This book proposes a free-market environmental management system designed to deliver a product that is superior to government oversight, at lower cost. It provides examples illustrating how the system might work and proposes an implementing legal strategy. Though environmental in origin, the principles this book describes are applicable toward privatizing nearly any form of government regulation.
This book examines where we are going and what to do about it from the perspective of an amateur ecologist developing habitat restoration processes as a hobby. By profession, the author is a medical device engineer, representing neither of the polar opposites of the environmental debate. The combination of multinational regulatory, industrial, and "hands-on" experience is sadly lacking in policy development all too often dominated by lawyers, activists, or other interest groups. The goal is to introduce a system design, capable of reversing the growing reach of regulatory government and motivating the human and ecological benefits through the responsible expression of individual liberty.
The book consists of five parts. Its design presents two paths. One is a positive thesis with examples and implementation plans that reflect no particular case. The thesis path is approximately 225pp, or almost 60% the text. Essential chapters and sections are marked with an icon: & (also noted in the Table of Contents). For those who are pressed for time and familiar with the technical, legal, and economic issues the positive path makes a good first read.
Should one choose the full story (over 390pp), there awaits the rewarding tragicomedy in the case study comprising the antithesis: the County of Santa Cruz, California. This approach yields the detailed data to both prove the antithesis and impart important insights into the benefits of the thesis and its compelling logic.
This explores the philosophical principles of governmental environmental management:
- Lack of accountable ownership of zero-priced goods: The Tragedy of the Commons.*
- Ethical systems graduated by the perception that environmental harm is inherent to human action.
* The Tragedy of the Commons was a seminal article by Garrett Hardin, published in the journal, Science in 1968. The thesis was that lack of ownership of a resource leads to overuse and destruction of the resource. The international waters of oceans are an example.
The antithesis opens with a logical examination of the preservation ethic. Much of what people assume is "natural" habitat has been severely altered by human economy. Given that nature is a dynamic, adaptive, and competitive system, environmental preservation inevitably leads to what scientists call a Type II error, or error of inaction. Such a policy relies upon flawed assumptions: the goal is unknown, the method is untested or nonexistent, and the outcome is unmeasurable.
The book then examines the assumptions underlying civic regulation and whether a civic monopoly can deliver upon its public mandate for environmental protection. Environmental problems vary so greatly among different locations as to render detailed analyses of general regulatory policy unproductive. Therefore, this book focuses upon a case study of the rural-suburban forest interface in the County of Santa Cruz, California.
Santa Cruz exemplifies the preconditions for the study of environmental management systems:
- The undeveloped portion of the County is comprised of disturbed habitat, having been logged, burned, and cleared for agriculture. That use has been largely abandoned for 50-75 years. Most of the land now consists of second growth forest being encroached with rural residential development and viticulture.
- Native ecosystems vary radically: including forests, meadows, rivers, coastal marshes, and oceanfront with widely varied geology and climate.
- It adjoins a highly urbanized and industrialized area: Silicon Valley.
- The County has exerted various forms of regulatory controls over suburban development, over the last 30 years.
- It still has active resource industries and agriculture.
- It has a university with a well-deserved reputation.
- It has an activist county government with entrenched political constituencies that have maintained continuous control over the study period.
- It has a large, and politically active, preservationist community.
- It was the first community in the nation to implement a Local Agenda 21 per the document by the same name from the 1992 United Nations Conference in Rio de Janeiro.
Given the above characteristics, the ecological results of civic environmental regulation in the County of Santa Cruz are applicable to a variety of similar regulatory issues, elsewhere.
The book then opens the exposition of its antithesis:
Documents the historical record of an alliance of environmental activists and regulatory agencies that have dominated the County of Santa Cruz. The cases demonstrate that many programs and activist causes, sold to the public as having environmental purpose, function at variance to their purported intent.
These chapters have 14 charts, detailing the conversion of private, non-industrial redwood timberland to suburban residential development. This discussion instills the technical, political, and economic background with which to understand the alternatives proposed in Part III.
Chapter 1 recounts a single logging job. It details how activism actually harmed the forest it was supposedly protecting. It sets up the question of why it seems that the most successful loggers are often those with marginal practices.
Chapter 2 analyzes the history of the industry in the local market. It uses US Forest Service data to analyze inventory balance, effects of taxation, conversion of use, substitution effects, consequences of regulatory cost and delay, and the need for a locally competitive log purchasing market.
Chapter 3 examines the economic impact of regulation and zoning law on a theoretical landowner. It demonstrates that the County of Santa Cruz has used zoning law to increase revenue and favor select political constituencies and development interests while claiming to protect the environment.
Opens the thesis with a philosophical proof of why and how a free market environmental management system is ecologically preferable to political control. It imparts the principles and justification for a regulatory system that is motivational instead of coercive.
The proposal is a synthesis of these components:
- Certified, insured, and guaranteed operations in lieu of civic permit,
- Validated and accounted operational processes and ecosystem data.
