Monday, November 18, 2013 | No comments

Cooperation: A Free Market Model for Environmental Protection

By Riley Risto

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Utah is blessed with some of the most amazing landscapes in the country. From the curious rock waves of Zion’s slot canyons to the Salt Flats in the west desert, tourists from around the world want to visit this state. Utah is also a bustling hub of energy and resource development, providing valuable jobs and affordable energy. Balancing these usually competing interests has been a difficult challenge, and not just since environmental activist Tim DeChristopher hijacked an oil and gas auction in December 2008.

IACX Energy, a Dallas-based helium gas producer, decided to avoid the possibility of litigation or activist-inspired regulatory compulsion by going directly to their would-be adversary and working together to craft a “win-win” agreement that augments drilling in a proposed wilderness area. By drilling horizontally to the intended underground helium dome instead of vertically, IACX gets its gas and the Southern Utah Wilderness Alliance  protects valuable wilderness. “Let’s face it—when you’re on federal land, you have many stakeholders,” IACX president Scott Sears told KUER.  “And I think the worst thing you could do is just barge in like a bulldog and say, ‘This is mine and I’m gonna do whatever I want and to heck with the rest of you.'”

This sort of cooperative agreement stands in stark contrast to the combative, rhetoric-laden battles between property owners/lessees, legislators, and environmental activists. Regardless of where you come down on the environmental debate, you have to admire a legally entitled company that takes the initiative to engage a non-profit, instead of waiting for them to lobby the legislature for proxy enforcement by fiat. Other business owners and executives should take note; in industries that have a residual impact on surrounding areas and/or future generations, it makes good business sense to cooperate with other stakeholders. The more this happens, the less we’ll see frivolous, one-off regulations added to state code.

Let’s go a little deeper though, and examine the idea of primacy in property rights discussions. The most common and perhaps important function of courts is to settle private property disputes, which include, by extension, our persons, effects, long-term health, and in some cases even quality of life. Since our livelihood is derived from combining labor and resources, any third-party action that deprives a person of this ability to exercise prior property rights constitutes a tort. Cases involving pollution of air, water, audible, olfactory, or visual environments, and miscellaneous other nuisances can be difficult to adjudicate in a legal system that doesn’t fully understand and respect private property. However, these quality of life measures are not unimportant to those who have worked to maintain or improve their property.

Take the case of the BP oil spill as an example of how not to protect the environment or do business. Environmentalists, having become accustomed to and dependent upon regulatory pressure against big corporate oil, ran into an unsympathetic administration that was hungry for more energy to combat sky high energy prices. Since private ownership of seas and sea floors is unheard of, there is no one but a legislator (beholden to public whim) who has enough power to deny access to these resources. There exist no neighboring property owners to object to proposed uses that may ex ante create problems for them or devalue their property. All it took for BP to secure access to the resources below the sea floor was a permit to drill, so they went at it with reckless abandon.

This turned out to be a disastrous business decision and an even bigger ecological disaster. Had BP approached stakeholders along the affected coasts prior to deploying the Deep Water Horizon, they surely would have been counseled to take additional steps and employ redundancies to avoid or reduce the impact of oil spills. However, with the scope of most spills limited to a few square miles, the lack of immediate adjoining property ownership made this type of outreach unlikely. In other words, the lack of private property in the gulf and preeminence of political stewardship over “public property” make this area, and consequently every other resource rich, publicly managed property, a ticking time bomb.

While many, myself included, have a problem with SUWA’s usual tactic of pressuring the federal government to designate just about every open space as a national monument as a means of preventing most forms of recreation and development, one has to acknowledge that environmental stewardship and protection is an important precursor to long-term prosperity in a world dependent upon allocation of scarce resources—which is why the IACX/SUWA agreement is so important. If more stakeholders can come together to tackle tough issues surrounding the need for responsible development we are more likely to avoid ecological encroachments and disastrous federal land grabs in the future.

Because society’s general antipathy towards private property makes the purest free market solution unlikely, it is incumbent upon responsible business owners to be proactive in seeking win-win solutions to resource exploitation by cooperating not just with neighboring property owners, but also with special interest groups, as a path to legal indemnification and responsible stewardship.

It’s not just good PR—it’s good business.

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About the Author

Riley Risto is Director of the Center for Free Enterprise. He holds a masters in business from Brigham Young University and works as a community banker. He is a passionate advocate of Austrian economics, outdoor enthusiast, husband and father of six children. He lives with his family in Midway, Utah.


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