 I am a person who admires government very much. I see government in the context of a sacred trust that is the basis for the quality of life, for the continuation of values, for the hopes of future generations. And I see it having been successful even though we don't always give it credit. I look upon things like social security, highways, railroads, defense, research, water. Airports, etc. These are government programs that I doubt would have happened had it not been for progressive government in the United States. Other nations who haven't been so fortunate don't have a similar base. A change for me, and I must say that when I started out in a career, I was as bought as conservative as you could be politically. I grew up in a small town in the Midwest, and everybody in town was a conservative voter, and so was I, and I worked successfully for corporations, was very competitive. But then I wandered around the world alone for a couple of years and saw a great deal that opened my eyes. The dilemmas of other nations that weren't so fortunate to have our free society, to have the structure of government that we had, the realization that many of the things I thought wouldn't work were working very well, whether it be socialized medicine or some other themes. So I adjusted a bit, admittedly. And then, having watched and been in government, I realized recently that we are undergoing a remarkable change, remarkable potential change for positive advance into the future. That occurs in part because of information management, computers, the ability to think in seconds, ideas that 20 years ago we didn't think were possible to consider. I remember René Dubose, a remarkable, wonderful scientist, said at that time before he died, he doubted very much that the human mind could even think ecologically before some of these computer programs were available. And so we've had a tremendous advance, and that frees us. It allows us to deal factually, it lets us move away from almost the mathematical modeling, the conjecture, the theories down to getting real and solving the problem. So government is capable of doing that, I would argue. And I think of a personal experience on the importance of information. In those years when I was in Sacramento, we had all the resources of the state that we were to deal with, and one of the most difficult was water because there was a drought on it at the time. And we would sit down in these meetings and we would glare at each other, the urban policy person would come and sit down, the ag person would come and sit down, and other interests at the table, and it was Liar's poker. We all had our database, and we didn't trust the other people's database at all. So we always had to talk, shouting at each other, and no advance occurred. And nobody was always theory, it was always mathematical modeling, it was always, I don't know. Recently I turned on internet, and there was a water program, every 20 minutes, information on the key water points in the state, flows and so on, public information, things that we would have dreamed of having back then, and they were just not even thought about. And so all of a sudden policy makers are able to advance tremendously in that area and a lot of others, in ways that I wasn't able to even consider, excuse me if they say. Got a problem? Help yourself? Thank you. Is that okay? Thank you. Another reason that government is now capable of remarkable advance that we are beginning to take part of and I believe clearly is going to happen, if we're to survive frankly, is the word management. One of the remarkable accomplishments of America as a nation has been the development of management, understanding the dimensions of a problem, structuring it with goals and objectives and solving it. It might be building a lectern or a factory or a dream, but we're very good at that. The rest of the world has copied us pretty much. Until recently government wasn't in a position to do that kind of thinking and that kind of carrying out of actions. The problems we face, California now has 30 million people. I talked to the head of forestry this week in the state and I said, how was your budget last year? He said, Jesus, we spent 250 million. Our budget hope was 250 million on fire control. He said there are now people in every grove of trees in the state where it's possible to do so. Everybody's dreaming of their retreat. He said our overrun was 175 million because we're trying to always protect people's houses all through the forests and the problems of dealing with population are starting to hit us. When you look at the world population levels, it's a very real problem that can't be discounted. It drives terrifying potentials ahead of us. Who will feed China, for instance? For those who discount some of these things and the importance of government management, I think in terms of my colleague from Montana, it is said that in the Ohio, Missouri river basins, when you get to New Orleans and have a drink of water, it's been through someone else's stomach six times. And considering all the beer they drink in Bozeman, it may be a major source. I'd say that positively there, was there with them. I think another thing we've learned to do is to communicate and educate. 25 years ago, we were not as enlightened as the American public is today. A lot of our educational television improved. I wish I were a student today. The tremendous opportunities to learn more faster. I would say further when I've had a personal experience, and a lot of them I guess, that gives me confidence about government. And what I think of just to pick one is salmon. I enjoy salmon and when the group of us went into state government those many years ago, one of our goals was to double the number of salmon that were available out the Golden Gate. One of 80 programs that we'd actually put together. I've been out several times so far this spring. The last time I went out I had my limit in 15 minutes of huge beautiful salmon. We didn't double the number of salmon. We tripled the number of salmon that are available now to fishermen and to the fishermen. How do we do that? It came up with the most remarkable breakthrough, cooperation. The idea was that there were a thousand miles of spawning streams that were plugged by poor logging practices of a century earlier. And the appeal was that if we opened those, we would indeed increase the number of salmon available by opening natural systems, not hatcheries, not technologies. And that occurred and we hoped to do it in whatever it was, 60 years. We did it in four or five years. Why did we do it? Because people got in the water and worked it out. School children, bank presidents, volunteers, professionals. It was a remarkable accomplishment of volunteerism, government, and industry coming together to tackle a problem and solve it. Goals and objectives. I suppose, and there are many other programs that have been very productive there from those years. One is called Ceres. We spent $4 million on a computer software program so that we would be able to have an 800 number so that every water user in the state can call and in your community be told how much water you should use for irrigation that day. So that you're not over-irrigating, which is one of the things that brought down the Roman Empire. It was too much water. It evaporates. You leave salts, more salts before long. You can't grow anything. We had wiped out the grain belt in North Africa, of Rome. And California has 300,000 acres out of production and other 600,000 endangered by this process as we started to turn it around. No individual could have done that. It wasn't an economic theme. It was a process of government serving the future. And it's not doing very well. A lot of other programs like it. One of the critics of the constant complaints, of course, is regulations that are damaging to free enterprise or whatever. And while that can be true, part of this progressive change is that we now understand enough that we can solve the problem. And industry, most of all, is moving out in front. Companies like 3M and Hewlett Packard are operating at levels above what the Sierra Club would expect. And this is changing constantly. No longer are we chasing simple economic models of growth. We're understanding that this is a complex condition. California's 30 million people are out of water, very close to being out of air, facing a lot of other problems that can only be solved by a cooperative endeavor sitting down working out together. This word cooperation and regulations deserves a further touch. I constantly turn toward several nations in the world that have put together a program to totally recover environmental quality. Put environmental threats behind us the way we put smallpox and polio behind us. We're now capable of that. We know enough. We have the ability to do it. And several nations are actually carrying it out. And I would like to show you in several overheads what is happening in the Netherlands where they made a decision to be an example for the world. And in doing so, they were able to have 80,000 industries, companies will say, move out and take the lead. And they are seven years into a 25-year plan for total environmental recovery. And they're very much on target. These are the basic themes that they have that they're managing for. And they're the trains, the locomotives pulling the trains of environmental recovery in the nation. I mentioned information. This is an example of what we don't have. The Dutch know exactly where their pollution is coming from. And when industry said, all right, we know how to manage. You've got your statistics. Let's work together. Only don't harass us with a lot of micromanagement. We'll give you the information. And then let us respond in a legal agreement. Here's an immediate response from one of their dirtiest industries on their track as to how they would clean up. This isn't theory. This isn't make-believe. This is seven years into a program for a nation's total environmental recovery, funded with billions, not millions, changes and priorities. A reason to be hopeful to the point that the majority of the population of Holland is excited that they are providing a demonstration for the world for environmental recovery and demonstrating that government can work very well in doing this. Another advantage that lets government be more efficient. This is an example of a collective database and the result you can have. Every school child, every government decision maker, every corporate decision maker in a second can know right out the global what their effect is going to be of a decision. Say it's an energy choice. And that is an example dramatically of why we have, why at least I'm very optimistic about the future. In the clearest outline, it's a social contract. Children, bank presidents and corporations are involved and they are succeeding. The question that of course is asked, well, I would get this from every audience. Well, that's fine for Holland, but they're small. U.S. is big and complex and we're different and we could never do anything like that. A business wouldn't cooperate. This is an example of a major accomplishment where we were told that energy policy had to increase 7% a year forever. This was 20 years ago. Why? Because an economist had planned it that way. There was no real basis for it. We argued that wasn't the case. We stopped it there. We reversed it. An industry took the lead, as did others, to manage, by second point, the dilemma that the nation and state faced. And there are the results. We were told California will be in the dark if you guys follow that plan. 13 years later, you'll note, the economy had grown by about a third in trillions with no real net increase in energy. It was a matter of management and it demonstrates very clearly what the U.S. is capable of. But the real radical thought here is cooperation. That's what we haven't tried. We've gotten things so locked up. Everybody abusing government, particularly economists, make a living doing it. We all blame government. Well, government is us. And government is a remarkable only path for the future if we want to save America and the world. It's an important tool to use and we should use it. So I am in essence said that because of changes, government is much more capable and daily becoming more so. Information management, the profession of management itself, communication, education, a lot of other themes that add up to a capability that hasn't been there in the past. I've certainly criticized government and I hope I do many times in the future, but it's a changed ballgame. We can't deal with ideas from the past and survive. And these days I'm refusing to do so. The word sustainability is an interesting one. I would say sustainability is taking the word economics head on. There's a major change because as we're seeing the conditions of the world, whether it's threatened oceans, the problem of human waste going down the Mississippi, government has to