violate the law and gut protections—leaving vulnerable species otherwise on the road to recovery at risk of annihilation. Sadly, the mainstream media, which seems to treat as revealed truth every study, press release, pronouncement, and tweet from environmentalists, especially if it’s critical of the Trump administration, parroted these claims.

History of Failure

Based on environmentalists’ and the press’s reactions, you would think the ESA had a glowing track record of success in bringing species back from the brink of extinction, but nothing could be further from the truth. Actually, the ESA has been a costly fiasco.

Since 1973, more than 2,470 species of plants and animals have been listed as “endangered” or “threatened” under the ESA. Federal, state, and local governments, as well as private individuals, have spent billions to help those species recover. People have been forbidden to build homes or businesses on their own land, told they must stop farming or logging, and road and hospital construction has been halted or delayed. Yet for all this effort, just 85 species have been removed from the Endangered Species List, representing only 3.4 percent of all species ever listed.

And a majority of the species removed from the list were taken off for reasons other than successful protection. Eighteen species had been improperly placed on it in the first place, due to data errors (18 species); 22 were foreign species given no protection by the ESA; 13 were recovered due to other laws or regulations, such as the banning of DDT; and, worst of all, 10 species were delisted because they became extinct while on the list, or were already extinct at the time they were listed.

In more than 46 years of existence, at best, the ESA is responsible for helping 16 species to recover—though it’s questionable whether the recovery of those species, which are mostly plants, is actually due to the ESA, since they existed almost entirely on federal land and were thus already protected. If the ESA were a school, it would have the worst graduation rate in history!

Project, Properties, Species at Risk

Although the ESA has almost entirely failed to recover species, it has been spectacularly successful in violating people’s property rights, in the process depriving many of them of their hopes and dreams. Simultaneously, ESA has harmed the very species it was intended to save.

For instance, in 2012 construction on a $15.1 million underpass in Texas was brought to a screeching halt when workers came across a single “bracken bat cave mesh weaver,” a blind, translucent spider that was thought to be extinct. There was just one big problem: The spider was so similar to another blind spider in the region that in order to confirm its identity, researchers killed it. In doing so, they may have killed the last remaining bracken bat cave mesh weaver in existence. Since that time, no other member of the species has been identified, and construction on the project was delayed for three years.

After the red-cockaded woodpecker was listed as endangered, many landowners in the Southeast began clearcutting their long-leaf pine trees, which is key habitat for the woodpecker. Why? They feared losing their property rights after watching their neighbors, in whose trees woodpeckers had established homes, lose their right to manage their property. Property values declined wherever woodpeckers appeared, and logging was undertaken at a feverish pace to avoid the woodpecker taking up residence on people’s land.

Since 2014, landowners in Thurston County, Washington, have had their ability to develop their property severely restricted due to the discovery of three subspecies of the Mazama pocket gopher, which has been twice listed as threatened under the ESA. To avoid being sued by the federal government, Thurston County now requires landowners who want to build on their property to determine whether their soils are suitable gopher habitat.

In one case, because inspectors discovered a single mound of dirt indicating the possible presence of gophers on an eight-acre parcel of land during a site review, Steve and Deborah McLain have been unable to get a permit to build a home on their property, despite offering to cede the acre surrounding the mound as protected gopher habitat. In another instance, a home developer had to fence off 64 percent of a one-acre lot to get a permit to build a home.

Reforms Aim to Reduce Costs, Improve Recovery

The regulatory reforms by the Interior Department (DOI) are aimed at reducing costs and focusing scarce agency resources to recover species that are most at risk of disappearing in the near term. Indeed, DOI is reversing a decades-old policy that mandated that threatened species (that is, species not as close to extinction as endangered species) receive the same protections as endangered species. The act itself had said that actions impacting threatened species should be judged on a case-by-case basis. However, previous administrations applied the same heavy-handed prohibitions intended for endangered species to threatened species.

From a regulatory perspective, this policy eliminated the significant difference between the two categories written into the law. In the process, it unjustly restricted property use even when the species purportedly being protected by the restrictions wasn’t t endangered. The restrictions meant resources were diverted from protecting species at near-term risk of extirpation to issuing regulations and enforcing restrictions for species not currently at risk of decline or extinction. It’s long past time the government corrected this ineffective, unfair policy.

A second reform revises how critical habitat for species recovery is designated. This reinstates a requirement that officials review areas currently occupied by an endangered species before reviewing uninhabited areas that might harbor endangered species in the future. The Obama administration had changed the habitat rule to impose equally stringent restrictions on potential habitats as well as occupied habitats. Specifically, the new rule states, “The Secretary will designate as critical habitat . . . specific areas outside the geographical area occupied by the species only upon a determination that such areas are essential for the conservation of the species … [and] there is a reasonable certainty both that the area will contribute to the conservation of the species and that the area contains one or more of those physical or biological features essential to the conservation of the species” [emphasis added]. The second provision clarifies, in accordance with a Supreme Court ruling, any area declared critical habitat actually be viable habitat.

