Natural capitalism

Around the world, there are stark reminders of the impact that economic decisions can have on the environment: the Dalmatian coast of Croatia denuded of trees cut for shipbuilding, California's Owens Valley sucked dust-dry of water to supply Los Angeles, desertification in Africa due to overcultivation and overgrazing.

That's pretty much been the history of civilization, right up to the Three Gorges Dam in China - the largest hydropower project in the history of the world. When completed, critics warn, it will inundate 244 square miles, threatening already-endangered wildlife and forcing the relocation of at least 1 million people.

To a lesser degree, the reverse is true. Recent efforts to protect the environment have hindered economic growth: coastal zoning regulations blocking new resorts, clean-air and clean-water statutes restricting industrial output, endangered-species laws preventing housing developments and farming in certain areas.

This apparent conflict between ecology and economy - felt deeply and fought fiercely by partisans on both sides - is etymologically ironic. Both words come from the same Greek root - oikos, meaning household or habitat.

But now there are growing signs that these two contentious symbols of how we treat - and are sustained by - the earth are coming together. One is the tendency among pro-environment thinkers and activists to tout the necessity of factoring in the environment when gauging economic well-being and setting policy (promoting "Natural Capitalism," to use the title of a recent book on the subject).

At the same time, there is a more conservative line of scholarship and advocacy that emphasizes "market environmentalism" - the belief that private property and self-interest lead to environmental protection. Or as Aldo Leopold, conservationist and author of "A Sand County Almanac," once wrote: "Conservation will ultimately boil down to rewarding the private landowner who conserves the public interest." While no one is proclaiming a new age of peace and love between the two, environmentalists and free marketeers are finding ways to work together for mutual benefit.

For example, Environmental Defense recently teamed up with the Political Economy Research Center to protect fisheries. (Environmental Defense is a national research and advocacy organization with a staff of more than 75 scientists, economists, and attorneys. PERC, based in Bozeman, Mont., studies ways to apply "free market environmentalism" to problems involving natural resources and pollution.)

What both organizations would like to see - and are pushing Congress to authorize - is the use of "individual transferable quotas" (ITQ's) as a regulatory tool to reduce overfishing in the Gulf of Mexico. Set by management agencies, ITQ's would limit the commercial catch while allowing fishermen to buy and sell permits. Other environmental groups, including Greenpeace, argue against any scheme that acknowledges the right to own a natural resource - in essence, a property right.

But Environmental Defense economist Peter Emerson says "providing better economic returns for fishermen" has to be a part of addressing the troubling decline in fisheries around the world. And this in turn means finding ways to reduce "excess capacity" - the number of fishing boats scrambling after a dwindling resource. For free marketeers at PERC, this would be an important step toward letting commercial markets and property rights help protect the environment.

While this coming together of interests is unusual, it is not unique. The two organizations have worked together to promote water markets (programs for buying and selling water rights in the thirsty West), to end below-cost timber sales on national forests, and to urge the "polluter pays" principle in determining who bears the cost of environmental cleanup.

"While they definitely are a conservative organization relative to most environmental organizations, I have found them always to be a source of good ideas," says Dr. Emerson. Terry Anderson, executive director of PERC and a professor of economics at Montana State University in Bozeman, has watched such partnerships grow over the years. "The thought that the ideas out of PERC would have coalesced with ideas from a major environmental group, back in 1990 and especially 1980 would have been totally unthinkable," he says.

Target: government subsidies

Government subsidies harmful to the environment are targets both sides enthusiastically aim at. Around the world, governments subsidize fishing fleets - a main reason why some three-quarters of all fisheries are in decline. In this country, selling the right to cut timber on national forests for less than it's worth loses money for the federal Treasury and threatens biodiversity.

Regulatory gridlock can delay cleanup and end up costing more. Increasingly, advocates on both sides of this ecology-economy divide are finding ways to cooperate.

One example is North Carolina's Tar-Pamlico River Basin Association. Heavy runoff of phosphates and nitrates from farms, dairies, and timber operations was found to have killed millions of fish due to oxygen depletion caused by nutrients in the rivers.

Realizing the difficulty of dealing with this "nonpoint pollution" through federal regulation, the EPA left it to local authorities, environmentalists, industry officials, and farmers to determine how the federal Clean Water Act standard would be met. A system of nutrient caps and pollutant trading was developed that improved water quality - at a fraction of the estimated cost.

Some environmentalists criticize such efforts at pollution trading (there are others involving air quality) as an official blessing of "the right to pollute." But the idea, as Rep. Sherwood Boehlert (R) of New York puts it, is to "provide a way, to go beyond technology-based command-and-control standards and focus on environmental results."

Such devolution of authority for environmental protection - from the federal government to state and local authorities - is likely to increase under the administration of President-elect George W. Bush.

Some activists fear this may represent a setback from what's been perceived as a "greener" attitude by outgoing Interior Secretary Bruce Babbitt, EPA administrator Carol Browner, Forest Service chief Michael Dombeck, and other officials. On the other hand, it's a trend that in fact has accelerated during the Clinton years. In any case, the public is unlikely to let any administration stray too far from the save-the-environment trend that dates back 30 years to the first Earth Day.

Wirthlin Worldwide, an opinion research firm often associated with Republican candidates and causes, recently reported that "two out of three Americans say we need to protect the environment no matter what it costs." While Democrats were more likely to hold this view (76 percent), most Republicans (52 percent) did, too.

Straightforward capitalism

Meanwhile, conservationists are finding their own ways to connect economic decisions with environmental protection. The most direct means here is entering the market themselves. Defenders of Wildlife, the Nature Conservancy, land trusts, and other private groups increasingly are applying straightforward capitalism to environmental protection, putting their money where their mouths are.

For several years, Defenders of Wildlife has compensated ranchers for livestock lost to wolves and grizzly bears. Last month, the group launched its "Proactive Carnivore Conservation Fund," helping ranchers pay for electric fences, guard dogs, and other means of preventing conflicts between domestic stock and endangered predators.

"We are impressed with the number of ranchers willing to work constructively with us to solve problems," says Craig Miller, director of Defenders of Wildlife in the southern Rockies. The Nature Conservancy, known for buying up natural areas in order to protect them from development, now has an "EcoEnterprises Fund."

Most environmentalists reject the notion that the "free market" - based on private property rights unrestrained by government regulation - is the answer to solving ecological problems.

"Yet worldwide experience confirms an abundance of market-based tools whose outcomes can be environmentally, economically, and ethically superior," assert P. Hawken, A. Lovins, and L.H. Lovins in their recent book "Natural Capitalism: Creating the Next Industrial Revolution."

For now, advocates and academics will wrestle over the politics of finding the proper balance between economic necessity and environmental protection. So too do philosophers and theologians.

"This may be dismissed as a utopian fantasy," warns Dr. John Cobb, professor emeritus at the Claremont School of Theology. "But the alternative is too horrible to accept."

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