be there to manage the quality of that water coming from the bars of Montana all the way to Missoula. Not Missoula, but where it was. Okay. So I would argue that sustainability will replace economics. The importance of it is that it has a social base as well as an economic one. I think that it provides a basis for public trust. If you don't have your children believing the future is possible, no nation is going to make it. Ask yourselves if you know any children who are worried about the future because they fear the environment is going to go away on them. The majority do. I disagree with the themes of privatization. The focus on the individual and other themes that so often the economists push. I think it was an interesting tool to develop the nation. I think, however, it is now outmoded, and I expect it, in fact, it already is declining as an agent of change. At one time you could say economists and their theories were the engine driving the American economy and the world economy. They've now become the caboose. And I don't want to leave without pointing out that I nonetheless agree with some points here. The idea of managing well and using economics, the polluter pays, the end to subsidies, wolf compensation is a small example. A lot of other themes are very useful tactics as tools to be included in the management process of solving the environmental dilemma by getting government out in front, cooperating with industry, and moving into the future. Thank you. Thank you, Huey. In an age of growing environmental concerns, leading resource economist, one of those economists who he was talking about, Terry Anderson is defining a new course for achieving environmental equality. He believes that market approaches can be both economically sound and environmentally sensitive. Terry's research helped launch the idea of free market environmentalism and prompted public debate over the proper role of government in managing resources. Government subsidies often degrade the environment he points out, but private property rights encourage resource stewardship and market incentives harness individual initiative for protecting environmental quality. His broad-ranging ideas have provided a new look at complex and seemingly intractable environmental problems. PERC, the Political Economy Research Center, which Terry directs, advocates free market environmentalism and serves as a forum for disseminating related research and information. Terry's the author or editor of 14 books, including Free Market Environmentalism with Donald Leal, which is the definitive treatment of the subject. He's published widely in both professional journals and the popular press, including the Wall Street Journal, the Christian Science Monitor, and Fly Fisherman. He's a frequently requested lecturer known for his articulate and provocative presentations, which we will hear in a moment. He's also an economic historian who's written extensively on the shaping of the American West and is a professor of economics at Montana State University. Thank you, Chris. I was pleased that Huey called me the caboose instead of another term I could think of that you might hear for economists. That was very polite, Huey. Economists, of course, are always the brunt of jokes, and most of them are well-deserved, I suspect. And a lot of them have to do with the kinds of models that we put forward as economists. And I won't burden you with too many of them. I'll just give you one that I got recently in an introduction, which was, you know what an economist is, don't you? And I was obliged to, of course, say no. And I was told that an economist is someone who is pretty good with numbers but doesn't have enough personality to be an accountant. I was then given my economist hat, which I thought I could wear for the evening speech. This Green-Viser, of course, typifies sort of the kind of approach that an economist might take, being obsessed with things like efficiency and the kind of modeling that Huey talked about. And I hope you'll bear with me for just a few minutes while I walk you through some fundamental points that I think you'll need to understand the rest of this lecture. Now, most of you probably had college education, so you no doubt had some economics. So I don't think it'll take too long to get through the material I have here. You'll understand that, of course, we have in economics these things we call isoquants that trace out the possibilities for producing various commodities using labor and capital and resources of the environment. And we can track how you'd combine these things to produce the exact amount that you'd want. And we could put on here budget constraints. And eventually, if you really study economics long enough, you get to understand... Well, finally we get to this resource conversion path that you can see here, this curve that shoots out here to the left. And then ultimately, really what's important is you get here to this curve right here, this BB curve, which shows the production possibilities that an economy is capable of producing. And then all you need to do is impose upon that the social welfare function which we all know about. And you find the tangency point which gets you to omega, which indeed is what economists call the bliss point. Now, if you've had economics, you've probably seen all that crap. That's really what a lot of economics is about. And it's a lot, in a sense, of what I learned in graduate school to a certain extent. I can remember very fondly the lecture when we went through these graphs and accompanying them the mathematics, which was always a bit difficult for me. But I can remember so distinctly as the professor went through and there was all this logic behind these neat graphs. And then when we got to omega, and I knew that as an economist I could take society to the bliss point, I sort of thought, I mean, what more could you ask out of your career than be able to take society to the bliss point? You know, I mean, you could be a doctor, you could win a Nobel Prize, but taking society to omega is where it's really at. Well, of course, if you think that's what I believe today, you're wrong. In fact, perhaps Huey and I were ships passing in the night at some point, because I started graduate school as a sort of left-wing liberal. And when I found out that I could take society to the bliss point, if only I knew the social welfare function and the production function, I thought, this is great, you know. I mean, I'll get a job in government and I'll be able to solve all these problems. I was once at a cocktail party, this was many years later, after I had made the transition going the other direction from Huey. And I was sitting next to a dentist, I recall, and after a few beers, he said, you know, I've never heard an economist talk the way you do. He said, in 25 words or less, how did you come to that position? He'd obviously heard economists and professors before. And I said, well, I can give it to you in two words. It took me a while to condense it down. And I said, I learned in graduate school in the first six weeks, incentives matter. And as soon as I got those words and understood what that meant, I changed the way I thought about how we might organize the cooperation that we need in society to solve all kinds of problems, not just the production of bread and fish and guns and butter. And eventually, for my career, more importantly, how we might produce more environmental amenities. Indeed, in Chris's introduction, she said that Huey and I share, I think, not just a compassion for killing those animals, but a passion for that, but as well a passion, I think, for how we might improve environmental equality. If you really believed in the graphs that I had up here showing these nonsense ideas, in my opinion, if you really believed in them, you'd have to understand, first, in order to really believe you can get to the bliss point, or I would put it differently, to believe that you can really truly plan, be it green planning or socialist planning in the Soviet Union. You need a tremendous amount of information. You need to believe that you can concentrate very much information in a few people who become the experts who, in Thomas Sowell's word said, this requires the special knowledge of the few to guide the actions of the many. If you believe you can do this, if you believe you can get to the bliss point, then, in fact, planning is a real possibility. But I don't think that the kind of information required to do significant planning is possible. Secondly, even if you could get to that required information, even if you could give me the information to find Omega, don't trust me. Not because I'm not a person of integrity, but because the pressures that will be put upon me to achieve Omega in light of a world where corporations might desire not to achieve Omega, in light of a world where individuals like you and like me might desire something than maximizing social welfare, then you have to understand that incentives make a big difference, whether we're talking about incentives facing a decision maker running a corporation or incentives facing a planner who might implement these plans. Now, at this point on my notes, I had crossed out because I thought, well, I don't want to dwell on this because surely no one would today hold this up as an example of how we ought to run things. And the example I have here is water. Now, here we talked about water, and I think there is no better example of what goes haywire when you have the government involved in a significant way in planning. While Stegner's written about it, as have numerous other environmentalists, there are no significant dams in this country that would pass any kind of sensible economic muster. None. I've written three books on the subject. I have found none that would pass such muster. Why do they exist? They exist simply because we had people who believed they could find Omega, who believed they could make the desert bloom like a rose. You can make the desert bloom like a rose, but at a tremendous environmental cost. Read the San Francisco Chronicle this morning on the Mekong River. We will spend, no doubt, as citizens of the United States through the World Bank and other development banks, tremendous amounts of money to build a dam on the Mekong River. All in the interest of progress, all in the interest of social welfare, all in the interest of doing good for those people. It is a case of planning. It is a case of management. It is a case of progressive change. All words that I think we ought to be very skeptical of. And I think there is no better example, or if you will, worse example of planning than water. So if that's the case, what's the alternative? And here I'll switch from my economics hat and put on indeed my environmentalist hat. Because I am an environmentalist. I believe that you can be an environmentalist. I actually do wear this hat. Not only does it absorb sweat, which I do a lot whenever I even walk up a set of steps, but in addition to that it unfolds and covers the spot on top and provides a sunscreen that's far better than even 15 or 20. Now, I obviously put on a red bandana to get a bit of humor perhaps, but I do want to emphasize that I think you can be an environmentalist and not necessarily be a more government type or more planning type. And as Chris suggested in the introduction, the way I think you achieve that is through what I call free market environmentalism. Free market environmentalism can be simplified quite easily. And over the years and the number of speeches I've given with 15-minute constraints, I've decided you can boil it down to two very simple tenets. The first tenet is, wealthier is healthier. If you look around the world and ask, I thought of this this morning when I was brushing my teeth and taking a drink of water in the hotel. I did not hesitate for one second to take a big gulp of water to put it on my toothbrush. I didn't hesitate for one second. I should have hesitated two months ago while lecturing in Guatemala and didn't. And I paid the price. Now what's the difference between Guatemala and the United States? The answer is quite simple, the wealth. And the wealth is what gives us the wherewithal to take care of environmental problems. And there can be little doubt today that wealth comes from free societies. Free societies that depend on market systems that give to people both the incentive to produce income and wealth and the signals through prices that tell us what to produce, when to produce it, where to produce it. In fact, the energy numbers that are up here are very revealing. They don't suggest, in my opinion, the great successes of planning, but rather demonstrate exactly what happened when we suppressed energy prices throughout the 1960s, subsidized energy delivery. I grew up thinking you should live better electrically with your elective toothbrush and garage door opener and the list goes on. We distorted the prices and encouraged people to not worry