Frog Case Shows Reform Is Needed

The case of the dusky gopher frog highlights the need for this reform. In 2001, the U.S. Fish and Wildlife Service (FWS) listed the dusky gopher frog as endangered. At the time, only 100 adult frogs were known to exist in the wild, all in Mississippi. In 2011, FWS designated 6,477 acres stretching across Louisiana and Mississippi as “critical habitat” for the frog, empowering it to limit the uses of the land to help the species recover.

While this might on the surface seem within the intended purpose of ESA, there is a unique hitch in this case: The frog does not exist on the 1,544 acres of private land in Louisiana, has not existed there since 1965, and in its current condition, the land is not suitable for the frog’s habitation or survival. In other words, there ain’t no frogs there, and they can’t live there unless the landowners make costly changes to the land to make it suitable for the frogs.

FWS tried to extort the landowners into making a portion of their property suitable frog habitat, saying it would allow the property owners to develop 40 percent of their property if they undertook changes to alter the remaining 60 percent to make it suitable habitat for the frog. FWS estimated the required changes would cost the landowners $20.4 million. FWS said it would also allow owners to leave property in its current state, but by doing so, FWS would not allow any development, costing landowners $33.9 million in lost value. The mafia could provide no better an example of strong arm tactics!

The lands owners challenged FWS’ Louisiana critical habitat designation, and 18 states and a number of business groups—including the American Farm Bureau Federation, National Alliance of Forest Owners, National Mining Association, National Association of Home Builders, and U.S. Chamber of Commerce—backed their challenge.

Inexplicably, by a vote of eight to six, the U.S. Court of Appeals for the Fifth Circuit allowed FWS’ critical habitat designation to stand. As Fifth Circuit Judge Priscilla Owen noted in her dissenting opinion, FWS’ action was “unprecedented and sweeping” … “[It] re-writes the Endangered Species Act.”

Let’s be clear: The dusky frog is not in commerce, much less interstate commerce, so the federal government should not have jurisdiction over the frog or the property/habitat in question in the first place. Perhaps more importantly to the general public is the fact that if FWS’ habitat designation is allowed to stand, no person’s property is safe from being declared critical habitat for some endangered species; the government could force each and every one of us to expend resources to make our properties suitable for one “endangered” species or another.

Sound farfetched? Consider this: There are currently more than 1,650 species listed as endangered in the United States—with listings in all 50 states and the District of Columbia—but less than half, only 742 of them, have had critical habitat designated for their recovery. In addition, FWS has hundreds of ESA listing decisions pending, each of which, under the terms of the law, would require the designation of critical habitat. And for those species without critical habitat, before the Trump administration’s reforms, FWS had threatened that future designations “will likely increasingly use the authority to designate specific areas outside the geographical area occupied by the species at the time of listing.”

The Trump administration’s regulatory changes should prevent similar efforts, which violate the Constitution’s Fifth Amendment protections against uncompensated takings. If government wants to take a person’s land to expand a viable habitat, the landowner should be justly compensated. The same principle applies when government confiscates someone’s land for a military base, a road, or a school.

DOI’s rule changes don’t gut the ESA and won’t lead to the demise of any endangered (or threatened) species. However, the changes will help ESA operate more efficiently and lawfully.

Further Reforms to Make ESA Work

Although the Trump administration’s actions are legal and eminently reasonable, they still don’t get at the root of the problem of the ESA. The true cost of the ESA should be measured in houses, homeless shelters, and hospitals not built or significantly delayed; medical and technological discoveries not advanced; funds not available for education, crime control, health, or environmental matters; and in “protected” species lost or still on the list and declining.

ESA fails to protect species because it creates perverse incentives to destroy species and their habitat. More than 75 percent of the listed species depend on private land for all or part of their habitat. Yet if people provide suitable habitat for an endangered species, their land becomes subject to severe regulation and possible confiscation.

Property owners are faced with three undesirable options: kill an endangered species member—“shoot, shovel, and shut up”—destroy habitat before a species moves in, or lose the use and value of their land. Clinging to this approach condemns the very species ESA was passed to protect.

For 46 years the ESA has made property owners adversaries of endangered species. At a minimum, we must make property owners allies in species conservation. The fairest and most effective way to foster species recovery would be to reward people for managing their property in ways that attract endangered species. For instance, paying landowners when their property is restricted to protect species would be consistent with the Constitution’s requirement landowners be paid just compensation when their property is taken for public purposes, and it would keep them from being forced to choose between their own welfare and that of the endangered species.

 

Photo by Florian GIORGIO on Unsplash

Is Privatization the Solution to Amazon Fires?

Mary O’Grady asks the question in the Wall Street Journal.

Photo Credit: Fogo em Serra Negra by Mark Hillary on Flickr.

