Bush Should Apply the Ownership Society to Environmental Issues

Unfortunately, but not surprisingly, little mention was made concerning environmental issues in President Bush’s State of the Union address. Critics will say this is because the President had nothing new to offer on the environment, but they’d be wrong.

Indeed, President Bush has touted the "ownership society" as a solution to a variety of policy problems, including health care, education and retirement. He has yet, however, to extend the ownership ideal to environmental issues. This is an oversight in need of correction. Government programs and policies, some begun over a century ago, have created perverse incentives that cause environmental harm. If these distortions were removed, the environment would improve.

Take, for example, one of the few environmental issues that the President did mention in his address: Rebuilding New Orleans. Sadly, the Feds seem hell-bent not to learn from their mistakes. The President has promised to rebuild New Orleans "bigger and better" — bringing all of the people home at the federal government’s expense. This is foolish.

Federal policies, including subsidized flood insurance and Army Corp of Engineers flood control efforts, turned what could have been a bad weather event into a catastrophic human tragedy by both encouraging people to build in flood prone areas and by contributing to the demise of thousands of acres of wetlands off the Louisiana coast which would have otherwise reduced the impact of Katrina.

The National Flood Insurance Program (NFIP) and U.S. Army Corps of Engineers’ flood control efforts shift the cost of insurance and physical protection against floods from property owners to taxpayers. From 1928 through 2001, the Corps spent $123 billion (adjusted for inflation) on flood control projects nationwide.

Besides encouraging people to build their homes and businesses in areas at high risk of catastrophe, these projects also disrupt wildlife habitat. Nationwide, pollution from subsidized coastal and flood plain development has contributed to the decline in oyster beds, sea grasses and other flora and fauna.

Ending these programs wouldn’t prevent property owners from developing their lands as they choose, but it would ensure that property owners, rather then the general public, would bear the full cost of those development decisions. Since the cost of property development decisions are high, less unwise development will likely occur and the environment will be better off as a result.

Another policy area that would benefit from the application of the ownership society idea is agriculture subsidies.

Since 1995, the U.S. government has spent approximately $144 billion on direct and indirect agriculture subsidies. As a result while prices for grains, soybeans, sugar and cotton have all fallen (some to near record lows) the amount of acreage devoted to these crops has increased dramatically. For example, despite that fact that in 2001 soybean prices were their lowest levels in 10 to 15 years, the acreage devoted to soybean cultivation increased a million acres or more every year from 1997 to 2001. And, since 1996, the production of grains and seeds exceeded demand by more than 87 million metric tons, yet most crop prices dropped by nearly 40 percent! Much of this excess grain has been stored at government expense.

The environmental impact of agricultural subsidies is profound. In order to produce more, farmers convert wetlands and wildlands to agriculture, intensively use fertilizers and pesticides, and divert water from rivers and streams. Indeed, roughly half of U.S. wetlands lost from 1986 to 1997, more than 300,000 acres, were converted to agricultural use. And fertilizer and pesticide runoff from farmlands contribute to destructive algal blooms and the 7,000-square-mile dead zone that appears every summer in the Gulf of Mexico off the coasts of Louisiana and Texas.

Under the present system, agricultural producers bear only a portion of the economic and environmental costs of their decisions. Subsidies encourage the overuse of water, pesticides and herbicides, and the conversion of wetlands to crop production. Yet it is the public that suffers from higher food prices, fouled water, and fewer wetlands and wildlands. If farmers bore the full costs of their choices with regard to the amount of acreage farmed, the crops planted and the intensity of chemical and water use, they would likely reduce their use agricultural inputs, and some might even go into other lines of work where incomes are higher.

Government subsidies for coastal development and agriculture have severed the link between the decisions of individual property owners and the often harmful environmental and economic impacts of their choices. Applying the ownership society concept to these and other environmental issues would make this President Bush what his father rhetorically claimed to be — the environmental president.