about energy consumption. Thanks to the Arabs, we got the big slap in the face that we should have had earlier and said prices are going higher, folks. And when they went higher, we responded. And we responded more because of higher prices than because some president told us to turn down the thermostat. Prices matter, wealth matters. The data are unequivocal and I draw your attention, coming close to home here for you, an index of environmental indicators published by the Pacific Research Institute here in San Francisco. I have a couple of copies. I'd be happy to give it to those people who need it the most. But the data in here suggests for the U.S. and Canada that we are improving and we have been improving and we will continue to improve. And the reason we can afford to do it is because we're wealthy enough. Two quick stories on that point. One, when a conference was being held and a group of blacks from Africa were being admonished, not to let multinational companies bring pollution to those countries. A black woman in the discussion session said, we would love to have a chance to die of cancer. It is an old person's disease. Think about what that means. Those people in African countries where the average age of death is 46, don't worry much about the problems that you and I worry about because they simply don't have the wealth to do so. Free markets will give them that opportunity. Second one, a bit more humorous. I was in Rio just before the Eco Summit in 1992. We were trying to cross Rio in a rainstorm when the troops were practicing for the arrival of all the dignitaries. The cab driver was frustrated hearing us in the backseat speaking English. He turned to us and said, you, Eco 92. And we said, no, no, we're here for another conference. We're not part of that. He said, good, Eco 92, bullshit. And again, as I say, a bit more humorous. But this was a person trying to eke out a living and saying, now we have a bunch of wealthy environmentalists from developed countries coming here to talk about why we shouldn't have economic growth. I'm not here to say that economic growth is a panacea. I'm not here to say that economic growth has not brought with it some environmental degradation. But surely we have to understand that without economic growth we will not have economic improvement and we will not have economic growth without free markets. The second and perhaps even more important tenet of free market environmentalism is that we need to get the incentives right. Getting the incentives right, incentives matter, is the key part of what free market environmentalism has to offer to environmentalists. Now I don't simply mean getting the right taxes to find omega. I don't simply mean getting the right government plans in place to either subsidize tax or otherwise encourage through carrots and sticks brought on by government. I mean by free markets simply that individuals with private ownership of resources have an incentive to either benefit from doing good or pay the cost of doing bad. Let me give a couple of very quick examples. First in the case of doing good. A good friend of mine, Tom Borland, was a biologist, is a biologist. Tom Borland worked for international paper. Tom Borland understood when he was hired by international paper in the late 1980s that he was their token environmentalist. Affirmative action threw, in a sense, the Endangered Species Act, if you will. IP knew they had to have somebody that they could say was sort of watching out. So Tom went out on his first mission, took place where they were going to cut trees on private lands and he said an eagle is nesting in that tree. They came out, they said which tree? He said that one. And they spray-painted a big blue X on it and clear cut 40 acres around it. Tom said, and I've heard him tell his stories, seen the pictures. So these are true, I'm not embellishing you. Tom said that didn't quite work the way I wanted it to. Next he found the colony of red-cockaded woodpeckers. Well, red-cockaded woodpeckers take more than one tree. Same story though, which trees? All those which had cavities, they spray-painted and clear cut around 15 or 20 trees in that case. And Tom said this is not working. Why isn't it? He said the reason it's not working is that I'm asking foresters who have to report to their people who ultimately have to report to shareholders to not make profits off the resource. I need to switch it around. I need to find a way they can get rewards from doing good. Well, to make a long story short, Tom implemented bee hunting, which I think is good. Tom implemented renting out small parcels of land to mom and pop to park their little mobile home or trailer, camper trailer on in the summer and go hiking and fishing with the kids. When Tom left IP to start a very successful and lucrative consulting business, where he does the same thing now with lots of forests in the southeast, 25% of IP's net profits were coming from non-timber resources. That's getting the incentives right. They do not clear cut down to riparian areas. Why? Because those areas are simply too valuable to forego the recreational amenities on and the other amenities that come with them. In the interest of time, and I'll be happy to take on other examples as we go on, here we mentioned things like the wolf program that a good friend of mine Hank Fisher runs. Let me give you one on the other side because I think it's important to understand getting the incentive right means rewarding people, but it also means making people bear the cost. Here we talked about the number of times that water is recycled as it flows down the Mississippi. That is a classic case of government getting in the way of property rights. Let me give you the quintessential example of this. The city of Chicago was drinking water out of Lake Michigan. The city of Milwaukee was dumping sewage into Lake Michigan. The city of Chicago sued the city of Milwaukee and said cease and desist. The city of Milwaukee, and they did it not on the basis of any environmental law, they did it strictly on the basis of a free market property rights basis common law. They said you can't pollute the resource that we have a claim to. They went to court. The court said Milwaukee, cease and desist now, pay damages, and install the treatment equipment that would stop you from doing this any longer. That happened in 1972 when we passed the U.S. Clean Water Act. Milwaukee looked at the Clean Water Act and said, haha, we already have in place the equipment that the Clean Water Act says you have to have in place, we don't have to do anything. And indeed, backed away from what the court said they had to do under common law, under statutory law, got by with polluting more than they had to under common law. That's getting the incentives wrong. And again, I could go through other examples, but I'll conclude. The essence of free market environmentalism is get the incentives right. Whenever I give speeches on the subject, if I convince you that maybe it will work for Tom Borland and IP, maybe it would even work for some pollution, invariably I get, if you're so blasted smart how about global warming or ozone? I don't pretend that free markets are a panacea for everything. If global warming is a problem, I don't have a free market solution for you. But I don't think green planning does either. Because first, we don't know whether it's a problem. And second, I don't think we can trust the incentives that come with political systems. All that free market environmentalism is about is really getting the incentives right in our local house, getting our own house in order, and if we do that through free market environmentalism, then I think we go a long ways to starting to achieve the kind of environmental successes that we've enjoyed in the United States and pursuing those in other countries. At the same time, we do it without impinging on human freedom and without dictating to other countries how they ought to live. It won't solve it all, but it will help a lot. Thank you. Thank you, Terry. Huey, do you want to offer a rebuttal to that? Yes. The point I care most about is reality. We have to deal with the reality that we have problems that have to be managed. And while we're trying to adjust and get the incentives right, and we've told these individuals, go ahead, you know, it's your world, things happen to us, like the East L.A. riots. And how many times have we had dilemmas like that because people are unemployed, this economic system didn't work for them. They were in this lower rung where they didn't have the incentives and the income. Well, what was the answer to the East L.A. riots with the current administration? Free market. So they hired Mr. Uberoth, who gentlally went in to apply free market approaches to solving this dilemma by bringing in a billion dollars in investments, et cetera. Failed cold. That is still a tinderbox down there. He didn't get the billion in investments. And I think those kinds of dilemmas are always lurking around these theoretical themes that don't understand the strength of sustainability, which for the first time takes in these kinds of social dilemmas. It has the confidence to move forward. I would look at individual incentives in the sustainability mode and suggest that incentives have to concern a lot more than income. People who work in military, church, teachers, environmental groups are really little bothered by the kind of incentives that the economists normally are thinking about. It's a spirit of the idea. And unless we have that kind of incentive, unless we believe that cooperation and working together can deliver a livable future, we're not going to make it anyway. We get this weird imbalance with 5% of the population owning 90% of the wealth and these people rioting in East L.A. because they don't own anything. We can't afford education. We can't afford to clean up the environment under the old models. I'm arguing that by using the real examples that exist, we can. The Dutch, New Zealand, Singapore models. I was in Singapore 40 years ago. It was dangerous to walk down the street at night. And they didn't, they had a plan. They got the first green politician. He came in and he told his troops in Chinese style, clean up the rivers, clean up the country. Now, when you visit Singapore, you could lay on a park bench with your billfold on your chest and nobody would bother you. And these are successful models. This isn't, oh well, we got to do it this way or that way. In my own existence, in the few years I have left, I'm really not interested now in worrying about theories that were being tested in the past and are still around. There are honest working concepts using new tools with goals and objectives and they're getting results. The Dutch model has an objective of total environmental recovery in 25 years and there's seven years into it. And it's a plan that has school children in 80,000 corporations, not eight, not 80,000 corporations out in front cooperating and loving the fact that they have regulations that they have a part in now. They don't want to throw out regulations. They say, heck no, we want environmental quality and we love command and control. There's still 20% of Dutch industry that would pollute in a minute if they get away with it, but now the majority are self-pleasing. They don't let them get away with it. That is hard reality happening and it's a doorway to the future. I don't believe that focusing on individual incentives, the themes that economists still advocate are going to be the answer. I think there are a lot of fascinating indicators. One of the fun ones for me anyway was the Soros paper in Atlantic Monthly a couple of months ago. I'm sure most of you read it. Here's a guy that's a billionaire and he comes out and he also said, well, I don't like the idea of narrow capitalism. He said, gee, I grew up in Hungary and at my first age in my life I lived under the Nazi regime and then the communists came along and he said, you know, they're very similar. They have one truth and if you don't believe it, they shoot you. And he said, it's getting that way with this emphasis of market economy, of capital. He argued that we have to maintain a diverse society in order to succeed and whatever our challenges are. That is an example, I would argue, of this tradition of economic dominance as a tool for policymaking disintegrating. How's my time? A few moments. A few moments. I think that one of the important points for me is, again, to acknowledge the importance of using incentives, of using the kind of themes that my colleague is talking about, but as you would use it as a spice in food, it isn't the food. And the Dutch example, where they have their goals and objectives and they're meeting them, where they are cleaning up their water, they're cleaning up their farm soils, they acknowledge that their toxics floating around in the air are cause of a cancer epidemic. We're still struggling to admit that, though I hope we're closer. And a