Transcript 1. What is natural resource economics & why is it important?

6.
Ethical Issues in Productivity & Stewardship:
Agricultural Water Use
Larry D. Sanders Spring 2002
Dept. of Ag Economics
Oklahoma State University
1
INTRODUCTION
Purpose:

–

to understand the ethical issues related to agricultural
water use
Learning Objectives:
1. To review an ag water use case study, identifying the
situation, causes, ethical issues and alternatives.
2. To understand the nature of ag water use as an example
of the larger issue of productivity vs. stewardship.
3. To become aware of generic issues related to water use
and water quality, recognizing the ethical choices
embedded in the public & private alternatives.
4. To become aware of the process of finding “common
ground” as an alternative for resolution.
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Stewardship of the land by farmers:
Myth or fact?
 Dustbowl
& Oklahoma?
 Recovery from Dustbowl?
 San Joaquin Valley wetlands destruction (CA)?
 Ogallala Aquifer depletion (High Plains)?
 Chesapeake Bay eutrophication?
 Colorado River salination & siltation (AZ)?
 CRP/EQIP/WRP participants?
 Holistic farming?
 Farmer cooperation w/Ducks Unlimited, others?
 Destructive effects include:
– Environmental contamination; Habitat destruction; Resource
depletion
3
Cases: Irrigation Drainwater
Contamination in San Joaquin Valley
 Critical
habitat for humans & millions of
migratory waterfowl
– 1/5 of North America’s waterfowl winter in San
Joaquin Valley
– 6% of original wetlands remain
– Most waterfowl now use national wildlife refuges &
private duck-hunting preserves
– High mortality/deformation rate; likely cause
selenium poisoning from ag drainage into refuges
– Human health at risk w/Kesterson Reservoir
selenium count 8 to 4000 x standard (1983)
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Irrigation Drainwater Contamination
in San Joaquin Valley (cont.)
 Ethical
basis for public intervention
– Rights-based view:
» Prevent humans harming other humans
» Prevent harm to wildlife & environment
» Desire to stop actions harmful to humans &
waterfowl (stop the action that pollutes
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Irrigation Drainwater Contamination
in San Joaquin Valley (cont.)
 Ethical
basis for public intervention (cont.)
– Utilitarian view:
» Public action to prohibit/regulate actions where net
social benefits less than net social costs (farmer
practices result in pollution of waters that cause
social costs to society that are greater than benefits
to society)
» Desire to modify existing structure so farmer actions
no longer impose net social cost (internalize the
social cost by levying a tax on effluents; if the farmer
can afford the license, ok to pollute)
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Irrigation Drainwater Contamination
in San Joaquin Valley (cont.)
 Public
–
–
–
–
–
–
–
resolution must be:
Legal
Politically viable
Enforceable
Cost effective
Technologically feasible
Environmentally sound
Ethically defensible
 Short
term: close drains that feed reservoir
 Long term: resolve the toxicity of irrigation
farming
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Irrigation Drainwater Contamination
in San Joaquin Valley (cont.)
 Productivity
vs. Stewardship
– Maximizing production: greatest output
– Productivity: efficiency of production (increasing ratio
of value of output to value of input)
– Stewardship: maintaining certain environmental
standards for sustainability
– Public policy & producer both have goals to maximize
production & productivity
» Adequate, varied, affordable, globally competitive food
supply that supports economic stability
» Rights-based & utilitarian views used to support such goals
– Environmentalists: 2 goals responsible for ag crisis &
environmental destruction; ignore stewardship
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Irrigation Drainwater Contamination
in San Joaquin Valley (cont.)
 Productivity
vs. Stewardship (cont.)
– Environmentalists: 2 goals responsible for ag crisis &
environmental destruction
» Producers must increase productivity to improve profits
» Technology or externalizing costs primary ways to do so
» Easiest/most common negative externalities: natural resource
management (soil, water, habitat) of inputs or waste disposal
» Technology improvements may also result in negative
externalities and/or environmental degradation (larger/less
efficient fossil-fuel burning equipment, hybrids, chemicals),
although some technology may reduce environmental impact
» Technology treadmill & increasing debt levels minimizes long
term positive impact
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Irrigation Drainwater Contamination
in San Joaquin Valley (cont.)
 Productivity
vs. Stewardship (cont.)
– Result: Stewardship often loses out to productivity
– Producers & public policy based on rights-based view
of individual freedom to choose &/or utilitarian view of
profitability wins over Environmentalists rights-based
view of ecocentrism or rights of nature &/or utilitarian
view of welfare economics to internalize negative
externalities
– Search for “common ground”among moral preferences
» Environmental mitigation
» Compensation to re-assign property rights
» Purchasing rights
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Other case & concepts
in TMR6
 Texas
Water War: Edwards Aquifer
 Allocative efficiency: resources should go to most valued
use (willingness to pay = willingness to sell; marginal
benefits=marginal costs; demand=supply)
– May provide utilitarian ethical foundation for commercial
development
 Market
failure: private market does not provide social
efficiency (marginal social benefits=marginal social costs)
– Causes include externalities, public goods, inappropriate
government intervention
– Solutions include private-private or private-society mediation,
government intervention
 Conservation
vs. Preservation
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Issues & Options:
Water Use
 SUPPLY
– Development (Dams, Diversions)
» increased water availability (industrial, municipal,
recreation), improved ag production & lower food
prices, flood control
» reduced endangered species/habitat & scenic areas
– Pricing or Sale of Rights--typically a state/local issue
» increased water costs & conservation
» may reduce ag production
» water is more likely available
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Issues & Options:
Water Use (cont)
 SUPPLY
(continued)
– Management--typically a state issue (Feds may be
involved if resource crosses state boundaries)
» increased water conservation & reduced scarcity
» use more consistent with need
» reduced freedom & value of water rights
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Issues & Options:
Water Use
 SURFACE
WATER RIGHTS
– Riparian (owner of land)
– Prior Appropriation
 GROUNDWATER RIGHTS
– Absolute ownership
– Reasonable use
– Restatement rule
– Correlative rights
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Issues & Options:
Water Quality
 FREE
MARKET--Point & Nonpoint
Pollution
 INPUT
TAXES--Internalize costs
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Issues & Options:
Water Quality (continued)

