The Upper Midwest has a lot of water. We who live there value it, especially our lakes and rivers. These are part of our culture, our collective ethos. But we don’t agree necessarily on how best to protect them.
In Minnesota, we are arguing about requiring vegetated filter strips along all public waters. At the federal level, the Trump administration just canceled a rule limiting the polluting of streams in the course of coal mining.
So we are not all on the same page even though water is the topic. But the underlying economics is the same, and this is a good time to consider it.
First, the legal principle that people should be free to use their property as they see fit as long as doing so does not harm someone else is an old idea. Economists call such harm to others “external costs.” Water pollution is a classic example..
Controlling external costs is not some whim that inherently reduces property rights. It is a conservative principle at the heart of the preserving private property rights. Of what value is ownership if someone else can destroy your property by doing things that have external costs?
Second, limitation of property uses that harm others cannot be absolute. There must be some rule of reason. If we didn’t want to hurt others at all, we could not mow our lawns or grill steaks. Truck-engine brakes would be taboo, as would body shops’ paint-booth vents. Every property owner eventually affects others. So we need agreement on common-sense exceptions to the underlying no-harm-to-others principle. Agreeing on such exceptions isn’t easy.
Third, years of customary practice create implicit property rights. If one could burn wood in stoves for centuries, then people take this as a right. If farmers were free to spread manure on frozen ground for generations, then requiring them to build expensive storage instead seems a “taking.” If one always could mine coal in West Virginia without attention to water downstream, then new regulation will be deemed a “war on coal.”
However, technology can change customary practices. We did not limit sediment in streams from farmers plowing up and down hills. But in recent decades, farmers have used increasing quantities of agricultural chemicals. Now soil washing off of a field that inherently carries complex chemicals harms life. “Mountaintop removal” coal mining, in which tens of thousands of tons of rock and soil get bulldozed over the edge of the hill, befoul streams more than underground mining.
Fourth, the more diffuse the pollution, the knottier its challenges. Decades ago, a coal-distillation plant near my neighborhood created measurable smoke. The sewer from my hometown visibly affected the next town downstream. Solutions to these problems, though not easy, could be specific.
But what about myriad gas-powered lawnmowers or charcoal grills? Who is responsible if asthmatics suffer from particulates? What about thousands of hobbyists who spill oil in their driveways when maintaining their cars? Or cat owners who let Fluffy out for exercise?
Each of these actions has small impacts when taken alone. When aggregated across millions of people, there is major damage. There is a fallacy of composition. A septic tank, verdant lawn and sandy beach benefit any single cabin owner. But if all cabin owners achieve these, the lake is ruined for everyone. Your cat may get exercise, but if hundreds of cats are let out, thousands of songbirds die.
Increasingly, rural towns must install expensive equipment because nitrate levels are increasing in their drinking-water aquifers. That is due to use of nitrogen fertilizers. There are clear economic incentives for an individual farmer to use these at levels beyond what is optimal for society as a whole. But which farmer’s nitrogen ends up in what aquifer? You cannot assign responsibility the way you can if noise from my teenager’s kegger wakes up your baby or if drift from your spraying dandelions kills my tomatoes.
The truth that information is valuable but expensive to compile applies in spades to external costs like pollution. For nearly a century, economists have argued that taxing harmful emissions can reduce pollution far more efficiently than command-and-control rules mandating use of certain technology. A broad set of GOP ex-officials, including Henry Paulson and Robert Gates, just delivered a document to President Trump endorsing this view. Virtually all economists agree with it. It is as uncontroversial a position as there is in my field, as broadly accepted as the gains from trade.
Taxing emissions requires measuring them, however, and while that is easy for point sources like power plants or sewage treatment facilities, it is harder for nonpoint sources like farm drainage.
That brings me back to riparian filter strips. They help but are no cure-all for ag-runoff problems. The political effort needed to get them in place is a cautionary tale in regard to dealing with even tougher farming-related environmental problems.
Critics of the rescinded coal-water quality rules may have been right about the cost of these versus their benefits. I personally am not qualified to judge. But it seems the rescission was instead an old-fashioned refusal to admit that a problem even exists. There was no talk at all of following the “repeal” with any sort of “replace.” Anyone who has ever visited mining areas of West Virginia knows that for 150 years we have erred on the side of allowing environmental destruction in these hills. This seems like one more chapter in a shameful history..
St. Paul economist and writer Edward Lotterman can be reached at firstname.lastname@example.org.