Environmentalism and Privatization

0:00That's the argument of an economist at the Fraser Institute, a well-known conservative think tank. Walter Block says privatizing our national resources would be more effective in cleaning up pollution than government regulations. Block used a lake as an example, which could be sold to the highest bidder and used by the private owner in a way society values most. I would auction off the lake, and now you own the lake, Mr. Lake, and you had been allocated in proportion to the way you thought you could maximize profits, i.e. in the way that you thought you could maximize consumer desires, because that's the way you maximize profits in a market system. Now, you might make a mistake. If you made a mistake, you would lose money and you would haunt us less in the future.

0:47Whereas if you were a public official and you made a mistake, you would not go out of business in quite the same way. See, the same things apply. It's just that one is more efficient than the other. The Fraser Institute also released data which it says shows that national newscasts in our country use environmentalists more often than scientists when doing stories about pollution. Walter Block, a spokesman for the institute, says the principle of private property also applies to private industry. When you own it, you take care of it. The Fraser Institute is a Vancouver-based conservative think tank. Thank you, Cheryl. Tonight, the environment for sale, a bright young spark and a current affair. First up, sell it to protect it, preserve the environment by privatizing.

1:36And Dave Gehry tells all about his date with a current affair. As the public outcry over the state of the earth grows louder, many people are calling for more controls and tighter regulations to be placed on enterprises that pollute. A recent Fisheries and Oceans Department memo indicates that the government isn't fully enforcing existing regulations. So would more regulations work or not? According to the Vancouver-based think tank, the Fraser Institute, more rules won't help.

2:21A new book published by the Institute suggests selling environmental property rights. The reason being that by giving a company full property rights, they will protect it as if they own it. Air and water pollution could be controlled by setting politically acceptable levels of waste treatment and auction off the rights to pollute to that level, so that polluters pay full value for what they discharge. The Fraser Institute asserts that ecological disasters stem not from the operation of free enterprise but from its absence. Joining me in our studio is the Senior Economist of the Fraser Institute, who is also the editor of this new book, Economics and the Environment, A Reconciliation, Dr. Walter Block. Now, I'm sure our set-up piece didn't fully flesh out exactly what the theory is, but can you briefly tell us what you feel?

3:12Well, I think that the lead-off was pretty accurate, but not fully. We're not against environmental regulations. On the contrary, we think that that's one of the areas in which government has fallen short. Namely that for decades, even hundreds of years, government has failed to uphold property rights by allowing what we would call trespass. I mean, if I dump my garbage on your front lawn, it's a clear violation of your rights. It's a trespass of your front lawn. But if I burn it up first in my house and then I send it wafting over to your front lawn in the form of soot and cinders, Somehow the same rules don't apply, and I think they should, and that's one of the conclusions of our book. What happens though, in theory I'm sure that that works, but what happens when the polluter, or the person who's at fault, pollutes so widely that you have to have one body actually go to bat for you, does that not work?

4:08Well, in the old system under the common law, people would invariably get an injunction against a polluter for violating their property rights. But governments, I mean, our constitution doesn't even mention property rights. And I think that's one of the greatest oversights of any constitution. If private property rights were protected, and there was a manufacturer spewing forth material on all incendiary, And I think not only do we need regulation, we also need privatization. All too often government is involved in owning forests or prohibiting private ownership in the case of animals that are in danger of becoming extinct, such as elephants or hippopotamuses, and I think that the experience in some of the African countries shows that those countries that have moved toward privatization or allowing hunting rights or allowing the people in the local communities to gain the benefit of the ivory have shown that the herds have been expanding.

5:13Countries such as Malawais in Bobway, South Africa, the elephant herds have been increasing in those areas. So it seems to work in wildlife, but how do we apply that in British Columbia to our air and our water? How do we privatize our air? Well I don't think that it's technically possible to privatize air. Water can't be privatized except when there's a shortage of it. If ever we go to the moon or Mars, we might have to have markets in air, but we're a long way off from that. I think that what we have to do is uphold property rights and reject trespass. Now with regard to water, there is no reason that we couldn't begin toward at least thinking about privatizing lakes. For example, take a typical lake where on the one hand you have recreational users and And on the other hand you have say a log firm or a lumber mill or what have you.

6:05They want to use this lake in mutually incompatible ways and each of them doesn't take into account the value to the other of the lake. Whereas if one owner owned the whole lake, he would say in effect to the logger, well how much will you pay me to use this lake? And he'll say to the recreational people, how much will you pay? And whoever will outbid the other for the resource will get to use the resource. But where does that leave the public, Walter, because we have a group that wants to use Howe Sound. A mill buys Howe Sound because they have the money to buy Howe Sound and that's what they're going to pollute. We don't get to use Howe Sound unless we pay for it. That does not follow at all. Even if a lumber mill bought Howe Sound or any given lake, if the value placed upon that resource was higher for recreational purposes than for lumber milling, they would find it

6:53in their own interest not to pollute that lake. You see, we want to have an optimal amount of pollution. We don't want to have zero pollution, which would mean that we don't have logs. We need both recreation and logs. It's a matter of allocating resources, and only the market can rationally allocate as they're learning on the other side of the iron curtain. But aren't the areas that aren't recreational properties or that don't appeal to people who want to use that particular area then going to be bought and used as a polluted area? We want some polluted areas, not every lake has to be used for recreation, just as not every piece of land has to be used for recreation, some of it has to be used for commerce and industry. People want both. So it's not that we're in favor of recreation and we're against industry, we want both. And the market is, I think, the best means that we have to allocate this in a rational way.

7:46So let me just say this, we have a 400 page book and we have just a few minutes to describe all this. So obviously we can only give a flavor of it. Let me just say that for those people that are interested in the audience, if you write me, Care of the Fraser Institute at 626 Bute Street, Vancouver, V6E3M1, we're in the phone book for those that didn't get that down, I will send you information on how you can get this book And I will also give you a free four-month subscription to Phrase a Form, which is our monthly publication. Now, I'm sure there's people out there saying, oh, here's another right-winger. All he wants to do is get money out of this book instead of talking about the issues. Do you feel, first of all, personally, that the environment is in danger in British Columbia and that this book will solve those problems if that is instituted?

8:36Is it theory or is it reality? Well, I think it's both. It's a theoretical apparatus and it certainly has real-world applications. And that is what the book's about, and I'm afraid we're out of time, but I think the The book is well worth picking up, and I think the theories have some valid applications. Thanks for coming in, Dr. Block. My pleasure. We'll have more on West Coast after this break.