The Rise of the Enviro-Capitalists

Wall Street Journal
August 26,1997

By Terry L. Anderson and Donald R. Leal

A quiet revolution taking place across the country and around the world is dispelling the myth that environmental quality must emanate from government. A new breed of environmental entrepreneurs, using the tools of capitalism instead of command-and- control tactics, are working to preserve open space, develop wildlife habitat, and save endangered species.

Andrew Purkey of the Oregon Water Trust, for example, wants to obtain greater water flows on Oregon's small streams in order to improve the habitat for spawning salmon and steelhead. Using private donations, he pays users to stop diverting water to which they are legally entitled. The trust paid Oregon rancher Rocky Webb $6,600 to compensate him for not growing the hay that he previously grew with water from a small stream running through his property. Says Webb: "I see it as a step for the positive, to make people realize there are workable solutions out there."

Then there is Zach Willey of the Environmental Defense Fund. This tall, soft-spoken environmental economist is also seeking greater water flows for salmon and steelhead, but on a much larger scale, along the mighty Columbia River in Washington state.

Mr. Willey recognized that massive government-built dams on the Columbia were threatening salmon runs by raising the water temperature and reducing the currents that carry young fish to the Pacific Ocean. While the federal government spent billions of dollars studying the problem it created, Mr. Willey negotiated a trade between Skyline Farms of Washington state and the Bonneville Power Administration. Skyline Farms will relinquish diversion rights in return for payments from electricity producers, who will use the greater flows to generate more hydroelectric power. The deal will add 25,000 to 50,000 acre-feet to Columbia's flows each season. Both parties stand to benefit, but the salmon will gain the most.

In the 1980s, International Paper Company biologist Tom Bourland saw profits in wildlife and recreation on the company's Southern U.S. timber holdings. By spearheading efforts to lease the land for hunting and fishing and selling daily recreation permits, he helped growing timber stands generate considerable profits. Because of his efforts IP's wildlife and recreation program has became an important profit center, not an afterthought.

Peter S. O'Neill, a real estate developed in Boise, Idaho, recognized the growing demand for natural beauty in an urban setting. He responded by building housing communities that offer free-flowing trout streams, lush streamside vegetation, and biologically diverse lakes and wetlands. In one of his early projects he transformed an ugly flood-control channel into a year-round spawning stream that feeds trout into the Boise River.

Enviro-capitalism is at work beyond North America as well. Orri Vigfusson, an Icelandic vodka distiller and fly fisherman, is helping the recovery of Atlantic salmon. On behalf of the Atlantic Salmon Federation, he secured an agreement from Faroe Islands fishermen not to net salmon at sea in the north Atlantic. The federation pays the fishermen $685,000 per year in compensation. Three years after the agreement, twice as many salmon returned to native rivers in Iceland and elsewhere in Europe.

In South Africa, the founders of an eco tourism company have combined environmental protection and market forces by giving landholders a stake in their profitable business. To attract environmentally oriented tourists, David Varty and Allen Bernstein, founders of The Conservation Corporation, are working with the landowners--who are also the shareholders in the company--to create large habitats for African wildlife, allowing wild animals to replace the cattle and crops that previously occupied the land.

While enviro-capitalists work independently of government, they cannot function without a governmental system that respects private property rights and free markets. Often, in fact, they must overcome government-created hurdles. Before the Oregon Water Trust could pay water users for their diversion rights, for example, Oregon water law had to be changed to allow such transactions. Mr. Vigfusson's success in buying salmon netting rights cannot be directly copied in much of the world (including most of North America) because those rights are not privately owned.

Private property rights and free markets have contributed mightily to our economic wealth. What few realize--especially in Washington D.C.--is that they can contribute just as mightily to our environmental wealth. Enviro-capitalists are showing the way.

Terry L. Anderson is Executive Director and Donald R. Leal is a Senior Associate of PERC. They are authors of Enviro-Capitalists: Doing Good While Doing Well (Rowman & Littlefield, Inc.)

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Leal's research on natural resources and environmental issues spans nearly 20 years. His current focus is on preventing over-harvesting of marine resources and restoring ocean fisheries.Leal is working to build support for individual fishing quotas (IFQs) and fishing cooperatives as more effective alternatives to the current regulatory approach...
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Terry Anderson is the William A. Dunn Distinguished Senior Fellow and former President and Executive Director of PERC as well as the John and Jean De Nault Senior Fellow at the Hoover Institution, Stanford University. He believes that market approaches can be both economically sound and environmentally sensitive. His research helped launch the...
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