"Environmental Entrepreneurship versus the Progressives"

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"Environmental Entrepreneurship versus the Progressives"

By: John A. Baden, Ph.D.
Posted on November 29, 2012 FREE Insights Topics:

Pete Geddes is the General Director of the American Prairie Reserve.  This is an entrepreneurial foundation dedicated to restoring 3,000,000 acres of grassland and its wildlife and ranches.  It's their "American Serengeti". 

Pete came to Bozeman from Missoula nearly 17 years ago after earning his graduate degree in forestry from the U of M.  One of his faculty advisors, an economist no less, advised Pete to avoid Bozeman's fringe economists and their notorious  "New Resource Economics".  Fortunately, Pete discounted this advice and worked for FREE for over fourteen years. 

Pete learned of the New Resource Economics (NRE) from an article I wrote in Northern Lights, a lamentably extinct publication masterfully edited by Don Snow.  Don left Missoula for Whitman College in Walla Walla, Washington to be their Mellon Professor.  There he teaches literature and environmental studies, I'm sure to the immense benefit of his fortunate students. 

Both Pete and Don brought immense benefit to the work of FREE, bringing greater harmony to the oft-conflicting values of responsible liberty, environmental quality, and modest prosperity.  Don recently urged me to write about the evolution of this successful saga and Pete agreed to help. 

The initial public presentation of this project will be at the Association of Private Enterprise Education (APEE) meeting this April.  Several major contributors to the NRE will offer their thoughts and commentary. They include, Rick Stroup, Randal O'Toole, and Randy Simmons, all are nationally recognized for their analysis of environmental policy and proposals for reform. 

My abstract for the APEE session follows below.  I believe the lessons of NRE's success will be helpful as the constraints on federal management tighten and the failures of central control more obvious.   

 

Exploring the DNA of an Intellectual Victory:  The New Resource Economics

 

This APEE session explains an analytic triumph over the dysfunctional command-and-control approach to natural resource management created during the Progressive Era of the early 1900s.  The Progressives addressed genuine and important problems in natural resource and environmental management. These problems included waste, over exploitation, pollution, and injustices.  

Alas, the Progressive analysis of genuine problems neglected many of the institutional causes of these failures; poorly defined and unenforced property rights, common pools, crony capitalism, and political corruption.  Not understanding the bad information and perverse incentives that caused or exacerbated most of the problems, Progressives created socialist agencies to manage America's forests, rangelands, waters, and wildlife. These included the Bureau of Reclamation (1902), U.S. Forest Service (1905), and Park Service (1912).  The intellectual foundations of these agencies reined largely unchallenged until the New Resource Economics emerged at Montana State University (MSU) during the 1970s.

The New Resource Economics, aka, "Free Market Environmentalism", lacked institutional or political support at MSU.  It faced persistent opposition by entrenched university, agency, and constituency groups across the nation.  Further, NRE developed in a remote cow college.  Hence it lacked the instant recognition and credibility it would have enjoyed had it originated in an exalted university such as Yale, Cornell, Michigan, or Berkeley.

Prior to the success of New Resource Economics (NRE), the dominant and unchallenged model of natural resource management was "sylvan socialism", the Progressive ideal. Federal agencies control one-third of America’s lands, waters, and associated wildlife. Over the decades, the agencies skillfully developed constituencies among commodity groups, universities, and national environmental organizations. Together they pushed for management schemes that advanced mutual interests while growing agency budgets.

Their operational model was straightforward: find young men of good breeding and character and instill the latest scientific education about the natural world.  Accomplish this then send them out to manage the nation’s natural resources for the greatest good, for the largest number, for the long run.  Alas, socialism worked here only marginally better than elsewhere. Environmental and economic problems soon became obvious to people concerned and informed but not invested in the Progressives' payoff matrix.

The proper role of government is to monitor and protect. Its natural trajectory, however, is to advance the interests of constituencies. This system normally redistributes wealth and opportunities to the powerful.  Because agencies need not pay the costs their regulations impose, and are only remotely accountable to voters, they have little incentive to adopt reforms opposed by powerful interests.

Over time bureaucracies tend to replace the goals that justified their creation with budget protecting behavior.  Rather than steward our resources “for the greatest good, for the largest number, for the long run,” the natural resource agencies systematically came to advocate programs that often (1) have environmental costs that exceed environmental benefits, (2) are financially wasteful, and (3) increase the command sector of the economy at the expense of voluntary exchange and coordination.  

The key insights of NRE are powerful predictors of such behavior.  First, bureaucratic decisions, like those made elsewhere, are made on the basis of information and incentives, not good intentions. Second, institutional arrangements influence information and the incentives to act upon it. 

NRE explains why market coordination and clear and enforceable property rights are critically important, especially to the poor and disadvantaged minorities.  NRE also emphasizes the importance of social entrepreneurs, individuals who create concrete ways for citizens to implement their good intentions through non-profit entities addressing social and environmental problems and opportunities.

An army of scholars, opinion leaders, and decision makers has come to Bozeman over four decades.  They helped critique Progressive Era bureaucracies and explore private sector alternatives.  As a result NRE has become the dominant intellectual paradigm throughout America and beyond.

The scholarly battle is over - we’ve won. Special interests still dominate the policy arena.  However their pleadings are understood as naïve or rent seeking.  

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