Posts by Shawn Regan

5 ‘no-brainer’ ways to cut spending on energy and agriculture

As PERC’s Rick Stroup often says, “Efficiency has no constituency,” and that’s certainly true of environmental policy. The federal government is replete with inefficiencies resulting from overlapping, redundant, and wasteful spending programs.

Over the last three years, the Government Accountability Office has outlined 131 areas of wasteful and duplicate spending by the federal government. The GAO released its latest report last month, identifying an additional 31 areas to improve efficiency and effectiveness across the federal government. Below are a few of the “no-brainer” actions the GAO identified that relate to energy and agriculture.

1. Three separate federal agencies are responsible for catfish inspections, a duplication that costs taxpayers millions.

The 2008 farm bill assigned the U.S. Department of Agriculture responsibility for catfish inspections—a task already carried out by two other agencies: the FDA and the National Marine Fisheries Service. The GAO estimates that eliminating the USDA’s catfish inspection would save taxpayers $14 million “without affecting the safety of catfish intended for human consumption.” (The White House’s proposed budget for 2014 would eliminate the USDA’s catfish inspection program.)

2. Renewable energy initiatives are fragmented across 23 agencies and 130 sub agencies.

In 2011, nine federal agencies implemented 82 overlapping and duplicative wind-related initiatives, “including 7 initiatives that have provided duplicative… financial support to the same recipient for a single project,” the GAO found. In 2010, 679 renewable energy initiatives were spread across dozens of different agencies, costing taxpayers $15 billion. Regardless of how you feel about renewable energy subsidies, reducing agency duplication and fragmentation is a no brainer. 

3. Three rural water infrastructure programs with a combined funding of $4.3 billion could be coordinated between federal agencies to reduce state grant application costs.

The Environmental Protection Agency and the USDA manage three rural water infrastructure assistance programs. To apply for these grants, states are required to submit engineering reports that cost $5,000 to $50,000 to each agency. Considering there were 54 projects reviewed by the GAO, this number contributes to considerable waste in state budgets. To the EPA and USDA’s credit, in October the GAO reported that the two agencies “have taken some actions to coordinate their programs and funding at the federal and state levels to help meet the water infrastructure needs of rural communities.”

4. By aligning fees with program costs, the USDA’s Animal and Plant Health Inspection Service could “achieve as much as $325 million in savings.”

Carried out by the Department of Homeland Security and Customs and Border Patrol, the Animal and Plant Health Inspection Service inspects passengers and cargo, seizes contraband, and intercepts pests, which could have detrimental impacts on U.S. agriculture. This service charges those bringing goods into the country a fee that does not entirely cover the costs of the program. Should fees be increased to accurately reflect the costs of the program, the USDA could save as much as $325 million.

5. The federal crop insurance program could achieve up to $1.2 billion per year in cost savings through some combination of limiting and reducing subsidies.

In recent years, the cost of federal crop insurance programs has been increasing. The average annual cost of the program from 2000-2006 was $3.1 billion, which increased to $7.6 billion for 2007-2012. According to the Congressional Budget Office, this trend is poised to continue upwards to an average of $8.9 billion per year for 2013-2022.

More >
Q&A with Matt Ridley on Economics, Ecology, and Rational Optimism

As part of PERC’s recent Lone Mountain Forum, “Reconciling Economics and Ecology: The Foundation of Environmental Optimism,” PERC board member Gerry Ohrstrom sat down with science writer Matt Ridley to discuss what these two disciplines might learn from one another. Watch a short video of the interview above, read the full interview below (lightly edited for clarity), or listen to the podcast [approx. 7 mins]. For more PERC Q&As, visit the series archive.

Q: Ecology is about preserving resources while economics is about exploiting them. How does one reconcile these two disciplines?

A: In a way, I think they are both about emergent properties. Ecology is about the spontaneous order that appears in the world through the interaction of different species — the pattern that you see. And economics is about the same thing in society. So they are both bottom-up fields for me. They’re both about how order emerges from the interaction of individuals.