- Pricing uses of ecosystem assets through risk analysis.
- Quantitative models describing property as bounded process assets.
- Reduction of transaction costs in contracts for land use, and
- Civic respect for unalienable private property rights.
The free-market verification system operates in lieu of civic permits to provide private environmental management with an insured guarantee. The certification system is analogous to a combination of that used for consumer goods, as certified by Underwriters Laboratories, and the system used to manage medical malpractice. The system certifies owners and practitioners to validated process development and verification practices, instead of conformance to specification. The certifying body, as a competitor in the verification business, has every reason to assure that their customers perform at both minimal cost and risk because they reinsure the practitioners should they fail. The program requires continuing education and research on the part of the practitioner toward extending the state-of-the-art of validated resource management practice. (See attached Illustration.)
There is currently no objective estimate of the financial worth of ecosystem assets. The proposed system generates the necessary accounting data as part of the conduct of certified operations. The capital value of ecosystem resources derives from accounting records of habitat restoration, research experiments, and hazard mitigation projects. The process yields the replacement cost of ecosystem elements necessary to an accurate assessment of the insured assets at risk. This is similar to the manner in which industrial insurers developed our understanding of financial risk through direct measurement of the scope and probability of an insured loss. That data serves other valuable purposes within the system.
As risks are identified, investments to reduce or offset risk become profitable. This process motivates investment in risk reduction through improvements in the conduct of operations. The use of pooled risk also serves to distribute the impact and benefit of aggressive experiments against those that are less so. The process differentiates risk-reduction investments according to local attributes. Crude pricing schemes begin to take form by which to trade rights to use ecosystem assets capable of offsetting accounted risks elsewhere.
Individual ecosystem assets can have financial worth as long as they can be bundled into valuable units without having to sell all the uses of a parcel. One must therefore reduce the transaction overhead of trade in the use of these assets. Transaction volume helps promote accurate appraisal of ecosystem resource value, and motivates investment in improving the condition of ecosystem assets.
The accounting process required under the proposed system produces data by which the market can recognize ecosystem assets, capable of reducing the cost of environmental risk associated with economic activity. Investors will contribute capital to ecosystem management enterprises, capable of reducing risk. Stock ownership in such businesses can engage self-interested consideration of others, who hold coincident assets as overlays of competing land-uses. This system can objectively account for relative degrees of ecological interdependency.
Many resource assets are mobile, or have such low unit value that their minimum economies of scale can wildly exceed the bounds of traditional property lines. The solution is to recognize that uses of ecosystem assets, which transform the state of mobile resources, are collectible into functional process units over large areas. To consolidate these operations, requires both workable transaction contracts and consideration of conflicting interactions on any particular parcel. Such process units, as enterprises, could operate on a noncontiguous, global scale, overlaying other land uses.
Applying the above structure to the following principle constitutes a partial solution to the Tragedy of the Commons:
Is it too complex for an average person to understand? Few people understand the laws of economics in a free market, but that system has demonstrated its competence to managing dauntingly complex operations. Unlike rules, which are simpler in concept than application, one does not need to completely understand laws in order to use them. The proposed system will, ultimately be easier to use, because assessments of risk and claims against the uses of property are incorporated into the price of either insurance or investments in ecosystem assets that offset risk.
Briefly contrasts existing environmental control systems, with proposed applications of the principles observed in the thesis. It develops examples from the rural-suburban forest in Santa Cruz County, suggesting specific pilot programs with which to address complex environmental problems. The sequence of these cases develops a story line within the book that is, sometimes, humorous. Together, they form a setting for the development of an implementing strategy, detailed in Part V.
The chapter topics in Part IV are:
- The timber landowner and fire management at the rural-suburban interface,
- Exotic species control and pesticide management,
- Coho salmon and the endangered species act, and
- Watershed management and nonpoint pollution control.
Part V starts with a "walk through" of current rule-propagation mechanics. This leads directly to a corrupt alliance among Non-Governmental Organizations acting for wealthy foundations implementing institutions of Global Governance through the United Nations. Chapter 2 provides an example of a landowner who can turn the legal mechanics of the civic regulatory system against itself in defense of the ecological health of his property. The final chapter proposes a strategy to return private property to civil control and restore civic respect for private property rights in defense of environmental health. It starts by examining the reasons that support personnel, working in the existing system might prefer the free-market alternative. Those entangled within the universities, non-governmental organizations, and the civic bureaucracy, may welcome the proposed changes, though there are obviously constituencies with no interest in devolving their power. The beauty of the program is that it can start in parallel competition with civic regulation, to displace it where it is more efficient. Part V closes the work with a brief discussion of the legal foundations of this Constitutional counter-strategy.
Thank you for your interest,
Mark Edward Vande Pol
Natural Process: That Environmental Laws May Serve the Laws of Nature, ISBN: 0-9711793-0-1. Copyrights © 1999, 2000, & 2001 by Mark Edward Vande Pol. All rights reserved.