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December 02, 2006

Hidden Costs

Army personnel are all-too-familiar with the plight of the red-cockaded woodpecker. An endangered species, the woodpecker has an affinity for military posts, which often have large tracts of woodland. Since they're endangered, the Army marks all trees that contain a woodpecker next, and heaven help anyone who gets within 50-100 meters of a nest. It can put a dent in training, but the Army doesn't fool around when it comes to the environment.

Outside the military environs, however, people have a few other options for dealing with endangered species. And in the town of Boiling Spring Lake, North Carolina, residents have chosen an interesting method: clear-cutting every pine tree in the area to ensure their property values aren't harmed.

Very few people would agree with the idea that businesses ought to be able to inflict the costs of their negative externalities on others. If I were to make, say, Thneeds by cutting down Truffula trees and starving the Brown Bar-ba-loots, it would be inappropriate for me to receive all the profits for my Thneeds while the local community had to bear all the costs of missing Truffula fruits, starving Brown Bar-ba-loots, Swomee-Swans who can't sing because of all the smoke from the Thneed factory, and so on. Because I created those costs, by rights I ought to pay for them.

Yet this is precisely what we do with environmental issues under current laws. While I can't condone property owners acting in such a way as to further endanger the woodpecker, I can certainly understand their feelings. If a red-cockaded woodpecker is found on their property, their property values will drop into the sewer, as few people will want to buy a property where they will face onerous restrictions on what they can and cannot do in order to protect the woodpeckers. But if we as a people agree that we want to preserve species like the woodpecker, why should only the people who have the misfortune to have a woodpecker on their property pay the costs of preserving it?

Of course, there's a very good reason why we inflict these costs on the few rather than agreeing to pay for the costs collectively: if the government were forced to pay for those costs rather than simply using government power to force the unlucky few to pay, there would be less agreement on environmental protection. Sure, we might still agree on protecting photogenic species like the red cockaded woodpecker or national symbols like the bald eagle, but there would probably be a lot more objection to protecting fish or insects. So we hide the costs, except for those people whose luck allows them to own property that is devalued. It may be effective, but it's not honest.