Q: Are you suggesting economics could learn something from Charles Darwin and ecology could learn something from Adam Smith?

A: This is one of my crusades, actually. As someone who was an ecologist and nowadays writes a lot about economics, I am fascinated by the parallels. Charles Darwin read Adam Smith, so there is sort of an ancestral connection between the two fields. And there is a lot going on in evolutionary biology and ecology that is very parallel to what is occurring in economics and vice versa. People like F.A. Hayek knew this and went across to evolution to pinch ideas, so I think there is a very fruitful dialogue between ecology and economics.

Q: You are the author most recently of a book, The Rational Optimist: How Prosperity Evolved. If prosperity continues to evolve aren’t we ultimately going to run out of resources?

A: I don’t think so because I think that the amount of resources we have depends upon our ingenuity. In other words, the more prosperous we get, the more frugal we get in our use of resources. Land is a good example: We use less and less land to produce the same amount of food because we’re getting better at it. We’re applying fertilizer or irrigation or whatever it is. The same is true for the amount of steel in a bridge; it is a lot lower than it was 20 years ago, etc.

So actually we are shrinking the amount of resources we need to run society at the same time that we are growing them, because there are more of us and we’re becoming more prosperous. I actually think the richer we get in this century, the more comfortable the resource position is going to be because we’re going to be better at recycling, better at finding resources, and better at using them frugally.

Q: That is somewhat counterintuitive. The more we use, the more we’re going to have, the more frugal we’re going to be, and the wealthier we are going to be.

A: Until now, the problem has been called the Jevons Paradox, which says that the cheaper you make energy, the more people will use it. And that’s true with a lot of resources. But there is evidence that the Jevons Paradox is reaching its limits with some resources. Land is a good example, again. We are actually reforesting land all over the world, we’re taking land out of farming all over the world, because even though there are more of us every year, and even though more of us want to eat chickens and pigs and all these land intensive forms of food, we still, even with this profligacy, can’t keep up with our increasing efficiency, our productivity. So actually we taking land out of agriculture and turning it back to nature reserves. And as the population growth rate falls in this century, I think that process will accelerate.

More >
Q&A with Emma Marris on the Rambunctious Garden
The science writer who is "turning the conservation movement upside down" calls for an end to notions of pristine nature.
More >
Andrew Morriss Talks Green Energy on MSNBC

PERC's Andrew Morriss appeared on MSNBC last week to discuss green energy and Solyndra with Dylan Ratigan:

[vodpod id=Video.15472914&w=425&h=350&fv=launch%3D44584398%26amp%3Bwidth%3D420%26amp%3Bheight%3D245]

More >
How Property Rights and Limited Trophy Hunting Saved the African White Rhino

From PERC's latest Case Study:

"In 1900, the southern white rhinoceros was the most endangered of the five rhinoceros species. Less than 20 rhinos remained in a single reserve in South Africa. By 2010, white rhino numbers had climbed to more than 20,000, making it the most common rhino species on the planet.

Saving the white rhino from extinction can be attributed to a change in policy that allowed private ownership of wildlife. While protecting the rhinos encouraging breeding, the ranchers were able to profit by limited trophy hunting.

Poaching for rhino horn, which is in high demand for medicinal and ornamental purposes, had also devastated the rhino population. CITES banned the commercial sale of rhino horn, which caused black market sales to sky rocket and encouraged poaching. If the ban were lifted, ranchers are ready to supply the market by harvesting the horns humanely, which then regrow just like fingernails.

Strong property rights and market incentives have provided a successful model for rhino conservation, despite the negative impact of command-and-control approaches that rely on regulations and bans that restrict wildlife use."

The author is Michael 't Sas-Rolfes, who recently launched Rhino-Economics.com. See also Michael's Q&A on rhinos and tigers from earlier this year.

More >
The Endangered Species Act and Federalism

A new book from RFF Press features a chapter by PERC scholars Terry Anderson and Reed Watson. The Endangered Species Act and Federalism, edited by Buzz Thompson and Kaush Arha, explores the role of states and local governments in protecting biodiversity in the United States.