lot is happening and a lot is moving in this direction that I believe will lead us to happy, healthy, well-fed future generations. But we're going to leave much of the economic thinking that's dominated us in this century behind. Thank you. The last point that Huey made is perhaps a good place to start. He talked about the Dutch goals and objectives, and though I haven't traveled through home but not lived there, I have lived in New Zealand for a while. And I certainly would be the last to suggest that groups can't set goals and objectives, can't do it in cooperative ways and can't do it outside of markets. In fact, you might find it hard to believe, but I actually live in a very communal world. I'm a member of a commune. We call it the family. At my house, we don't price the food on the table. We cooperate, we set goals and objectives. The wife and I, sometimes we're pretty heavy handed with a couple of the other members, use a little command and control. But I think that works very well. I think you can go beyond even that size community, or in my case, to larger communities and accomplish some of the goals and objectives that can be set in those fairly narrow homogeneous groups. And you can achieve a great deal of cooperation. And in fact, if anything, I think economists have greatly exaggerated the lack of cooperation, the extent to which self-interest dominates. And we, as a profession, economists have underplayed the importance of cooperation, even in heterogeneous societies. I draw your attention to a book that I think is one of the more important books to be written in the last ten years, probably, written by Matt Ridley, a biologist from England, a book called The Origins of Virtue. And Matt understands economics well, and he points out that it's interesting that in a world where there's so much self-interest, there is so much cooperation. So I believe that you can get cooperation. I'm just very skeptical about how far you can get with it when you get to a society certainly the size of the United States, that is as heterogeneous and as diverse as ours. Now, will it work for San Francisco? I'm even skeptical there. Will it work for Russian Hill? Perhaps. Will it work in Marin County? Perhaps. But it is the examples of New Zealand and Holland, I think, ignore some of the problems that come with a real diverse society. So cooperation is important. I think it's important to teach people to be cooperative. I mean, my children learn about cooperation in our household, and I hope I've inculcated them in some of these ideas. But again, going beyond this, I think we have to be skeptical about. If we go beyond the small societies where cooperation is possible, I think we kind of wave our hands off and say, we're going to have cooperation, we're going to do it under planning, and we're going to do it under government. Government is not cooperation. Government, by definition, is coercion. It is coercing people to do what a collective somehow has decided. I obviously don't oppose that entirely. I'm not an anarchist. I wasn't with the Montana militia out in eastern Montana last winter. So I'm not a total anarchist. I do believe you need some coercion. But I think we can go too far. Let me give the example of business saying, well, we really like this command and control. We really like this planning. I'm very skeptical of, and I'm very skeptical of because of, at one particular example, and there are others, but this one stands out. In 1997, when the Clean Air Amendments were passed by the U.S. Congress, those amendments included some very strict restrictions on the way coal-fired generating plants would have to deal with SO2 emissions. And those amendments included basically installing very expensive technology, scrubbers on stacks, on those plants. After a few years passed and people started to look at this, what we realized was that we got a situation where we had more expensive electricity, dirtier air, and we looked back and said, why? And the answer was quite simple. Businesses involved in electricity said, we agree. Let's have command and control. But, by the way, let's grandfather the existing plants in. They didn't have to have it. And then, as economists looked at that, they said, well, why would we have done this? How could we have achieved better air? Burn clean Montana and Wyoming coal. Why didn't we? Because the eastern coal interests said, we don't want you burning Montana coal. We want you burning West Virginia coal. Bring to mind somebody named Senator Byrd. He lobbied for emissions. Once you required the emission control equipment to be on there, you surely weren't going to haul coal from eastern Montana, which was very expensive to haul, and instead of using very dirty eastern coal. So we used eastern dirty coal, which put out far more SO2 than if we had put no technology on those, no scrubbers on those stacks. And the result was much more expensive electricity for consumers. Now, why did business support that? The answer was simple. It restricted competition. Command and control is not something that business opposes. Over and over in this country, businesses said, give us command and control because it's the only way we can restrict competition. So I get very skeptical of this. Finally, I'm not surprised that I would certainly not argue that regulations won't work. When rivers were burning in Ohio, regulations, although there's now some data to suggest that maybe the rivers were being cleaned up before the regulations, but that aside, accepting that regulation did it, it was easy to get those regulations because everybody agreed burning rivers were bad. We picked the low apples from the tree with regulation. Now we're reaching for high apples, and those high apples involve things like cleaning up superfund sites to the point where the dirt will be edible by children. They involve cleaning up rivers in Montana so that you won't get cancer, meaning that you won't have your chance of cancer go up by 1 in 10,000, if you drink untreated water from the source 1 liter a day for 70 years of your life and eat a quarter pound of fish from the source every day for 70 years of your life. We're cleaning up arsenic out of Montana rivers to meet those standards. Now those are high apples. If you think that we can continue to afford that kind of regulation, I think you're wrong. People are starting to say in places like Montana, don't tell us we have to do that. We would rather have more hospitals, more schools, maybe more tennis courts, but we don't think it's necessary to achieve those high standards. And so again, I think regulation can work. I think it has worked, but I think it can go too far. And in the case of the United States, we're reaching for the highest apples on the tree. If we think we're going to achieve them with command and control, we're wrong. If we want to achieve them, the only way we'll succeed is to get the incentive right through market processes. Picking up on that, I wonder if I could ask you both to comment on whether you believe that the condition of the United States environment has improved over the last 25 years and if it has whether you would attribute that to regulatory factors or to improve private sector efficiency and maybe speak a bit about distinguishing between the regulatory climate that characterized 1965 to 1980 when very significant environmental legislation, clean air, clean water, NEPA, OSHA were passed, even with Republicans, for example in the White House, Republicans are conventionally thought of as being less environmentally supportive and Democrats more environmentally supportive. To the regulatory, to the climate in which we find ourselves now where I would say there's a much more hostile, generally a more hostile approach towards environmental regulation. Well, I'll just start on the first question. There's little doubt that the environment has improved. I mean, I think data are unequivocal on that point. And I think there's also little doubt that why it's improved is at least in part to regulation. It's also in part due to the point I was making about wealthier is healthier. As we've gotten wealthier, not only do we want nicer cars, more TV sets and whatever else, we want more wilderness areas. I mean, we have in the United States wilderness areas equal to the size of this state set aside where you can't ride a mountain bike. Now, not many societies can afford that. We can and we've demanded that since 1964. It's come about with government. So there's no question it's improved and there's no question it's improved in part because of regulation. The important question that I think follows from that, though, is there are really two important questions. One is, would it have improved had we not had those regulations? And I've just read a paper by a law professor and an economist suggesting that if common law had been in place, and I harken back to my point about the water pollution case of Chicago versus Milwaukee, that we would have gotten these improvements anyway. And in fact, we might have gotten even more improvements. Now, that's a hypothetical. It requires research. What do you mean by common law? All I mean by common law is that when people have, under common law, people have the right not to be infringed upon by other people. I can't double up my fist and punch Huey in the face as much as I'd like to because he called me a caboose. But I can't do that because Huey has some rights that say his nose is private domain and my fist shouldn't violate that. Similarly, if I truly am dumping my gunk into Huey's well, under common law, and there are lots of examples of this, he had every right to sue me to cease and desist. So would we have gotten improvement under that system is one question. The second question, and I think this is important, is how much is enough? And that's my point about cleaning up water. We can go so far that people start to scoff at our environmental regulations, which is exactly what's happening in Montana when people say clean up arsenic, which comes by the way out of geysers and Yellowstone, and clean it up to the point where, again, people wouldn't get increased chances of cancer if they drank water for 70 years and ate fish for 70 years. Those are absurd. People look at them and they just laugh at them eventually. So have we gone too far is another question. I guess I think that's what command and control does. It goes too far. The advance of environmental quality in the U.S. has occurred. It hasn't gone as far as it should have and could have considering what we did spend. But what has happened in the interim is we've learned a lot. And what we've learned is that we can't manage resources one at a time. We can't pick theoretical examples of one resource. We're going to deal with forestry policy this year, water policy next year, energy policy someday. What we've learned or what we're learning in these other small nations that are showing us very clearly is that you have to manage the whole package. When we transcend to that point, which we're doing, we will have remarkable advance similar to what the Dutch are enjoying. And this is the most critical point that I would present today. The largest use of electrical energy in the state of California in any one day is pumping water. Well, how do you get the energy to pump the water? Well, you have to burn some fuel. So all of a sudden you've got an air quality problem. And you can't manage thus water unless you're managing your electrical energy production and your air quality standards because acid rain will kill your crops and ruin your forest and a few other things we're beginning to learn. What we have begun to discover in this new era that we're moving into, that I'm arguing will be our future, is that we can manage things comprehensively. And that that is the way we're going to do it in the future. And industry understands that very clearly. That is what they do. Even a library manager here, it's got to be concerned not only with a leaking roof but employee relations and physical plant and a whole bunch of things. We have always allowed ourselves these narrow looks at a resource thinking we could especially focus on them and deal with them first in a theoretical fashion, somehow reduce them down to some manageable unit. The reverse is true. So I believe that the future here and it's already happening as these corporations are seeing the companies like 3M working in Holland come back and say, jeez, that's a far better way to do it. Let's do it that way too. And it's happening here anyway. Well, picking up on your point somewhat here, actually, this is a question for Terry. In one of your articles, you say that arguably there are instances where pollution crosses state borders or water use in one state affects downstream states but centralization, presumably regulation at the federal level, has come with high costs. I would say first it's not only arguable, it's sort of indisputable that pollution is crossing boundaries and that