Commentary
Price is the best, most effective, and ultimately, the final regulator of the balance between human activity and resource availability. The question is whether the price is to be arrived at freely between the provider and the consumer, or whether third parties will intervene and inflate the price artificially. A free market is just that -- free; anything less is a managed market.
When the first settler stepped into the
American wilderness, he negotiated with the
resource provider for the goods he wanted to
consume. The price was the energy and
ingenuity required to transform the wilderness
into commodity. Environmentalist may argue
that humans had an advantage because the
wilderness could not negotiate from a
position of free choice; the settlers who died
in the process might argue that the wilderness
had all the advantage.
Price -- without artificial inflation of federal regulations -- could and should control the balance between human activity and wetland loss. Federal wetland policy claims jurisdiction over every mud puddle in America -- and much land that is dry and dusty -- in the name of protecting "valuable" wetlands. The question is, "valuable to whom?"
A farmer who has a wetland in his corn field may wish to drain and fill the wetland. If he is free to negotiate with the provider -- without federal interference -- he will count the cost, project the economic gain, and make a determination to fill the wetland or not. If the project is economically feasible, chances are that the wetland is of minimal environmental value; if the costs are prohibitive, chances are that the wetland is actually wet and may provide some environmental benefit. When the government intrudes, and arbitrarily inflates the price through permits, environmental impact statements, fines, and mitigation requirements, the price of conversion becomes prohibitive. The government will have succeeded in modifying the behavior of its citizen, but the cost of doing so will be borne, not only by the farmer who would have increased his production as a result of the conversion, but also by the broader market of corn consumers who must pay a higher price because of the absence of the increased productivity. The principle applies across the market place.
Environmentalists reject this line of reasoning, claiming that the loss of wetlands to development before 1972 represents a tragic loss of biodiversity. It is a question of value. Environmentalists may well value a swamp more than the magnificent structures that now occupy Washington, D.C., and they may well prefer a mosquito and snake-infested onion marsh to the magnificent mile that is now the pride of Chicago. In the past, wetlands were converted because consumers of wetlands negotiated with the provider and made a determination which benefitted everyone -- including the environmentalists who now own magnificent buildings in Washington D.C. and Chicago. Upon reflection, only the most radical environmentalist would not agree that the value to society of wetland conversion has been far greater that the value of preserved biodiversity had the wetlands not been converted.
Environmentalists, however, have succeeded in convincing the government that a price freely arrived at between provider and consumer -- is not adequate. Therefore, the government must inflate the price artificially -- through taxes, permit fees, fines, and mitigation costs -- to cover the "external" costs to the environment. This is not a new concept -- only the magnitude of its application is new, and the source of authority for its imposition..
The earliest settlers understood the concept
of communal safety and environmental
protection and provided for both on a local,
community basis. The affected individuals
voluntarily imposed a tax on themselves to
hire a sheriff, construct a cemetery, erect a
courthouse, build a sewage treatment plant,
install water lines, lay trolley tracks, build
highways, and sanitary landfills The recent
escalation of the magnitude, and 
the
transfer of authority for its imposition to
Washington, has overwhelmed the most
important principle that validated the
concept -- the principle of voluntary
imposition of taxes by those who must pay
the taxes. If a local community wishes to
build a sewage treatment plant and offers its
citizens a bond issue to pay for the project,
the community can decide whether it wants
to increase its taxes sufficiently to pay the
cost the provider demands.. The negotiation
is between the provider and the consumer
and they both are free to accept or reject the
deal.
The idea of "external" environmental costs, arbitrarily arrived at by a collaborative process between environmentalists and the government, or the idea of taxes arbitrarily applied to products environmentalists believe consumers should not consume, is an outrageous eradication of the fundamental principle of free choice in a free market. The only artificial costs acceptable in a free market system must be costs that are voluntarily incurred by the parties who are directly affected.
Is the free market system obsolete? Apparently the government, and the environmentalists that drive environmental policy think so. But that doesn't make it so. Actually, the free market system is the only economic system that can protect the environment and sustain the economy to provide for future generations.
The free market system cannot fail to protect the environment because it is the environment that is the source of economic activity -- and sustenance. The problem is that free markets do not protect the environment the way environmentalists think the environment should be protected. Who appointed them God? Free markets cannot fail to protect the environment the way nature dictates that the environment should be protected. If too many trees are harvested, the price of wood products will force more investment in forests. If fossil fuels become scarce, the increased price will fund research to produce new technology. If inner-cities decay and crumble, real estate opportunities will draw investment in opportunities for profit. Cities have been remaking themselves for 200 years -- without the help or guidelines from a President's Council on Sustainable Development.
Free markets, and only free markets, can respond to the dynamic needs of the planet naturally. Choice is the essential ingredient of a free market. If choice is removed, the market is not free.
The pattern of land use that results from free market activity will not be massive biosphere reserves, regulated by a handful of enlightened elite biocentrists. Nor will the human species be herded into sustainable communities to be "managed" by their urban counterparts. Land -- and natural resources -- will be used creatively to produce the pattern of prosperity allowed by nature. If human activity becomes too aggressive, nature -- not a bunch of self-appointed eco-saviors -- will take care of itself.
HL