Chapter 17 Conservation and “Protection” of Natural Resources Rosalie Bleasdale

Problem…  It was believed that natural resources were being used too rapidly and political controls should be instituted to conserve resources for future generations.

New Programs…  Forest Service  Grazing Service  Fish and Wildlife Service  Soil Conservation Service  Natural Resource Conservation Service

Conservation…  Involves a capital investment.  It is a problem of choosing among alternative patterns of resource use over time.

Common Property vs. Private Property…  Private ownership encourages resource owners to conserve for the future.  So long as property is transferable, the current resource owner will have an incentive to consider future generations.  When ownership is transferable, the market value of the farmer’s land will increase in anticipation of a future harvest.

The Market and Resource Crisis…  A price system is a way to ration scarce resources over time.  It is in an owner’s interest to use the resource in a way that will maximize wealth over the present value of the resource.  Historically perceived economic crisis were solved by freely-functioning markets with individuals acting in their own self-interest.

Cont’d…  Natural resources are not fixed in amount but are functions of capital accumulation, science, and technology.  Trends in mineral prices actually tell a tale of decreasing scarcity of mineral resources.  Market prices are more likely to take into account expectations about future economic conditions more accurately than can be done through central direction.

Time preference…  Refers to the value placed on consumption in the near future relative to the more distant future.  For example, if a decision-maker’s RTP is high, the individual is willing to forego a relatively large amount of future income in order to obtain income in the present time period.

Soil Erosion…  New soil conservation programs were instituted in the 1980’s.  Conservation provisions were further expanded in the 1996 and 2002 farm bills.  Surveys completed by the SCS show that soil erosion does not actually pose an immediate threat to the nation’s ability to produce food and fiber.

Possible reasons for the problem…  Farmers allegedly lack knowledge concerning the effects of soil erosion.  Farmers renting land overexploit soil resources.  Runoff creates externality problems associated with land use.

Responses to the possible reasons…  The success of US agriculture over time is evidence that farmers are knowledgeable and competent enterprises.  The erosion of US cropland has decreased ¼ since the task force report.  Landowners, even when renting, have a large stake in maintaining soil resources.

Cont’d…  Government efforts to reduce soil erosion have been justified mainly on the basis of externalities.  A spillover occurs when an action by one person infringes on the property rights of another.  The presence of spillover effect does not imply that there is a spillover problem that warrants action through the collective-choice process.

The NRCS…  Primary purpose is to assist land users, communities, units of state and local government, and other federal agencies in planning and implementing conservation.  The stated goal is to “reduce erosion, improve soil and water quality, improve and conserve wetlands, enhance fish and wildlife habitat, improve air quality, improve pasture and range condition, reduce upstream flooding, and improve wetlands.

Protection of Agricultural Land…  Property Tax Relief  Right-to-Farm Legislation  Agricultural Districts  Purchase of Development Rights

Market vs. Central Direction…  Information Problems: The basic problem in the allocation of land among competing uses is how to employ the knowledge of all affected members of society to secure the most economic use of land resources. There is a loss of valuable information when land-market signals are overridden by administrative land-use controls.

Cont’d…  Incentive Problems: Low-income and other groups that participate least effectively in the political process are likely to be most disadvantaged by political land-use controls. There is also a problem in obtaining an objective evaluation of the relative advantages of the alternative measures available for affecting land use.

Conclusion…  When transaction and information costs are taken into account, however, little if any basis exists for thinking that a greater government role in protecting land and soil resources is warranted.  Freely functioning land markets will eliminate inappropriate loss of farmland, excess soil erosion, and other “crisis” affecting agricultural land, just as the market has eliminated resource crises in the past.