what happens in one place has an impact on a far away place. Ask people who live in Lake Michigan who are dealing with pesticide deposition from farming in Texas. Ask people who live in Arizona who watch the water level go up and down of the Colorado River. You were talking about dams as air conditioning needs increase in Los Angeles and Las Vegas. Ask people who live in Mexico who experience a mere trickle of the Rio Grande River after it has managed to pass through western U.S. states. So I guess my question is I think that you point a fair, you paint a fairly black and white picture here of command and control versus local control of resources. And I think that this ignores the relational nature of ecosystems that know no boundaries. And I'm concerned about how that relational nature, which is what I think the omega point is about, understanding interdependence and interconnectivity in the way that we live on the planet, how those interests prevail at some level as opposed to selfish local parochial interests. Well, let me take the extreme case, I suppose, of ecosystems. If you've read any of the literature on complexity and chaos theory, the essence is that everything is interconnected. So when the butterfly flaps its wings in Japan, we end up with a hurricane someplace or a typhoon someplace. Now, maybe those connections occur, but I don't think we're at all close to understanding what those are if they exist, and I think that's what you learn from complexity theory. And even if we were, I don't know how we would solve that problem with government because a butterfly flapping its wings in Japan is hardly... I wouldn't argue that, well, maybe we ought to go to war with Japan because it was Japan's butterfly or something like that. So I don't see how you can manage it at that level. So if we say, well, all right, let's bring it down to... let's put some boundaries on ecosystems. Let's not talk about a world ecosystem. Let's talk about an ecosystem that involves, say, the Great Lakes. No question there are interconnections in the Great Lakes, and there's no question that those interconnections involve people who live in different political jurisdictions. And in some sense, that's the problem. Well, those political jurisdictions have a great deal of power. Some have more power than others because they have more votes, and so some are able to get laws passed and say, it's okay if we dump our gunk into those lakes because we have more political power than others, and you guys are going to have to live with it. So I just don't trust that system, I guess. Maybe the only system, maybe the only one that we can devise. But again, I think we ought to look for common law solutions first. Secondly, I don't think we ought to take a global perspective of local problems. Local problems ought to be solved more locally. The more you can devolve them, the better. In the case of water, it is not the case that all water systems in the U.S. interconnect with all other water systems. They simply don't. And given that they don't, why should we have the federal government regulating them? If we're going to talk about regulation, as Huey has pointed out, let's have a Mississippi Basin Regulatory Agency, if you will. Rather than the EPA. I just finished editing a book that will come out later this year entitled Environmental Federalism, and there's a paper summarizing that book outside, or there were when I came in. And all that says is, look for the right political jurisdictions. It takes some imaginative thinking about, you know, how you ought to do that. But if, I mean, I don't pretend for a second to believe that this is going to happen in the U.S. because we're not going to get rid of the EPA. The EPA is not going to want to say, oh, yeah, you're right. Let's turn the Mississippi over to some regulatory basin that doesn't come out of Washington, D.C., or take the Sacramento. That's a big, big river basin. I think it ought to be managed as a basin to the extent that there are these spillover effects. But again, I think I don't see any reason why EPA ought to be involved with it. I think California ought to basically be the manager of that system. And final point just with respect to the Colorado. Again, I rest my case on planning right there. The Colorado problems exist in large part because of the damn, dams that we built there. End of that discussion. We are lifting water, we're talking about pumping costs. We're lifting water 4,000 vertical feet out of the Colorado into the Tucson Basin, where it isn't even all being used because there are cheaper sources of water anyway. And that's just as ridiculous. But planning's kind of an interesting word, isn't it, because it does suggest some kind of God-like omniscience about how we should manage resources. And I'm really talking about something else. I'm talking about how do people who live in faraway places or maybe right next to each other, but who are clearly connected to each other through a river that runs through, through an ocean that they share, through the migrating species that come or don't come, depending on what has happened along a particular migratory route, whether the route is intact to the extent that it can support those creatures that become integral along any place along the route, how do we find these ways to work together as people, whether it has to do with government or not, but that contemplates and understands that our survival depends on it. And I think to sort of quickly jump to it's either government or no government or a butterfly flapping in China having an impact halfway around the world, I realize the importance of extreme examples to make a rhetorical point, but I think that what we're talking about here is very tangible and very important to us as we live our lives on a day-to-day basis. And so Huey, one of the things that I want to ask you that arises out of this is as I've heard you speak about green planning and especially what's happened in the Netherlands, I see that government and corporations are working together. Certainly there are those who would argue that in this country, maybe all countries, the big government responds to big business and that they don't necessarily represent different points of view. So what I want to know is where are the NGOs in all of this? Because I do believe that it has been NGOs nationally and internationally who have been on the leading edge of environmental change. But where's their power at the table? The way it works, in my view, is that they transmit confidence in the system to the watching voting public. And it is as though you had a three-legged stool. You've got government, you've got industry, and you've got the environmental sector. The fascinating thing about the Dutch approach is that industry and government understand that they're going to have to go through some awful tough head-knocking and compromise in order to move down the road in this process toward total environmental cleanup. How soon do they do it? What avenues do they take first? And so their way around it, interestingly, is to provide funding so that the environmental critics are energetic and vital and there. And so they give funding to the environmental movement and that movement will turn around and suit government or industries using the same money. But it's because it's a shared sense of destiny that people at every level understand they're pulling on the same rope. They're going to, as they would have in the past, prepare for war. Now they're in a struggle for survival. If their grandchildren are threatened unless they all pull together, they've got quite a remarkable social condition moving which has strong economic upsides, by the way. They're probably the first they in these other countries have mentioned the first societies in history that have known what the costs are of doing something. And this is a fascinating place because it's open public information. The NGOs transmit to the press in very critical ways what they think each day, each week. And the press happily reports to the people. We haven't been that effective here as yet, but I have great faith that that is the role of the environmental movement in the United States. And as we move into this comprehensive, let's solve the problem dimension that I believe we will move into, that the role of the NGO will be defined in a similar powerful way. It is, at the present time, I think, being done that way, but the recognition isn't there. In a moment I'd like to open that up to questions from the audience. So please be thinking about that. And we have a microphone down here. So since this is being recorded for broadcast on KQED, if you have questions, if you could line up down at this mic, that would be terrific. This is a question that I'm interested in, both of your response to, Terry, free market environmentalism posits really that everything's for sale or that everything can be evaluated economically, dollar-sized. And in one of your articles, you laud a state park system for becoming economically self-sufficient by holding dances and weddings in the park and creating a Christmas in the park celebration. And, Huey, you've spent a lot of your life protecting wilderness areas and open space. And I'm curious about the importance of wildness and wilderness and the natural environment left to its own devices to evolve as it will in this context. I would start. We are talking, when we're talking about wilderness and the shared public themes, heritage. And when we have heritage, that's something that's passed on to generations and it becomes the fiber that a nation exists on and in time, hopefully, a global condition as well. And what we have in the way of heritage doesn't exist in Europe, these wild lands, the wilderness, natural areas, the kinds of areas that nature concerns and others acquire, have all been disrupted in Europe. What Europe has is another kind of heritage. We love to go and see their cathedrals. I love to go to the Louvre and see the great works of art or to the Rijksmuseum in Amsterdam and see their great Dutch masters. That's their heritage. Our heritage is this, a very important one, is these remarkable cultural hope diamonds that we have that will grow in value in 500 years from now. This nation will look back and the world will look back as seeing these themes as a gift to world culture just as the Dutch masters, Van Gogh and others, Impressionist eras are great gifts to world culture today. I see this as a huge, important theme that establishes a value that generations can share and affect the quality of our lives individually. So do you have a position on this sort of economic exploitation of parks in this way? Yes, I disagree with it very much. Well, people love to try to impale economists on the sword that everything has its price. And in one sense, everything does have its price. You pay the price to come tonight. I don't know why you pay this price because it's a nice night out there. I would have stayed outside if I were you. You pay the price. Is it a dollar value? I can't put a dollar value on it, but you paid a price. You gave up staying outside the nice sunshine to come in here and listen. So economists do believe everything has its price, but we don't believe you can necessarily put dollar values on everything. On the other hand, if we don't find some way of putting values on things, then they become priceless, and I don't mean of infinite value. I mean we simply don't know what the values are, and that's a real problem. In the case of parks, we have done that. We said, oh, parks have to be free. They need to be priceless. I think they are priceless in another sense, but we keep the price zero. And the result is two things. One, they are a little doubt. I need to tell you people who live closer to Yosemite than I, but I have to live close to Yellowstone. Yellowstone is overcrowded, and it's overcrowded in part because the price is zero. Secondly, because the price is zero, and maybe even more importantly, Yellowstone is not only overcrowded, it's overcrowded, it's underfunded. $19 million for a park as spectacular and as world-class as Yellowstone is appalling to me in a wealthy society. But if we think for one minute that Yellowstone's budget is going to go up a lot in the next 25 years or 50 years by groveling at the feet of senators and congressmen in Washington, we're crazy. And so those of us who love our parks ought to be paying more. I think because it's just, that is to say, I don't think I as a relatively wealthy person ought to get to enjoy that park for free. I also don't think relatively poor people ought to be excluded, so I'd be happy to see them let in for free. I think it's just that we pay more. Not only is it just, I think we'll get a better quality product. And so the point about, and we've just completed at Perk, a study of state parks, the state parks are beginning to understand they have a resource that people are willing to pay for. A colleague of mine last weekend