This post was taken from our new book, Mine !: How the hidden rules of property control our lives, available March 2nd. To learn more about the book, visit minethebook.com.
Yesterday we introduced Al Appleton and showed how he convinced New York City to invest in green rather than gray infrastructure, in trees rather than concrete. The result: impressively clean drinking water. Today we explain what all of this has to do with property.
We tend not to think about property when we talk about the environment. The advantages that we receive from nature – the clean air we breathe, a stable climate, schools of fish in the sea, picturesque views over landscapes – seem to be goods that are common to all. That’s a nice idea, but it’s also a problem.
Shared ownership works well when resources are abundant, but often fails when the population grows and technology changes. When valuable resources are free, we tend to take too much. The result of shared ownership is that we are overfishing the oceans, cutting down tropical forests and overusing the atmosphere by emitting greenhouse gases at historically high levels and driving climate change. At this rate, the world of our children and grandchildren will be very different from the world we grew up in, and not for the better.
Just as the watershed provides Catskills with clean drinking water, so nature offers all sorts of critical services that we take for granted. Insects pollinate our plants. Microbes in soils break down waste and create fertile fields for agriculture. Coastal swamps protect against storm surges and provide habitat for young fish. These are all examples of shared resources that benefit everyone and that do not belong to anyone. We all enjoy the wild birds and butterflies that fly around us. But the people whose land provides the habitat for this animal world receive no compensation for this. If they don’t own the resources and cannot charge them for them, there is little reason to protect them or invest in them.
For example, wetlands can protect cities by slowing storm surges or filtering drinking water. When landowners turn wetlands into homes or farms, they can benefit financially, but the community is far worse off from flooding and dirty water. Since no one owns the services of wetlands like flood control and water treatment, landowners do not consider the value of these services when deciding how to use their land. If the choice is to make a living from managing the wetland or nothing from maintaining the wetland, the choice is easy. Fill in the wetland.
Appleton’s great insight was to innovate in property design. He told the landowners at Catskills that New York City would treat them as if they owned the environmental services associated with their land. We don’t think twice about paying for potatoes or coal tied to land. So why not pay farmers to improve water quality? Appleton developed a ownership tool that wealthier backcountry urbanites could use to pay poorer backcountry farmers to maintain a cleaner environment. He showed how to motivate farmers when there is no state law that gives them ownership of the environmental benefits their land offers.
This approach of creating what we call ownership of the abundance of nature has exploded in recent decades. James Salzman has worked with governments around the world since 2000 to develop payment systems that compensate landowners for providing natural services. Most recently, he identified over 550 active “ecosystem services” programs worldwide with estimated annual transactions of $ 42 billion.
This strategy is trying to save the world’s rainforests. Tropical forests contain most of the world’s biodiversity and sequester large amounts of carbon from the atmosphere, which plays a crucial role in slowing climate change. Deforestation is responsible for up to 20 percent of global warming. Today swaths of the Amazon forests are burning, often referred to as the “lungs of the planet”.
The basic problem is that people who live in these forests do not have the environmental benefits that they offer. You can’t charge for wildlife habitat or carbon storage. Although these resources are vital to humanity, we get them for free. Unsurprisingly, forest owners and squatters instead focus on things to sell. They burn forests to clear them for pasture, logging, and agriculture. The challenge is making trees worth more than cutting them down.
Norway is doing just that, trying to offset some of the climate damage it has caused by extracting North Sea oil. Thanks to its “sovereign wealth fund” – profits made by the country from oil sales – Norway has spent tens of billions of dollars paying people in the Amazon, Indonesia and Mexico for their efforts to reduce local deforestation rates. As the rate of forest loss slows, more trees stand still and more carbon is extracted from the atmosphere.
China has made an even bigger investment. Payments for ecosystem services have become a central part of the country’s nationwide environmental protection strategy. China has already paid over $ 50 billion to farmers and households to increase forest cover. By planting trees instead of cutting them down, China preserves flood protection, wildlife habitat and water quality – all common goods that come with investing in trees.
So can we use property to lead people to protect nature instead of destroying it? Absolutely. Globally, new types of property to promote environmental goods are changing the behavior of farmers and forest dwellers, logging companies and large landowners – they are now competing and making money to protect the environment.
With a billion dollar program here and a billion there, ownership of ecosystem services adds up. These programs are already extensive, but not nearly big enough. The key to addressing some of the world’s greatest environmental challenges could be encouraging people to bring up more and more aspects of the natural mine.
Tomorrow we’ll end our week as guest bloggers about the Volokh Conspiracy by bringing all of these stories together.