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I was out camping last month with my buddy Tom. I was unpacking our basic necessities when he exclaimed, "Jess, your toilet paper isn't recycled! How could you buy that stuff?" "C'mon, the recycled stuff costs more and it's a pain in the butt to find," I replied. Tom sneered disdainfully, "And you call yourself an environmentalist?" "Well, I'm not that kind of environmentalist."
Tom's kind of environmentalists do things that are the right thing to do, because they love nature, and they try to get everyone else to agree that nature should be protected for its own sake. My kind of environmentalists do things that make economic sense, and they try to arrange things so that making environmental sense also makes economic sense. I'll call Tom's philosophy "Second Wave Environmentalism," which was dominant from the 1960s until the 1980s. The "First Wave" was Teddy Roosevelt's style of Conservationism; it got us lots of National Parks but isn't relevant to the Stewardship Foundation, so I won't discuss it further. I'll call today's other philosophy "Third Wave Environmentalism," which is what is practiced by the Stewardship Foundation. It represent a growing trend in the environmental movement and, I think, will be the dominant force of future environmentalism.
Second Wave Environmentalism is based on morality. The underlying philosophy is, "Everything is connected to everything else, so when we hurt the Earth we're hurting ourselves." The policy prescription is to use "command and control" methods for enforcing environmental protection in an ongoing struggle against economic development. The means of controlling manure runoff, for example, is to legislate that confined animal operations must use holding ponds, or some other technology determined by a central agency.
Third Wave Environmentalism is based on economics. The underlying philosophy is, "account for the external costs," or in other words, those who receive the benefits of environmental protection should pay for them, or those who cause the pollution should pay for it. The policy prescription is to use market incentives and economic methods to simultaneously achieve environmental and developmental goals. The means of controlling manure runoff, for example, is to allow bidding for land near sensitive waterways, so that cattle pastures and protected acreage can come to an economic arrangement for the best use of the land.
The Second Wave culminated with the "UN Conference on the Human Environment" in 1972. The Stockholm Declaration, the list of principles that resulted from that Conference, states as its first principle a moral imperative: "Man has a solemn responsibility to protect and improve the environment."
The Third Wave came of age with the "UN Conference on Environment and Development" (UNCED) in 1992. The Rio Declaration, UNCED's list of principles, defines in its first principle the economic concept of "sustainable development." "Sustainable" means that the environment would not collapse even if that form of development went on for centuries. "Development" means that economic activity and economic growth occurs simultaneously with environmental protection.
Under sustainable development, natural resources are treated as "environmental capital." We may sustainably spend the growth of natural resources (since they are replaceable forever), but we may not sustainably spend the capital itself (since that's irreplaceable). Our natural endowment should be treated like Arkansas' capital investment funds, where we spend the interest, but only convert the principal from one form of capital asset to another.
The Third Wave view means that natural resources may be "sustainably depleted" to the extent that they are converted into other long-term capital resources. For example, development along the Buffalo River can occur in the Third Wave view, as long as the result of the development is greater long-term economic improvement, but not for only short-term benefits. The Second Wave view is that non-renewable resources cannot be used sustainably at all, since they are inherently finite. For example, development along the Buffalo River cannot occur in the Second Wave view, since any development would permanently destroy the pristineness of the river.
Second Wave environmentalists have big fights with Third Wave environmentalists over the idea of "monetizing" the environment. "Monetizing" means assigning a monetary value to things, such as how much the recreational use of the Buffalo River is worth. "Agenda 21," the detailed policy book that resulted from the 1992 UNCED Conference, devotes an entire chapter to the proper ways to assign prices to environmental amenities. We assign a monetary value to the Buffalo River's "recreational value" ($37 million per year) and "existence value" ($6 million per year) in the article on page 10.
A Third Wave group, for example, could then monetize animal-based pollution as the monetary loss in recreation value and intrinsic value that the animals cause. They might then "bid" for the "right to pollute," by offering payments to the owners of the animals to remove their animals from sensitive areas. The Stewardship Foundation offers conservation easements to landowners in the watershed, which pay cattle owners to keep cattle 100 feet away from tributaries. The amount we pay is more than the landowner would earn by grazing the cattle on the sensitive acreage, and is less than what we perceive as the amount of damage caused to the river.