went to one and he just went around and talked to people. You mind paying $3 to visit Lewis and Clark caverns? And they all said, no, it's great. Look at what we're getting. This is a fantastic deal. We drive into Yellowstone, I've forgotten what the fee will be this year, but used to be $10 per car load for seven days. That's, Yellowstone collects 30 cents a visitor for having sakes. I mean, we can make all the arguments on a Gallitarian basis that this is just, but that's absurd because it's not poor people visiting there. Secondly, if we don't put a price on these things, they are not going to be funded. I would be happy to pay a fee as a wilderness person. I probably use it more than most people in this world, in this room. If I paid a fee, I would get better attention from the Forest Service. I would get better trails. I would get an ecosystem far better managed if I paid the fee and if that fee stayed with the people, even without privatizing wilderness, and I think that's a far better solution. If that's putting a price on it, then let's put a price on wilderness, on Yellowstone, and every one of those prices, resources. Otherwise, they will be priceless and they will be treated accordingly. But I think that that's a different issue than the question of whether parks should become sort of Disneyland analogs. But I have never argued they ought to become Disneyland analogs. If, in fact, Yellowstone starts charging fees, what they already do, they charge for fishing. Fishing is already there. People fish for free in Yellowstone. The first year they charged a fee, they collected $400,000, every penny of which stayed in Yellowstone, and not one fisherman that I know of complained. The sooner they charge more fees, the more revenues they'll have to handle fishing. Now, you pointed out that in some state parks, which aren't Yellowstones, they lease out pavilions for weddings. But those pavilions are there. Why shouldn't we be collecting revenues from them and using those revenues to preserve the resources that are there as well? That's my point. Well, it's been an interesting issue here in Yosemite because now that it's been sort of wracked with damages to existing facilities, there's many that are arguing take everything out, let it return to its natural state. Why did we ever have theaters and bowling alleys and that sort of thing in Yosemite, which is a national park, which allows it to, you know, are certainly profit centers. A legitimate question, but those things didn't come from the private sector. Now, you can say, oh, yeah, they were concessionaires, but look, this is a national park. And we, you let it happen, I let it happen. So I don't think you can accuse the private sector of being the bad guy here. Are there, are there questions from the audience? Alyssa. I have a question for Terry. I have a concern that the free market approach, how the free market approach would deal with environmental disaster such as the Exxon Valdez oil spill, for instance, and that it's too response oriented rather than preventative in regulation to do, you would have the state of Alaska and fishermen doing Exxon after the fact, after the environment has already been damaged severely rather than preventing such disasters. How would you address that? Well, first I'll just tell a quick story. I was invited once to a meeting of the Amaco Corporation and at that meeting we watched the Amaco Cadiz. That was the one that cracked up off the coast of Brittany. And somebody got up at the end of this video on it, an academic type and was chastising Amaco for this terrible disaster and I stood up trying to defend Amaco and said, well, the important thing is that they're liable for this and if they're liable for it, at least they ought to be thinking about what kind of tankers they have and whether they're tanker drivers or drunk or whatever. That wasn't a drunken case in that one. So anyway, the person from Amaco jumps up and says, hey, we're not liable fully for that. You don't expect that we ought to pay for this, do you? There are limits in international law on the liability with oil spills and I said, huh, I didn't know that. I said, wait a minute, I back away from my case. Again, if there are limits on liability, then we've got the wrong system. I don't think Exxon or anybody else ought to be limited on liability. That's point one. And in the case of international law of the sea, they are limited, we ought to get rid of that. Can you prevent tanker crackups? The answer is simply no. Now, can you help reduce the risk? The answer is yes. One thing that would help is to make them liable. Another thing that may help is to say, we need some regulations. Now, I think liability is much better than regulation, but I don't object to regulations in that case. Again, you can say, well, should they be triple hauled, quadruple hauled, 17-hulled tankers? I don't know what's the right. I know nothing about tankers, quite frankly. But I mean, those are important questions to ask. So will markets prevent things? No, but nor can government. We can only change the risk assessment. And I think important in that calculation is making people liable for costs they impose on others. That will at least change their risk, their assessment of what the risks are. I have a question about privilege for the both of you. If we wish to give privilege. If we wish to give each of us incentive to care for our own body and mind, we assert, well, that's an individual thing. The body and mind belong to the individual. And if we wish to recognize the property rights of what somebody makes, that is capital, what they've made, we'd say that belongs to them. But the earth itself, the natural resources we're talking about, are actually something, biologically speaking, possible to be individually owned. They are collectively owned. The cost of the environment must be socialized. I'm not speaking of capital. I'm not speaking of labor. So in order to not confer privilege upon a certain class of people, landholders, what would be a response to a land value tax? That is one that took up entirely the economic rent of location, which we'll call the earth. And then the same question for you, sir. In nature, there is no command economy. But there is open and free access to habitat, which is, finds its analog in economics. In other words, the economics of nature is, in fact, ecology. It's the opportunity for all organisms to access habitat. And I suggest that the same model that is taking up the economic value of habitat is a natural way of socializing something that belongs to all humanity. While not impinging upon the personal property rights of individuals, it provides all of the incentive for a society to take care of habitat and earth and leaves all of the incentives to take care of individual property rights of the body and mind and capital. So to speak to privilege is the question, which exists in the private ownership of land value. Social stability is critical to a nation's survival. And part of that seems to me is some form of ownership. And one of the old errors we made, and we will correct, I believe, is to point out that as a citizen of this country, you have a share in what would be called the public trust, that you do indeed have some tangible ownership for something. And the start is, if you divide the number of people in the United States into the number of acres of public land, you come out with more than two acres per person. And my two acres, I think, probably would be in Yellowstone. Somebody else's might be elsewhere, forest-grazing lands. But the basic problem here is that no one understands that. These people rioting in East LA don't understand that. They don't understand they have a share in heritage because we have used these economic themes to totally give away the assets of these lands. But we haven't observed that economic theme because we have not socialized the economic rent of land. Economics is not, nature continues to exist. We describe it in terms of ecology. The economics of the human experience continue. What is not in place at this time, of course, is the socialized rent of location. And if you don't do that, you do end up with these inequities. An example I'd offer you, if you go to Sweden, in Sweden there are no no trespassing signs. They don't need to buy parks. They don't charge a rent. If you want to go for a hike, you go for a hike. It doesn't make any difference who owns it. That is a way of providing a quality of life enhancement for society without cranking in all kinds of economic charges, which cost as much to administer as the charge itself, if not more very often. I think what we're talking about is a separate debate for me. I would be glad to discuss that with you. I'd like to have as many, an opportunity for as many questions as possible. Terry, do you want to respond to that at all? Quick response to the privilege question. I don't think you can avoid the privilege. I'm more worried about privilege that comes with political processes than I am with privilege that comes with private ownership, quite frankly. I'm very privileged. I live in Montana. I am privileged to have the health and ability and wealth to enjoy tremendous amount of wilderness area owned by the United States government, politically operated and politically provided to me at a zero price. That's a privilege I have. Thank you very much. I appreciate all of your contribution to that privilege. Now, you know, I also have a privilege. I happened to own seven and a half acres of land on which I have a little cabin. Now, should you be able to tax away the value of that land, all the value of that land, you could do that, but we have to ask important questions then about what happens to the incentives. If you tax away all the value, let's take what some people allege happens with the wilderness or with endangered species. To the extent that endangered species regulation taxes away values of land, it changes motivation. I don't pretend for a second that all people are out there raping and pillaging trees because of the spotted owl of the red-cockaded woodpecker, but some people have, and that's because we've said we're going to take away some value and people will respond to that. I'm not sure you could implement such a system without having some significant incentive effects, at least if you're going to debate the question. I come back to my word. Ask what the incentives are. I'd just like to interject. Some really breathtaking examples to me of people who are making other choices. One group of people are the Heisler who live up in British Columbia and decided not to sell their forests to paper companies worth millions, billions of dollars because this was their heritage and the way that they have lived and their understanding of relationship and ecology took precedent over an economic evaluation of that. Similarly, the Mison people in Papua New Guinea, also very poor people by our standards, have opted not to sell their forests worth anywhere from $500 million to $1 billion to paper companies because they understand that this is fundamentally who they are. So I think it's important to recognize that there are other ways of valuing and people who see privilege differently. I mean they see privilege as the privilege of living in a place that their ancestors have always lived and there is an interesting piece in the paper. I don't remember it was this morning or yesterday about a fight on a small island in Australia where the Aboriginal people do not want to see development there because it is a sacred place to them. It is their heritage and yet there are developers who have a different view and want to reap some specifically economic dollar benefit from it. I'm not going to let myself get impaled on any benefit cost analysis sort. I don't believe in benefit cost analysis. I believe in people doing it. I think that the groups you've talked about have calculated benefits and costs and they said you want to offer us billions of dollars? We're not going to take it. I think that's great. I've been offered far more than I believe my cabin is worth in the market but I'm not going to sell it because it means a lot to me and my family. That's my value. That's my benefit cost analysis. Hallelujah to every Indian tribe in this country that wants to do that. That's their business but we hold their land and trust by the way with one of the biggest planning agencies in the world, the BIA. We don't let them make a lot of their own decisions. If they want to turn that down, more power to them. But again, it's not a benefit cost calculation done by some economists. It's done by a group of people who have a system. Small groups and Indian tribes in this country are a classic example of small community groups who can get it together if a few of us would leave them alone. I again just want to point out that the cost benefit analysis is the language, the rhetoric of economics in which to talk about it. I don't believe that those people