Happy Private Conservation Day!

Actually a day late, but I was waiting to post until The Heritage Foundation posted their video and audio. Private Conservation Day is held around the time of Thomas Jefferson's birthday to recognize the concept of environmental protection through private property rights.

Robert J. Smith, who coined the term "free-market environmentalism," was given the 2008 Lifetime Achievement Award from the CEI. In his speech, which you can find linked above, he gives an overview of the success of conservation through private property rights in the past, and opportunities for the future. It is about an hour long, but well worth the time.

For those who don't want to take the time, I'll summarize. Private property rights improve environmental conservation, from the time of the first settlers of the Americas to today. The government's attempts to protect the environment through regulation and government ownership fail. Mr. Smith gives many examples in his speech. We need to know how much land the government owns (some estimate it to be above 50%) and what the resources on those lands are so that we can begin to debate if private ownership would be better.

A Hybrid Hummer?

Not likely, but even the Hummer cannot crush economic forces:

With sales of the brutish H2 in a free fall – they dropped from 28,898 in '04 to 12,431 last year – new Hummer models will be smaller, shorter, lighter and more fuel-efficient, says Martin Walsh, general manager of the division.

Of course this development alone is not going to make much a difference to our planet, but it is evidence that even the companies without the slightest sympathy for environmentalism cannot escape the reality of the changing market.

The Hybrid is So Yesterday

The auto industry is going green:

Just as Toyota's hybrid Prius went from being a curiosity into a best-seller, so air cars may follow suit. Given the pace at which manufacturers are developing greener vehicles, that day might come sooner than anyone thinks.

To be clear, I don't know if any of the specific technologies mentioned in the article will pan out. But the important thing is that the auto industry recognizes that this is the future. Increasingly, green means profits. It won't be long, in my opinion, before the hybrid is the technology we are trying to phase out in favor of better, cleaner, and cheaper technologies.

Capitalism 101: Profits = Good

Oil executives recently were dragged in front on congress by the ears to explain how they could have the audacity to make a profit.

What strikes me as odd is that the same people who are so upset about the obscene, below-average profit margin of the oil companies also think we should get rid of oil in favor of ethanol and biofuels. (More on why those are bad ideas another day.) This is evidence of a fundamental misunderstanding of the free market.

When a resource becomes scarce, its price goes up. The rising price may mean a good profit for oil companies for now, but it also signals something of the future. There are two options:

1) The oil companies will realize that they must invest their profits in the development of other forms of energy if they want to survive in the future. As gas prices go up, consumers will demand alternatives.

2) Oil companies will ignore alternative forms of energy, and then go out of business when other, smarter companies find better alternatives and sell them for less.

Either way, the consumer and the environment win, without the need for a single government hearing.

On a related note, a pop quiz:

When companies make a profit, who keeps the money?

A) The CEO
B) Stock holders
C) Fat, suspender-wearing guys with cigars
D) None of the above

If you answered D, you're right! Profit, by definition, is what's left over after everyone else has been paid. Profits, then, are used to re-invest in the company, creating jobs, fueling innovation, and other evil free-market plots.

Free Market Works to Save Forest

An investment group purchased wetlands in order to make money by conserving the resources:

The group, called Ecosystem Investment Partners, is at the tip of a paradigm shift that is turning one of the bedrock notions of free market economics on its head. “The fundamental pattern has to do with supply and demand,” says Adam Davis, a business sustainability consultant and one of EIP’s principals. “There used to be very few of us people out here on Earth compared to the size of natural systems. But with 6.5 billion of us, and with our consumption and production of resources per person going up and up, there’s a new relationship of supply and demand. Ultimately, it’s that new relationship that creates the financial value of natural systems.”

...

Some environmentalists balk at the new approach, arguing that moral suasion should be enough. They also object to the commoditization of nature and are repelled by the idea that the same sector of society that has historically destroyed the environment, the business sector, will now be the primary beneficiary of efforts to restore it. Proponents, however, say they are just being practical. “From a pragmatic point-of-view, all the indicators are going to continue to go down in terms of planetary health unless you price things into our economic system,” says BSR’s Stewart. “It is scary,” says Gretchen Daily. “It’s economic forces that have taken us to the brink. But we need a force that powerful to bring us away from that brink.”

The heart of environmentalism is the idea that nature is valuable. It turns out it is not only valuable in the "priceless" sort of way, but sometimes in real dollars. Businesses and environmental groups are finding that preserving nature is in the interest of their bottom line. The article above is just one example. The company I work for bought a huge plot of land that the city wanted to preserve. Instead of restricting growth, the city sold it for cheap, with the agreement that the company would only develop a small percentage of the land. This was also in the interest of the company, who estimated that the unique work environment they could create would attract better workers, and the land would pay for itself in a matter of years in increased productivity. This company also put in geothermal heating that not only protects the environment but also will be a good long-term investment.

While the issue of carbon credits that this article also brings up is complicated, that will have to be a post for another day. I agree with the basic premise that since the environment is valuable, it is in the interest of the free market to preserve it.

I'll bring up one more point that the article didn't get to. If we truly are facing a situation were natural resources are going to become scarce in the future, that means that those resources will become more valuable. Scarcity increases value. Considering that, wouldn't it be a great business move to buy up a whole lot of natural resources, and then do nothing with them? They will be worth a lot more in the future, right? Although the article left it to our imagination to figure out exactly how they planned to make money, it seems to me this is just what the Ecosystem Investment Partners did.

This is the first of many posts I plan to write how free-market environmentalism is, or could be, at work to save our environment. All of these posts will have the label, in the news.