Our public reverence for nature has done little to stop its overwhelming degradation by private interests. Ascribing a sacred quality to water has not helped to guide water management policy in any meaningful way, and so we are left with an environment in which businesses can accumulate the ownership of water, forests, land, and minerals.
Economist Mason Gaffney published an illuminating piece of writing late last year, in the November issue of the American Journal of Economics and Sociology. In it, he makes the claims that economists have dropped the ball on protecting the environment by osmosis, and that the fundamental assumptions about efficiency and ownership are wrong. In ignoring value created by nature from the outset, the legitimacy of inherited ownership and natural resource exploitation has never been questioned. “As a result,” Gaffney writes, “those economists have developed sophisticated strategies to deny the existence of gross inequities in society and extensive environmental damage.
When the allocation of natural resources is left to the market, the markets are usually inefficient, because few owners or license holders want to part with what they have been granted. Gaffney claims that in policy on water, forestry, mining and urban development, prices and taxes to discourage expansionism is the first place to start.
Often lauded is the transparency and supremacy of emissions trading schemes, but these tend to be flawed from the outset on account of the large allocations of credit essentially gifted to organizations already polluting the most. Gaffney relates this idea to all property rights throughout Sacred Water, pointing out that no system of resource allocation can arise in a vacuum and must be based on historical entitlements. Such entitlements must be completely turned on their heads.
In the case of water allocation rights, history shows us that allocation of water in agriculture has been granted first to those industries that have minimal capital investment and a fast production cycle. This made sense in an era of pioneers, but Gaffney explains that as a result, farmers with a high per-acre capital investment have been shut out from acquiring senior water rights, even though they tend to have higher marginal productivity.
“Appropriative rights now deny water to the farmers who are most productive. This is ironic, since the original purpose of the doctrine was to ensure that water was put to use productively on farms and not left ‘idle’.”
By charging the users of water and introducing a concept of reciprocity, the public can effectively reassert its claim on water as a part of the commons. The entitlement that is the use of a gift from nature must be countered by a reciprocal obligation. Gaffney highlights the Wright Act as a water pricing example, adopted in California in 1887, and says that it “led directly to the breakup of large landholdings, a feat never before or after achieved through any coercive land reform program.”.
The Wright Act allowed collectives of farmers in a region to form irrigation districts, legal entities that allowed them to pool their resources and get water. Gaffney includes an extract from the Stanislaus County Weekly News, dated 1907, which illustrates what happened when the Act was adopted:
The great wheat fields have been gradually diminishing for several years, but the last year was marked by a wonderful change. Like magic the wheat fields of a year ago have been transformed into great vineyards and orchards of fruit of all kinds…The past year has been one of great activity in land division; many large tracts have been subdivided and populated by new people.
The pragmatic policy instruments used in the Wright Act must be integrated into a new framework for thinking about natural resources. Ultimately, Gaffney advocates the common sense egalitarian philosophy that nature must not only be cherished but must be shared equitably.
Governments, lawyers, economists, and even NGOs purporting to fight the environmental fight have acquiesced to the status quo corporate schemes – convoluted systems of credits and permits that create opportunities for profiteering on polluting behavior and past emissions. Gaffney says most environmentalist groups “have upper-middle-class constituencies and seldom propose policies that might contribute to a realignment of wealth and power.”
Environmentalists tend to fall into one of two camps, neither of which is doing anything to address to core ownership issues in environmental policy. Gaffney defines these camps as “accommodationists, whose policies would serve to perpetuate the status quo outside of a narrow band of technical solutions to environmental problem” and “sacralists, whose reverence for nature and for the downtrodden members of society would lead to policies disruptive of the existing social and economic order.”
By rejecting the system outright, the utopian sacralists turn to protest and flag-waving, which Gaffney calls a strategy that “may make for effective fund-raising appeals by NGOs, but it does very little to protect the natural values they profess to hold sacred.”
Unfortunately, making noise about specific harmful projects only created an opportunity for the thousands more to continue unnoticed. The blanket dismissal of potentially useful economic tools is as dangerous as direct complicity in destructive industries.
Accommodationists are complicit in the creation and maintenance of entitlement systems, many of which are presented as protections for the environment. These people see no benefit in a pricing structure that gives every company or individual a level playing field. As happened with the Wright Act, diseconomies of scale would see many large businesses suddenly at a disadvantage if the current balance was upset.
In California today, Gaffney says there is a system of aqua-imperialism: “the growth of an empire based on long-distance transportation of water at great expense to people who will not directly benefit”.
The enormous farms wasting nearby water are in effect subsidized by the lack of a water price, this wastage necessitates a new industry of water transportation, and businesses operating them are then subsidized as well due to the importance of keeping demand satisfied. For as long as no-one is charged for the water, everyone is paying for it.
Gaffney gives this example:
Consider the lower Colorado River, which runs through Arizona, Nevada, California, and Mexico. Every major user is subsidized, mostly by Congress. No one pays for water at the source, but everyone gets paid to pump it up and take it home. No wonder there is a shortage. No wonder there are 82 golf courses operating in the Coachella Valley, a Sonoran desert, and 50 more planned.
Gaffney’s intention with Sacred Water, Profane Markets is to illustrate that equity and reciprocity at the micro level can have benefits at the macro-level. If ecological and economic limits are treated as the same, and water is treated first and foremost as owned by humanity, the trickle of incentives will fundamentally alter the way water is used.
Featured photo: Pete Souza for the White House.
Sacred Water, Profane Markets
To foster an ongoing public dialogue on Sacred Water, Profane Markets, the Robert Schalkenbach Foundation is co-sponsoring an event in New York on May 19, with the International Union for Land Value Taxation, a United Nations ECOSOC NGO, the Center for the Study of Economics and The American Journal of Economics and Sociology.
Friday, May 19th, 9:00 am – Noon
22 East 30th Street, New York, NY 10016
American Journal of Economics and Sociology editor Frederic S. Lee says that by recognizing the tendencies toward capital accumulation inherent in laissez-faire capitalism and enshrining the sanctity of nature at the forefront of any policy discussion, Gaffney has produced “principles of universal relevance”.
This event will explore how a just system of charging for nature’s services can not only protect nature from excessive use but also make the market for produced goods and services healthier by preventing the development of monopolies that impede economic efficiency and destroy social harmony.