would say that they're using a cost benefit analysis and I think that it is very important to understand the connotation that is conveyed, the meanings that are conveyed through different language and rhetorical frameworks that we use. So when you use an economic language, you get to inhabit the territory pretty fully. It's the language of planning. I'm interested in the fact that the environment is not a small nation. I think the United States is a relatively small nation compared to, say, China or India. I think that if you're advocating free market and you're advocating wealthier nations, I'm talking to you, Mr. Anderson, if you're advocating wealthier nations and the wealthier they are, the more they can solve their problems, then what do we do when China gets a whole lot wealthier, 1.2 billion people, and what do we do when India and Africa get a whole lot wealthier? Do you advocate that the free market system would then work with these people who are wanting to have cars and build cities and make roads and who are sometimes living on the very fringes of their own survival and wanting to move up in the world? How do we deal with this on a global issue through a free market idea? I guess I'd say we don't. We can't. I don't have any way that I see we, meaning the United States or the group of us in this room have a way of going to China and saying you can't do this. I guess if we have enough military clout we might try it. I certainly don't advocate that. I don't see any way that we can. We can communicate with them and you and I would be right on the save wavelength here. I think to the extent that we have information that says if you do A, B will happen. We ought to communicate where A is taking some action and B is causing some environmental damage. We ought to communicate that as best we can. Short of that, I don't think we have any ability or in my opinion any right to tell the Chinese what they're going to do. We might try and do it on the basis of it's our environment too, but I don't know how you do that. Secondly, let me just add that all the data point in the same direction. The best air, the best water, the most open space, the best lands, all of it is in the wealthiest countries. I wonder why though. Say again. I wonder why. It's because don't you think the wealthier countries, if we're talking about Europe and we're talking about Japan and we're talking about the United States, don't you think that we had something to do with the fact that the environmental degradation in the so-called third world is so terrible? Absolutely not. I don't agree with that. That's probably another debate as well. But Huey, I'd be interested in your response to that as well because no matter how much green planning you do in China, we are reaching the limits of what our environment can tolerate in terms of waste and the way that we're dealing with it. So how would you respond to this gentleman's point if you were to implement green planning in China and India, for example, but still supporting the kind of development that's going on there which, by the way, is many. When you say it's not us or we don't have anything to do with it, indeed we do. These are American corporations that are in large measure responsible for the economic boom in these places. I hope the truth wins out that 1.2 billion times anything is overwhelming. In the book Who Will Feed China, the author mentions that if the Chinese drink two additional bottles of beer a year each, to prepare that beer will wipe out the Norwegian grain crop and if they get 100 eggs a year, a piece that will wipe out the Canadian grain crop and those grain crops are already fully utilized. So I would argue that the Chinese are very aware and the Chinese currently have Dutch managers going to China, talking to them about how they might put together a green plan. Hi, my name is Sean Captain. Huey, good to see you. I wanted to address the Dutch model because I'm actually working on a book about that right now, so it's on my mind, sometimes more than I want it to be. I think it's hard to explain, obviously, in a 15-minute presentation or in a debate, but talking about things like command and control, which is a very hot topic, or incentives or cooperation with your hot topics. But the characterization, I think I'll probably address the question towards Terry, is the characterization that I could offer and it's basically Roosevelt's good old theory of speak softly but carry a very large stick. And they have had a very strict command and control system in that country as in most, as we call Western nations, costs a lot of money and its businesses don't like it because it costs a lot of money. What they did was they said, we'll sit down with you and talk about ways to do it a little bit cheaper. We'll give you a little more flexibility on the goals and time frames, which is something actually that businesses actually requested of them. So we can plan our investments on this. We'd actually prefer that from government. So they've done that and they've said, as long as you achieve the goals, then we'll hold the stick away from you. But we still have command and control, we still have regulation and the moment that we don't say that it happened, the stick comes back. And I don't think you could ever say that businesses care about the environment or ever give a hoot about the environment. But they do care about lowering the transaction costs of dealing with the environment. They know the regulations are there. However, you have to make sure they know the regulations are there. So that's why command and control works. And only in a framework, I believe, of a very big stick of command and control, can you start talking about economic incentives and any kind of cooperation? So your comments towards that. Thank you if you want to jump in. Well, Mike, I guess I would just say a great example of what you just described, I think, exists in the Tar-Pamlico sound in North Carolina. And it exists in the following way. EPA said, you're violating water quality standards in Tar-Pamlico. And they went to the point sources of pollution and said, clean up. And the point sources, namely cities and industry, all said, good heavens, how can we clean up more? We've already cleaned up a lot, and to clean up more is going to cost millions and millions and billions. And the environmentalists agreed with EPA that it ought to be cleaned up. The environmentalists got together based on a command and control standard, got business, municipalities, the environmental community, and agriculture, the big polluter in this case, got them together and said, what can we do here? Here, in a sense, is the stick. It's out there in full view. What can we do? And the result was that business said, we're going to have to spend the millions that it would take to clean up, to meet EPA standards. Maybe we'd be better off spending them raising the dykes around big pig farms so that they don't spill over when it rains. They spent much less money and achieved far more environmental quality, water quality in this case, than they would have had they simply had a technology base. This is what you have to do. So though I'm not a big proponent of regulation, if you're going to have it, I think that's a far better way. Here's a role, back to the NGO question, really. Here's a role where environmentalists played a very positive role by bringing people together. They were kind of the watchdog in a sense for EPA, and it worked very well. So we can debate whether the regulation was right, whether the water quality standard of the set was right, but I don't think it's debatable what resulted. It was a far better result than you would have gotten without a technology base standard. So when I've written about regulations of this sort, I've said don't impose technology base standards. They are really about the worst thing you can do. If you're going to impose standards, put them in a local, as local a basin as you can, and again, you can't have them all this little pot of water here, but if you can localize it, make them local and get the people together in that vicinity and say fix the problem, do it your way, and you'll get a far better result. So I think I'm probably agreeing with you. Gee, that may be dangerous. First pass in favor of another question. Okay. I'm going to speak or ask you to address the issue of a local technological command and control system down in the South Coast Air Quality Management District in Los Angeles, which has the worst air quality in the country, and they have command and control rules addressing NOx and SOx emissions for different industries, and that's the baseline command and control stick, and then there's the carrot, which is to give certain industries that are subject to those rules otherwise an opportunity like in North Carolina to meet a ratcheted down level of air emissions meeting a performance standard, basically, which gives industry an opportunity to flexibly, maybe cost-effectively go ahead and meet that performance standard, which is lower than what they'd have to do under the command and control program. Failing that, they revert back to the baseline of the command and control program, so it seems to me that in this debate, here's an opportunity to bridge together a lot of, I think, what both of you are saying, which is you have the carrot, which is the performance standard, which is more ambitious than the command and control. Failing that, you revert to what would otherwise have been the government solution in the first place, so if you could both speak to that, I'd appreciate it. Well, I think it's a remarkable accomplishment and that Air District received one of those 15 awards that we received as well, and so we saw them close up, and they've had a huge, unbelievable challenge. You've got to take on a huge urban center with these air quality problems and put them into a manageable context and improve the conditions so you can see the mountains again. They deserve the tip of my head. I think it's a great start. It must be getting late because I probably agree. I mean, it's a case where people are, well, if you're so blasted smart with markets, fix this one. I don't have a market solution to that one. I can't bottle up this air and say, ah, got mine, you polluted it, pay me off. I don't see a good way to solve that now. Given that you can't solve it with markets that I can think of anyway, you can't build fences in the air, then you do what we've done there. I think that the last Clean Air Act amendments that allowed this stuff to happen are tremendous stride forward. It's only a shame that it took so darn many years to have that happen. Economists have been talking about tradeable emissions for a long, long time as a way of improving things. Nobody would listen to us because we use benefit cost analysis, I think. My name is John Levinson. One comment about government and incentive is balancing each other. While you mentioned dam building in the United States, which Wallace Stegner was very much opposed to, and which as long as the Eurovention of Reclamation and the engineers had the bit in their teeth why they ran with it and they built every dam that they could. On the other hand, in Los Angeles, the Otuses and the Chandlers owned the San Fernando Valley and to assure themselves of a water supply for their real estate development. They bought the Owens Valley and they drained Mono Lake up to a recent NGO activity to get some water back in Mono Lake. However, the point I wish to make is that I think that increasing globalization makes it absolutely essential that governments participate in the process whatever it is throughout the world. You may be familiar with a document, a 11-page document which was issued by the State Department in mid-April called Environmental Diplomacy, which I think reflects a position of the United States government to try to engage in regional matters with people who are concerned about those various regions. And there are many of them, China being one or East Asia, another being in the Middle East. It's either water or war between Syria and Israel. You're uncertain about whether we have enough evidence about global warming, Mr. Anderson. But the folks in the Pacific Islands don't care if you're certain or not because if it is in fact global warming and if the Antarctic ice cap does in fact melt, they've got a 2-inch mean high tide level and they'll be underwater. They need a global approach to that particular matter of global warming in order to keep part of the citizens of the world above water. And I think there are many other examples of that sort which indicate that governments must become more involved in the environment along with industry and with the public population. I pick up on the monolite case first. Monolake is a great example of what happens when you don't have markets. You're right that an NGO was involved in what was in 1983 when the Monolake decision was, early 80s anyway. When did we