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Economic success, ingenuity a recipe for a better environment

Rocky Mountain News
July 3, 2004

By Terry L. Anderson

Dip into the current environmental news, American’s most reliable river of hysteria.
Just this month, the Save Our Wild Salmon Coalition is fretting that the Bush administration
is “spurning science.” The Sierra Club asks if we “really want bulldozers in our national forests.”
And Greenpeace imagines that “Monsanto Wins Right to Pollute.”

For years, these kinds of dire statements stood unchallenged, the nobility of self-proclaimed
environmentalists insulating their ideas from challenge. Thomas Malthus, the pessimistic English
demographer and economist, remains the patron saint of these forces, behind the litany that the
geometric growth of population outstrips the arithmetic growth of resources, putting the world
on a path to decimation. The best we could do, they assert, is slow the slide into oblivion by
living simpler and doing without.

That was the whole one-sided argument until Julian Simon came along.

A professor at the University of Maryland, he examined environmental data and traditional assumptions
from a purely scientific basis. His results cast considerable doubt on accepted environmental wisdom.

Simon’s work led many other scientists and statisticians to examine environmental claims more critically.
Some environmentalists eventually broke with the movement. They saw that the world was not collapsing – that
our quality of life is getting better, not worse; that the creation of wealth and technology supports
environmental quality, not undercuts it; and that the relationship between man and his environment is
less a Darwinian battle than a mutually beneficial interaction powered by human ingenuity.

The relationship between environmental quality and economic success breeds ongoing improvement.
Quantitatively, we know not only that higher levels of income promote environmental quality but also
that the improvement in quality is better than a 1-to-1 ratio. That is, if income rises 10 percent,
the demand for environmental quality rises more than 10 percent.

At lower levels of income, people trade environmental quality for economic growth – preservation of self
is the primary goal, not the preservation of nature. But that situation can change quickly. In general, the
annual income level at which the demand for environmental quality appears is between $4,000 and $8,000. The
demand for water quality comes at even lower levels. Similar relationships exist for the preservation of
endangered species and even the relatively obscure concern over carbon emissions.

Moreover, the point at which the demand appears trends downward as new environment-enriching
technologies appear. Wealthy countries export the technology to poorer ones, who can simply acquire what
they need to improve the quality of, say, water or air, at lower levels of income.

The economic progress so dreaded by the Malthusians turns out to be the key to environmental
security. Because of economic growth, not in spite of it, the developing world is able to enjoy
improved standards of living, both economically and environmentally, sooner than the developing world did in the past.

Of course, economic growth is founded in privatization, which in turn is based on the right to use one’s own
property as one wishes. In much of the world, central economic planning and community property are the rule, not
private property. This leads to the tragedy of the commons, in which harm is done to both the economy and the
environment. Nobel laureate Milton Friedman asserts that even privatization is not enough, that the rule of
law is a prerequisite. As he put it, “What does it mean to privatize if you do not have security of property,
if you can’t use property as you want to?”

Recent history bears out the relationship between improved income and improved environments:

  • Sustainable growth is now occurring.
  • Resource stocks are not declining and in many instances are actually growing as we discover new
    sources for existing resources and new ways of more efficiently using existing stocks.
  • Soil resources are increasing as agricultural yields of rice, corn and wheat have increased for decades.
  • Reserves of oil, natural gas, and coal continue to increase.
  • Stocks of aluminum, zinc, iron, and copper, even with maintained use in society, have been steadily
    increasing for decades as technology develops more conservative production techniques, and the price
    mechanism encourages exploration and new discoveries of underground reserves.

We are not leaving future generations worse off. Rather, today’s bounty is leaving them with more capital
and larger stocks of natural resources.

The basis of a better environment turns out to be the same “secret” behind all other success stories,
human ingenuity. As humankind grows more creative in using the natural world to improve life, the natural
world responds with bounty. Julian Simon believed that the ultimate resource is human ingenuity. “With
every mouth comes two hands and a mind,” he said.

Or, as the great political economist Aaron Wildavsky put it, scarcity has yet to win a race with creativity.

Terry L. Anderson is a senior fellow at the Hoover Institution and is the author of “You Have To Admit It’s
Getting Better: From Economic Prosperity to Environmental Quality.”

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