From Mary O’Grady in the Wall Street Journal:

In August 2016 Reuters reported on a study by the nonprofit Climate Policy Initiative that linked the absence of land titles in the Amazon to conflict and environmental degradation. “Without clear titles proving land ownership, farmers have less incentive to make new investments, improve productivity or protect the environment, said the CPI, a San Francisco-based group with operations in Rio de Janeiro,” Reuters wrote.

 

No one knows exactly how much of the actual forest destruction has been on land that isn’t private property. But it may be a lot.

 

Brazil’s Ministry of the Environment … estimates that 51% of the fires occurred on property with no title and no owner. Another 14% occurred on land that has been “donated” to the landless peasant movement known by the initials MST, and 13% were in conservation areas or on indigenous lands. Only 22% of the fires occurred on registered property.

Photo by Florian GIORGIO on Unsplash

Protecting Our Natural Surroundings

“I divide environmental topics into two sometimes overlapping groups, ‘romance’ and ‘sludge.’ The romance sector includes parks, forests, wildlands, wilderness, wildlife, and scenic vistas.”

By John Baden

I divide environmental topics into two sometimes overlapping groups, “romance” and “sludge.” The romance sector includes parks, forests, wildlands, wilderness, wildlife, and scenic vistas. These treasures grace calendars and coffee table books. Most educated and comfortable adults, even committed urbanites, are attracted to and want to protect this sector.

The second division is sludge. This term refers to nasty stuff that is often the necessary byproduct of legitimate productive activities such as food processing, mining, and manufacturing. These are spillovers from legitimate and useful activities.Economists call this category negative externalities. They ask: How might we efficiently reduce them—or even better, convert them into useful products?

That’s exactly what environmental entrepreneurs did when they converted the wood waste and scrap from lumber mills into valuable wood panels. Those panels replaced plywood—which had replaced boards formerly cut from old growth trees. Lesson here? In a market process economy, superior substitutes naturally evolve.

We can’t live without some sludge; it’s inherent in living and using products from the earth. While recognizing this, I choose to work in the romance arena. Had I elected to focus on sludge, I’d live in Boston and study its harbor. Instead, I live on a ranch between Bozeman and Yellowstone Park and study my surrounding habitat. Thus, I work in the tradition of America’s first conservationists.

America’s old-line conservation organizations were primarily concerned with the romance sector of their environment, largely with protecting wildlife. A common target was market hunters, people who overexploited the wildlife commons. The Migratory Bird Treaty Act (MBTA) of 1918, one of the oldest wildlife protection laws, was among the National Audubon Society’s first major victories.

The 1857 book Wild Northern Scenes; Sporting Adventures with the Rifle and the Rod is an example of the connection between outdoor recreation and preservation of environmental romance. In this book, S.H. Hammond writes: “We are here alone with nature, surrounded by old primeval things. Tall forest trees, mountain and valley are on the right hand and on the left. Before us, stretching away for miles, is a beautiful lake, its waters calm and placid, giving back the bright heavens, the old woods, the fleecy clouds that drift across the sky, from away down in its quiet depths.”

My columns and posts build on a lifelong interest in conservation. It began by creating the Concord Conservation Club while in the fifth grade of the small, high-quality and quite rural Concord School  in Miami County, Ohio.

Our club focused on wildlife, both fish and game. For example, I recall Field and Stream articles on the importance of fence rows in providing habitat. In those years family farms fields were small by today’s standards; forty acres was a large one. Most farms were fenced to keep farm animals, mainly beef and dairy cows and flocks of sheep, in for grazing. Various types of grasses and small bushes grew on both sides of each fence. I learned that fence rows provided good habitat for small animals nesting, hiding from predators, and gaining protection from weather. I maintained  my interest through high school and college and expressed it through hunting and fishing.

My columns with the Goodman Institute will be written while enjoying life in the Greater Yellowstone Ecosystem. My goal is to explain how responsible liberty, sustainable ecology, and modest prosperity can complement one another while fostering wholesome communities. Communities flourish within this trinity. Eliminate any one and life becomes problematic, unpleasant over the long term—even unsafe.

Of the three elements of this trinity, modest prosperity is often underrated. Especially by Greens with a “woke” philosophy. Socialists and other authoritarians fail to understand the linkages among liberty, prosperity, and sustainable ecological systems.

They see economics as a subset of engineering rather than of evolutionary biology. Hence, they believe that prosperity can be designed and administered by the governmental bureaucracies via regulations and directives. This command approach never has and never will succeed. Why?

Bureaucratic knowledge is incomplete, and errors are common. Further, incentives often yield perverse outcomes. For example, federal programs to subsidize draining prairie potholes, America’s “duck factories,” destroy habitat for migratory water fowl and terrestrial wildlife dependent on pools of water. Reclamation irrigation dams destroy salmon runs. Here as elsewhere, political forces trump ecology and economics.

Prosperity, as contrasted to windfall gains from winning a lottery or finding gold, evolves as individuals discover ways to move resources to higher value. I will be discussing that in the future with the example I know best, our ranch.

John A. Baden is founder and chairman of the Foundation for Research on Economics and the Environment (FREE), located in Bozeman, Montana.