Anderson and Watson's chapter provides an economic assessment of environmental federalism, focusing on the transaction costs of species management at various levels of government authority. The text is now available from RFF Press.

More >
Is clean water for fracking the next cleantech opportunity?

Lynne Kiesling at Knowledge Problem has an interesting post that might be of interest to enviropreneurs. She picks up on a recent article that suggests clean water for fracking is the next hot cleantech sector:

"In an interview this week with VantagePoint Capital Partner and Founder Alan Salzman, he told me that he sees technology that can help solve the clean water issue for fracking as an upcoming hot area for investment. “We think the limiting factor for gas fracking is water. We’re not gas people, and we’re not oil people. But we are water people,” said Salzman...

A company called ABSMaterials has been working on the problem of cleaning liquids involved with fracking. The company uses sand-like particles to absorb chemicals, and the company says it can remove 99 percent of oil and grease from water in fracking fluid, and another 90 percent of the toxic chemicals like benzene and xylenes."

This video shows one of their products in action. As Lynne notes, this project and others are being funded in part by the Department of Energy. Her concluding discussion asks good questions:

"If fracking really is here to stay and growing, as Mike has discussed extensively, are these research subsidies necessary to induce innovation in water cleaning technologies? If so, on what basis? Is there a Coase problem here — does legal precedent fail to define legal liability sufficiently to clarify the profits attached to the water cleaning? Or, if that’s not the case, is the water cleaning insufficiently valuable to be worth doing? That hypothesis is consistent with the argument that fracking does not actually create a lot of water supply damage. But if that’s the case, then why subsidize the research — isn’t that a waste of taxpayer funding on research that isn’t likely to be valuable enough to be worth pursuing?"

Mike Giberson, also at Knowledge Problem, has been providing diligent and extensive analysis of fracking and energy markets more broadly from a market perspective, much of which can be found here.
More >
Saving the Spotted Owl in a Static Natural World

Protecting endangered species is hard when you view nature as static. James L. Huffman in the Wall Street Journal:

No one really expects the strategy to work—not even those who first brought attention to the plight of the spotted owl. As Forest Service biologist Eric Forsman told the New York Times last month, "If you'd asked me in 1975, 'Can we fix this problem?' I'd have said, 'Oh yeah, this problem will go away.'" But he says he's grown "much less confident as the years have gone by."

And for good reason. Despite a 90% cutback in harvesting on federal lands (which constitute 46% of Oregon and Washington combined), the population of spotted owls continues to decline, as do rural communities that once prospered across the Northwest. In some areas, spotted owls are vanishing at a rate of 9% per year, while on average the rate is 3%...

The truth is that no one fully understands why the spotted owl continues to decline. The rise of the barred owl poses an unexpected, but not surprising, complication. If the natural world would just remain static, species preservation and ecological management would be far simpler. But Mother Nature relishes competition, and the barred owl is a fierce competitor. Are we really prepared to send armed federal agents into Northwest forests in search of barred owls?

The U.S. Fish and Wildlife Service has issued its "final" spotted owl recovery plan [PDF], which calls for another 30 years of management and $127 million.
More >
What If DeChristopher Could Bid?

Cross-posted at Grist.

Photo: 350.Before

By now you’ve probably heard the story of Tim DeChristopher, the 27-year-old activist who single-handedly shut down an entire Bureau of Land Management auction back in December 2008. DeChristopher, then a student at the University of Utah, snuck into the oil and gas leasing sale, posed as a bidder, and outbid developers on 22,500 acres of federal lands in southern Utah.

Almost overnight, he became an environmental folk hero, an eco-saboteur straight from an Edward Abbey novel. Although he was arrested, convicted for making false statements, and sentenced on Tuesday to 2 years in prison, his monkey wrenching worked. The incoming Obama administration cancelled the auction’s results and refused to reschedule the sale.

So, mission accomplished, right? DeChristopher stood up to a last-ditch effort by the Bush administration to open federal lands for drilling. Where others stood by, DeChristopher took action. And although it will land him in prison, it saved 150,000 acres of public land from fossil fuel development.

