Natural Rights, Natural Resources

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Bureaucracy vs. Environment, edited by John Baden and Richard L. Stroup, Ann Arbor: The University of Michigan Press, 1981, 238 pp., $15.00.

In 1978, the Environmental Defense Fund petitioned the federal Environmental Protection Agency to encourage the use of auction markets for the allocation of limited air-pollution rights. Some economists and conservative thinkers were puzzled. Why would environmentalists support markets instead of the typical command-and-control approach to regulation?

The authors of the 14 essays in Bureaucracy vs. Environment know the answer to the question, as do a few other people. The outcome of a market process where property rights are defined and enforced, though not perfect, is superior to the result obtained through bureaucratic allocation. On reading this generalization, some might react by saying it just isn't so. What about the national parks and forests, America's energy policy, clean air and water, and recreational resources? What about future generations?

These questions identify just some of the many topics analyzed in this book. The analyses are well documented, objectively constructed, and balanced. In other words, the reader will not encounter a series of polemics organized to elicit a final free-market hallelujah. Instead, one finds careful logic, data taken from reports of the agencies being analyzed, recommendations for reform, and occasional admissions that markets aren't perfect either.

Property-rights institutions and the accompanying recognition of opportunity costs serve as a common theme for the initial papers in the collection. Echoes of the theme are encountered throughout the book.

Since all natural resources were initially available on a common-access basis—and many natural assets continue to be allocated on practically the same basis—attention to the "commons" problem and the evolution of property institutions should and does receive prominent attention in the book. But the analysis doesn't end with philosophical arguments about the rent-enhancing qualities of efficient property rights. Instead, the reader enjoys learning how transferable rights were developed by early cattlemen in the West and by Navajo Indians who wrestled with grazing rights, and how experiments with implicit rights and user charges may become a useful mechanism for improving the management of environmental use. In each case, the awkward transition from common access to private property is given appropriate attention.

On the subject of regulating energy resources, the reader will find two essays. One provides tantalizing tidbits about America's early regulation of whale oil, then builds an analysis of natural-gas regulation. Another examines coal gasification and identifies its losing aspects for all parties concerned. Papers on America's romance with dams and flood-control projects, grazing policy, and timber management round out the analyses related to specific resources.

Two essays put the finishing touches on the collection. It is there that the reader learns about the not-so-silent bids of future generations when markets for natural resources are allowed to operate. And there, too, a summary and final reminder of the collection's focus is provided.

The essays in the collection, edited by John Baden and Richard L. Stroup—who are also among the contributors—are generally well written; are very accessible to readers who do not have specialized knowledge in economics, natural resources, or any technical area; and offer a refreshing balance of ideas to those who may tire of emotionless recitations about market efficiency and of emotional sermons about environmental degradation.

In short, upon finishing the book, one has not only a certain feeling of optimism about man's progress in dealing with scarcity but a clearer recognition that much can be gained by focusing on the process chosen to deal with the problem rather than on the problem itself. I predict that those who read the essays will leave markers and notes along the way, reminders to reread, copy, and use at a later date.

Bruce Yandle is a professor of economics at Clemson University.

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