Got Environmental Problems? Think Government.
Foreign Policy identifies true environmental catastrophes, but misses the main cause.
The Gulf oil gusher may be capped (for now), but "many of the world's greatest environmental catastrophes continue, with no end in sight," according to Foreign Policy magazine. Foreign Policy lists five such catastrophes: Nigerian oil spills, Chinese coal seam fires, Haitian deforestation, desiccation of the Aral Sea, and the Great Pacific Garbage Patch.
While Foreign Policy identifies five true catastrophes, it fails to grapple with the main problem behind what is causing them. So what does the Gulf oil catastrophe have in common with the five ongoing disasters? The first question you should ask whenever you see someone behaving badly with respect to the stewardship of the natural environment is: What is the government doing that encourages people to act that way? It may turn out that government policies are not at fault, but history shows that it is usually a good place to start.
In the case of the Deep Horizon oil spill, BP's risky behavior was encouraged by the congressionally mandated $75 million cap on liability on damages to natural resources and economic losses suffered by private parties resulting from offshore drilling spills. In addition, by placing lots of promising onshore domestic petroleum resources off limits to exploration and production, Congress encouraged oil companies to make riskier endeavors offshore. Still it must be said, that as bad at the Gulf spill is, it the first such huge domestic oil spill in 40 years, and the U.S. has the resources to ameliorate its bad economic and ecological effects.
But what about the five big ongoing disasters highlighted by Foreign Policy? Are bad government policies behind them? In a word, yes. The annual Economic Freedom Index put together by The Wall Street Journal and the Heritage Foundation combined with the World Bank's Rule of Law Index provide a good shorthand way to illustrate bad policies. Let's briefly consider each of the five catastrophes.
Five decades of Nigerian oil spills are the first ongoing disaster featured by Foreign Policy. On the economic freedom index Nigeria ranks 106 out of 183 countries and is described as mostly unfree. On the rule of law index, the country garners a pitiful 11 out of a possible 100 score. The Nigerian government owns all petroleum resources and works in partnership with Western oil companies to produce it. Since 1966, some 546 million gallons of oil have been spilled—the equivalent of an Exxon Valdez spill every year. Oil accounts for 90 percent of Nigeria's exports and 80 percent of the government's revenues. Naturally, the government is more interested in maximizing revenues than it is in reducing pollution. In fact, the government has been so assiduously draining the Nigerian National Petroleum Company of revenues that the company is reportedly now insolvent. Foreign Policy notes that the number and severity of spills may increase as oil exploration extends into more remote and difficult terrain.
The second big ecological disaster cited by Foreign Policy is the massive coal seam fires in China. China ranks 140th on the economic freedom index (mostly unfree) and scores 45 out of 100 on the rule of law index. Coal seam fires are a vexing problem around the world. Given the right conditions coal seams can spontaneously ignite; however, most occur in abandoned mines. Foreign Policy specifically cites 62 underground coal fires in the province of Inner Mongolia that have been burning since the 1960s. That was when the coal industry was entirely run by the country's communist government. The Chinese constitution explicitly states that "mineral resources are owned by the state." As part of its drive to develop its "socialist market economy," the Chinese government now leases some mineral rights to private companies. China is currently the world's largest producer of coal and the mineral provides 70 percent of the country's energy. The underground fires burn up more than 20 million tons of coal annually, releasing about 2 to 3 percent of the world's greenhouse gases produced by fossil fuels. In June, the Chinese government announced that it was launching a $25 million initiative to quench half the fires in Inner Mongolia by 2012.
The third ecological calamity is deforestation in Haiti. At 141, Haiti ranks just after China on the economic freedom index and the Caribbean country ranks even below Nigeria on the rule of law index, earning a score of 6 out of a possible 100. Haiti is 98 percent deforested which causes vast amounts of erosion and boosts flood damage from frequent hurricanes. Foreign Policy blames charcoal production for most the problem and points to the next door Dominican Republic as a success story because it banned cutting down trees. Haiti's actual problem is the lack of secure property rights. Less than 5 percent of Haiti's land is accounted for in the public land records. On the Property Rights Index Haiti scored the same as Cuba, 10 out of 100 possible points. The Dominican Republic did a bit better at 30 out of 100 points. The importance of property rights for protecting natural resources is illustrated by the fact that in 1900 only 1 percent of Puerto Rico's primary forests still existed and in 1953 its secondary forests covered only 6 percent of the island. Today 32 percent of Puerto Rico is forested. Also note that Haiti averages 781 people per square mile, while Puerto Rico averages 1,135 per square mile.
The shrinking Aral Sea in central Asia is the fourth ecological catastrophe cited by Foreign Policy. Since 1960, the world's fourth largest lake has shrunk by about 70 percent, leaving former port cities and fishing villages high and dry. This disaster is entirely the result of Soviet communist central planning in which the rivers that sustained the Aral Sea were diverted to massive irrigation projects that aimed to create a cotton industry in the deserts of Uzbekistan and Kazakhstan. The freedom index rankings are 82 and 158 for Kazakhstan and Uzbekistan, respectively. Uzbekistan scores a miserable 10 points out of 100 on the rule of law index, while Kazakhstan scores 24 points. Interestingly, Kazakhstan has recently engaged in engineering projects that have somewhat restored the Northern Aral Sea.
The last ecological disaster underscored by Foreign Policy is the Great Pacific Garbage Patch. The currents of the North Pacific Gyre collect a huge amount of plastic waste from East Asia and the west coast of the U.S. and funnel it into an area variously estimated to be the size of Texas to the size of the continental United States. Over time wave action and sunlight break up the plastic into ever smaller bits that float in the top 100 feet of the ocean. Marine creatures are harmed when they mistake the plastic bits for food. There is also the possibility that toxins released by the plastics can accumulate in the food chain eventually reaching consumers on land. The Garbage Patch is a classic example of the tragedy of the commons. If there is no clear ownership of rights to a natural resource, the users of the resource will overexploit it. In this case no one owns the ocean and therefore no one is responsible for protecting it. This same tragic dynamic of overuse and overharvesting operates in other open access commons such as rivers, airsheds, fisheries, and many tropical forests. Some researchers are working on methods to capture and recycle the plastic, perhaps turning it into diesel fuel or polyester clothing. More fancifully, some Seasteading aficionados think that recycling the oceanic plastic could be an economic opportunity.
Foreign Policy largely missed one of the central features of all of the ecological catastrophes it highlighted: defective or non-existent property rights. In the case of the BP and Nigerian oil spills, the resource is owned by the government which sets up the rules for how resources are managed. The Chinese coal seam fires and the draining of the Aral Sea took place under communist regimes where private property was outlawed. In the sad case of Haiti, lack of secure property rights means that few have any incentive to reforest land. And the absence of property rights in the ocean results in it being treated as a global dump. The lesson is that establishing clear property rights encourages resource exploiters to behave responsibly. And if they don't, property rights enable rest of us to hold resource exploiters responsible for the damage they do.
Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.
Disclosure: I nearly forgot to mention that I spent my own money to buy two hundred shares of BP a couple of weeks ago. Back in the mid-1990s, BP took my wife and me on a tour of the Prudhoe Bay production facilities. The wind chill was -70 degrees.
