A Geek With Guns

Chronicling the depravities of the State.

Environmentalists Should be Advocating Strict Property Rights

without comments

Self-proclaimed environmentalists seem to always advocate stricter environmental regulations. Every time I turn around I see another self-proclaimed environmentalist demanding that the Environmental Protection Agency (EPA) further decrease the level of [whatever pollutant is the enemy of the week] that individuals and/or companies can emit into the atmosphere/water supply. I’ve explained, multiple times, why asking the EPA for environmental protection is a fool’s journey. The only way to solve environmental issues is through strict enforcement of property rights. Hell if Dr. Seuss would have taken property rights into consideration his famous work The Lorax would have ended on an entirely different not:

If the Once-ler does have the right to cut down the trees, would we imagine that he would clear-cut the forest? Assuming he believes he will have those rights into the indefinite future, his own self-interest should prevent him from clear-cutting. We know from the end of the book – spoiler alert! – that the trees are a renewable resource – they can be replanted. Why would the Once-ler throw away years and years of profits he could obtain by replanting just to make a few dollars now? The future stream of profits is so large as to make clear-cutting a really bad choice, which is why lumber companies cut only a portion of their forests and replant where they do cut. And even if the trees were not a renewable resource, clear-cutting only makes sense as a profit-maximizing strategy under the most unusual of circumstances.

In the case of a nonrenewable resource, “greedy” producers still have reason not to extract the full quantity. Owners of oil wells do not suck out every last drop once they start extracting. Why not? They face a tradeoff: They can extract a lot, or even all, and sell it at the market price and invest the proceeds to earn interest, or they can leave much or all of it in the ground and wait for the price to rise, earning higher profits in the future.

If one has possession of a valuable resource it is in their best interest to manage the extraction and sale of that resource in a way that maximizes profits. Why would somebody extract all the iron ore on their property and sell it immediately? Iron ore, being a non-renewable resource, becomes more valuable over time as it becomes more scarce. Another aspect to look at is the temporary nature property in most places:

Then why do we see clear-cutting or its equivalent in the real world? Usually it’s because the property rights of the owner are tenuous, substantially reducing the expectation of future profits and making it more rational to extract all the value now. This normally happens when governments threaten to nationalize resources or where the property claims are uncertain and one party wishes to grab all the value before another party enters the competition.

Property rights in most countries aren’t absolute and one can never be sure when their property will be seized through eminent domain laws. If you’re only likely to hold a property for a temporary amount of time it then becomes your best interest to extract all the value from it immediately. When you’re not sure if regulations or ore extraction are going to remain stable or change in a manner that makes extraction more expensive it becomes your best interest to extract it all immediately.

EPA regulations and weak property rights actually encourage environmental destruction. Like most government bodies the EPA effectively accomplishes the exact opposite of what its chartered mission claims. Environmentalists should be demanding the EPA be eliminated and property rights be recognized as absolute.

Written by Christopher Burg

March 9th, 2012 at 10:00 am