But how long will it remain protected? The incoming Obama administration, far less eager than its predecessor to open sensitive federal lands to drilling, was the crucial element in DeChristopher’s success. The lands could easily be reopened for drilling under future administrations. If monkey-wrench activism relies on fortunate shifts in political control, its long-term effectiveness is limited.

Here’s another idea: What if instead of landing him in jail, DeChristopher’s bidding was welcomed and encouraged? What if his bids were a real threat to energy developers that currently receive public lands at a discount? What if environmentalists were allowed to bid for federal land leases, win them, and protect them from development?

It’s a question no one is asking, but it’s an important one. BLM leases are often sold with little competition. What competition exists comes from other oil companies and reflects only the commodity -- not the environmental -- value of the land. While environmentalists can formally protest proposed lease sales, these rarely prevent drilling from occurring.

So why aren’t environmentalists bidding for leases? Part of the answer is that they can’t. The government requires leaseholders to develop their parcels, and if drilling does not occur within a certain timeframe, the lease can be cancelled by the BLM. This effectively prohibits environmentalists from holding and retiring important swaths of public land, even if they are the highest bidders.

The other part of the answer is that the political process, rather than a competitive market process, occasionally pays off for traditional environmentalism. The 1970s environmental regulatory era, for instance, was the product of a political climate favorable to environmental sentiment. Given the proper alliances, politics can be a close friend to environmentalists.

But, of course, politics can also be the environment’s biggest enemy. The very auction DeChristopher thwarted was a rushed political maneuver by the Bush administration and bypassed the usual environmental review procedure. It’s an all-too-common reminder of the limitations of political environmentalism -- its success ebbs and flows with each passing administration.

Opening lease auctions to environmental groups has an important advantage over politics or monkey wrenching: Lands can be protected regardless of the political winds in Washington. Leases are held for a decade or more and constitute a formal right to the resource -- out of reach from future political whims.

More >
Ownership Encourages Stewardship: A Look at Stream Access in the West

High Country News reports on stream access laws in the West and provides the updated chart below, which originally appeared in PERC Reports:

Recent attempts to limit Montana's Stream Access Law, the most permissive in the West, have reignited debates over the impact of access laws. The Michell Slough in Montana's Bitterroot Valley, once considered an irrigation ditch, has featured prominently in this debate:

The bill was backed by deep pockets in the Bitterroot, opponents say, but singer Huey Lewis says they weren't his. Still, he laments that the Mitchell Slough is now public. He and his neighbors tried to restore it into a healthy fishery, he says: They narrowed the channel, dredged out silt, added streamside vegetation, and worked with irrigators to increase stream flow. But when the state Supreme Court said it was a natural and publicly accessible stream, their incentive to continue restoration efforts slipped downstream...

That's because ownership encourages stewardship, says Reed Watson, of the Bozeman-based free-market think tank Property and Environment Research Center, or PERC. We tend to take better care of our own cars than we might of rentals, he adds, because we bear the consequences of our good -- or bad -- treatment.

"There are some positive things that can happen for restoration or the quality of streams from the environmental perspective that I think might go away if every single waterway is open to public access, including irrigation ditches," Watson says. He notes that landowners in Utah also halted stream restoration work when the state Supreme Court, in 2008, ruled in favor of public access.

As Reed Watson wrote in 2009:

Whether riparian landowners can legally limit public access to non-navigable streams is a key determinant in whether those landowners view those streams as assets or liabilities. In states that limit public access to non-navigable streams, landowners have an incentive to improve fish habitat and the stream’s natural hydrology. Those states that allow near limitless public access do so at the expense of private stewardship efforts that often create valuable public benefits. States that have yet to directly address the issue of non-navigable stream access would be wise to consider the incentives to private riparian landowners and the positive impact they can make on the state’s stream resources.

Note: The chart above is for summary purposes only. Ask before you access.
More >

Pages

Subscribe to PERColator posts by Shawn Regan