In contrast, the US Green Party, a staunch Second Wave group, says in its 1991 Congress Platform, "We strongly oppose the idea of pollution 'rights,' which we see as an unjustifiable commodification of public natural resources and a recognition of a fallacious 'right to pollute.'" I don't like cattle polluting rivers any more than the Green Party does, but I recognize that right now, everyone has the right to graze their cattle wherever they want on our tributaries, despite the potential damage to the Buffalo River. By acknowledging that landowners have a "right to pollute," we can then ask them to waive that right. Without assigning a price to the "right to pollute," the price is implicitly set at zero. And with a price tag that says "free," the environment gets overused, just like people overuse anything that they don't pay for.
Second Wave and Third Wave environmentalists agree that the current system of "free" use of environmental amenities encourages environmental degradation and the over-depletion of natural resources. Second Wave environmentalists would restrain the free use of environmental amenities by coercive enforcement of laws. Third Wave environmentalists would restrain the free use of environmental amenities by charging for the amount of use, at a price equal to the damage caused by the degradation. The same result could be achieved by charging for pollution damage as by paying to avoid pollution.
The difference between charging for pollution damage versus paying to avoid it is whether the polluter or the environmental user has "rights". If the recreational users of the Buffalo River have primary rights, then the polluters should be asked to pay for the amount that they pollute, and the river would stay clean (that's called the "Polluter Pays Principle"). An underlying principle of the Stewardship Foundation is that landowners have primary rights to use their own land. We therefore do not advocate charging polluters for environmental damage caused on privately owned farms. We do advocate paying private landowners to give up their right to pollute, and we do advocate that recreational users of the Buffalo River should contribute to those payments. We discuss "rights" in more detail on p. 14. so let's get back to "prices."
The 1972 Stockholm Declaration doesn't even mention "prices" in the context of environmental damage. They focused on creating national institutions for environmental planning. The US Environmental Protection Agency, and many other national Environmental Ministries, were created in response. The 1992 Rio Principles, in contrast, are directed at Treasury Departments, Trade Ministries, and Tax Agencies. They're the agencies who would administer environmental economic instruments, who would reduce environmentally destructive subsidies, who would collect user fees from applying the "Polluter Pays Principle" and so on.
Vice President Al Gore earns his place as a Third Wave environmentalist by including in his "National Performance Review" (President Clinton's initiative to "Reinvent Government") that a reinvented government should "encourage market-based approaches to reduce pollution." Gore also devoted a chapter in his 1990 book, "Earth in the Balance," to describing how to correct the calculation of Gross National Product to reflect the depletion of environmental capital, a hot topic in the UN System of National Accounting.
So does that mean that the environmentalists of the 1990s and beyond are going to be accountants and financiers, concerned with a different kind of green than the Green Party? No, not quite, because Third Wave environmentalists do believe in environmental stewardship. We believe in protecting the environment while promoting economic development, unlike the Second Wave environmentalists who would prefer that all development cease. Second Wave environmentalists use government to force people to comply with restrictions on development. Third Wave environmentalists do not need to use the government, since all of our methods are voluntary.
Third Wave environmentalists offer payments for the environmental protection that we want, at a price that we consider comparable to the improvement in the environment. If landowners find that price to be higher than their other income from their land, then they can accept our payment. If they find that their economic activity is worth more than our payment, then they continue doing what they were doing, and we can either raise our offering price or we can look for others who will sell the same environmental benefit at the lower price.
That's how free markets work. No government involvement is needed to make them work. Both sides enter into agreements voluntarily, because both sides benefit. That's what Third Wave environmentalism is all about, and that's what the Buffalo River Stewardship Foundation does.
Jesse Gordon is the Comptroller of the Buffalo River Stewardship Foundation and the editor of this journal.