start water flowing back into Monolake? Not until last year. And when it finally happened it was because that NGO helped broker some water deals to really make it happen. Had it not been for a water market I would submit we still wouldn't have water flowing into Monolake. So hallelujah to Tom Graff and the other people at EDF. I've always held them on a pedestal. With respect to global warming I agree that if it's a problem those Pacific islands will face some problems. But if we take on that issue and we're wrong then other people are going to face some costs. I'm not going to sit here and pretend that I know what that cost-benefit trade-off is. I don't. I'm just saying I don't think the jury is in on global warming and to look at it and say well if it exists then we need to take all these actions or there will be costs to these Pacific islands. That's true. But if it doesn't exist and we take the action then we've imposed a bunch of costs on other people. We did this with ozone and again I don't think the jury is in on that. But the people who are going to suffer more from ozone than from our ozone regulations are going to be people who are not going to have refrigeration as soon as they might otherwise have had it and some people are going to suffer from botulism. Now I can't make that trade-off for you. I will not pretend to be the economist who can do that trade-off. We just need to understand that those are the trade-offs. Governments are going to make those trade-offs. They'll probably screw them up but they have to make them. I don't object to that. I just hope that when we make them we do it with... Huey and I I think would agree on this. We do it with the best evidence we can. And in my opinion and I haven't read at all but I think the best evidence suggests that if we're going to go take some action on global warming we ought to move pretty slowly because I don't think it's going to be a problem. But again, we ought to... And it's not just I who say that. Let's forget the acronym for the IPAP study. They changed a lot of words in that study as a result of scientists saying don't say this is a foregone conclusion. So you can either act and be wrong or act and be wrong. Both of them have costs. I would like to know that politics is a critical issue. We keep talking about government or governments or governments globally or whatever. One of the exciting themes about living in a free society is the fun of politics. And if it isn't the way you want it then it's your fault. You've got to go out and change it. And that is why mathematical formulas don't work. And when you've got the mothers of a nation being stirred up because the third of the children of the nation are getting a glass of water tomorrow with carcinogens in it because of past misuse of toxics or you've got a cancer epidemic where mothers are worried about their children's future because of the 60,000 chemicals that are floating around loose in our midst. They're now beginning to be serious indicators of disease problems, genetic problems and other themes. It becomes a real condition where politics can move and will move and can change things. On global warming I would argue the idea of no remorse actions. If you plant more forests since the United States clear cut our forests and didn't bother to plant them anyway investing in new forests so that it captures carbon provides a source for new homes and fruit and whatever else will come from trees and forests that's a very smart thing to do from a public investment perspective. And it's involved with politics and that has to be part of the equation which can include economics. But I really feel that we ignore politics and we shouldn't. If we have two last questions quick and very quick responses we can get from both of them. Actually I have a question for each of you. My question for you is related to the way we talk about things and the semantics that we use and we hail sustainability as the latest and greatest in the progressive environmental movement and yet we still denigrate subsistence lifestyles and I'm wondering if you've given any thought to sustainability versus subsistence. And my question for Terry is related to your comment about using common law and I'm wondering doesn't that as Alyssa pointed out put us into a reactive mode and being in that reactive mode that means then that an individual or entity is required to come up with the money for a lawsuit so there's a money and a time frame issue with the common law process. And another gentleman asked you a question and I think you responded by saying that you didn't believe that there was a net transfer of wealth from developing countries to the U.S. so if you could touch on that as well I appreciate it. I would like to read Frontland's definition of sustainability. Fundamentally standard development is a matter of national discipline and what we need to do is to discipline our current consumption. This sense of intergenerational responsibility is a new political principle of virtue that must now guide economic growth. The industrial world has already used so much of the planet's resources and damaged so much ecological capital that sustainability in the future in her view is essential for future life. And while we react to in human society's sense we have some great examples of basic living lightly on the earth conditions and I would offer Buddhism in Asia as a case in point that there's not a million there's a billion Buddhists and part of their practice and principle is living lightly on the earth and they do quite an effective job they have a happy existence if you visit there in many senses gentler, better way potentially of cutting back on consumption so we have these actual working examples around this and I have thought a lot about your point can we go to subsistence levels I don't choose to but I assume we could I think that if we manage our affairs and if we assist the developing nations by the Rio conference was really about a carbon tax the North would nothing wrong with the world at a $2 gallon gas tax the North wouldn't solve so that we could then fund and assist the use of technologies in China and other nations of the world which I think we're going to have to do anyway that's getting another debate in power field I wanted to say common law reactive or proactive I'm pretty careful when I drive my car and in part I'm careful because I don't want to get sued and I'm very proactive in the way I drive my car so you're right that in one sense common law does not take a proactive political approach but it's the liability associated with common law that causes people to take a very proactive approach Montana power company to give one example when they built the coal fire generating plants in eastern Montana put in a three tiered system for collecting possible seepage out of the fly ash ponds and under the third put in another collection basin that pumps anything that leaks out back into them they did that without any single regulatory stick and when asked why they did it that was very proactive and they did it for one reason had there been pollution had it caused problems it was very clear who was going to be responsible in England where streams are privately owned to take on the cost of bringing these lawsuits there's an association called the anglers cooperative association belonging to it our pubs our communities our wealthy owners of fishing beats and they sue if water gets polluted they win cases they've lost none and as a result people who think about putting stuff into streams in England are very proactive so is the politics proactive no is the person taking the action proactive I submit yes and I think it's important the net transfer of wealth question is one that again I'm not going to get into any kind of empirical measure because I have no idea how would you how you would measure that if we demand things from from some less developed countries and as a result of that people say I'm willing to go to work producing these things does it have some impact on their environment of course it does are they wealthier in some sense they are I don't know how you how I would calculate whether the fact that they now have fewer trees and more health care is is a good or bad trade off I think they need to do that even if you said they have fewer trees and more automobiles or more television sets or whatever else I don't know how you make those calculations I don't pretend to know whether you can say it's worth it back to the point I think that's something they have to decide we ought to be able to communicate with them as Huey has suggested but I don't I don't think it's clear one way or the other whether as a result of our trading with less developed countries they are better off or worse off and if you know maybe you maybe you think that's perfectly clear and I think you can make it clear by saying I want to measure whether they're better off or worse off on the basis of do they have fewer trees if that's your measure then you can make a statement but if you want to measure it and take into account other things I don't think it's clear at all you're shaking your head so I look forward to your measures after the discussion last question and please we really do value your evaluation so if you would leave them with us as you're walking out we'd appreciate it a question for Terry I wonder if you could give a couple of additional examples that you think best exemplify how the free market has worked to protect the inherent value of natural systems such as the productivity of soil or the cleansing capacity of wetlands because I think in those types of positive contributions to are the well-being of humanity which don't easily come down to dollars and cents they transcend the tidiness of dollars and I wonder if you could have some examples like that and similarly Huey I wonder if you could give us some examples where beyond planning similar attributes could be pointed to in a green planning process where we get to actual results rather than the plan to get to results I need him to put a box around that question would you repeat it please let me take on the wetlands one in the interest of time and they have to talk about the soils later I think the wetlands is a tougher one anyway I think the best example of wetlands is what Ducks Unlimited does and what more appropriately what Delta Waterfowl has done they're both organizations that have collected fees for people who like to go out blast holes in the air in some cases and in other cases people who just think I would like to see more ducks in that money and in the case of Delta Waterfowl a great program they have is called adopt a pothole they go up into Canada where the best nesting habitat is where probably I don't know Canadian agriculture but I can predict that subsidies to agriculture are encouraging people to drain wetlands that's my bet I don't know they go up there and they say we'll adopt a pothole we'll pay you not to do that and we'll come up and survey the ducks that nest on that habitat and that's their measure of whether the quality's improved is it a good measure probably not the only one but it's not a bad one the person who adopts the pothole actually gets a quarterly report of duck production on that pothole they get pictures of their pothole it is an example of a free market at work is it going to do everything to save the Mississippi no but the best thing to do to save the Mississippi is to use free markets when it comes to agricultural programs if you eliminated subsidies to agriculture and you eliminated the subsidized destruction of wetlands you and I wouldn't be having this discussion at all but I think there are some examples of how markets have worked there for my question an example of how natural systems have been enhanced by this application of planning on an integrated comprehensive, systemic basis certainly I would offer some Dutch examples the Rhine in Holland ten years ago was unfit for a human to be in would be very dangerous now when I was visiting there standing in their environmental management pod up in the air with the automated air quality pickups and water quality dials they were uncomfortable because it was like a nuclear management facility to me and I asked the manager what are you doing really there were the fire trucks and people in uniforms already to go out in case there was a spill or a leak this is the largest harbor in the world they're overseeing which is Rotterdam he said very simple we're bringing salmon back to the Rhine and we've succeeded and so there is a restoration of a massive central European watershed a great reach wouldn't have happened had they not had a comprehensive integrated theme working with people politically industries economically working another thing they've done is emphasize electric transit electric trains so they get less emissions get less acid rain they get less soil pollution they get less dying forests these are examples of this remarkable restoration