REGULATION
– Key regs:
» Clean Water Act (CWA)-1977
» Coastal Zone Management Act (CZMA)-1972
» Safe Drinking Water Act (SDWA)-1974
» Federal Insecticide Fungicide & Rodenticide Act (FIFRA)47; Federal Environmental Pesticide Control Act (FEPCA)72; 88; 96
» Endangered Species Act (ESA)-1973
» Food Quality Protection Act (FQPA)-1996
– Performance Standards (flexibility)
– Prescribing/Proscribing Practices
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Issues & Options:
Water Quality (cont.)
 Subsidies
– --Incentives (WQIP; CRP; EQIP; CFO; WRP;
Cost-sharing; Green payments; IPM)
 If agriculture treated as “point” source
– Water quality, production costs, food prices up
– Soil erosion, farmer freedom down
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Issues & Options:
Wetlands




Definitional issue
Free market
– Reduced wetlands, water quality, wildlife, habitat
– More land for ag, residential & commercial use
Regulation
– Swampbuster
– No net loss
– BMPs
Subsidies
– WRP--1990
– Compensation
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WHEN PRIVATE DECISIONS
AFFECT OTHER PEOPLE OR THINGS
Finding
“Common Ground” thru
mutual consent
–May be private, public or both
–May be direct, thru an intermediary or both
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Agricultural Practice Harms
Human/Nonhuman species
Alternative
1. Do nothing
Consequence
--Harmed person(s)
&/or nonhuman
species pay(s)
2.
Producer changes
--Producer pays
--Consumer pays
--Harmed person/
species pays less/none
3.
Government accepts
responsibility
--Taxpayer pays
--Harmed person/
species pays less/none
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Who’s to blame & how to resolve?
How to find “common ground”?
Bull in the neighbor’s field
Private
vs.
Private
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Who’s to blame & how to resolve?
How to find “common ground”?
Odor from a large hog farm
Private
Private
vs.
vs.
Public
Private
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Who’s to blame & how to resolve?
How to find “common ground”?
Draining a wetland
Private
vs.
Environment
(Public?
Private?)
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Who’s to blame & how to resolve?
How to find “common ground”?
Closing a school or hospital
Public
Public
vs.
vs.
Private
Public
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Who to credit, who benefits & is it a net
benefit to community?
New farm/business brings jobs
& economic activity
Some folks
benefit:
-more income;
-more profit
opportunities;
-more “vibrant”
community
Some folks
lose:
-higher cost
of living?
-lower quality
of life?
-stress
infrastructure25
Externalities
 Decision
impacts
someone or something
other than the decision
maker & his/her
operation
 Impacts may be costs
(negative externality) or
benefits (positive
externality) or both
 Referred to as “market
failure”
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Solution?
 Simple,
if not easy:
– Internalize these costs or
benefits into the decision
maker’s operation (fees,
taxes, fines, penalties,
subsidies, grants)
– Education
 Who decides?
 How to implement?
 Who pays?
27
Alternatives:
1. Free market?
--Affected parties work
it out
--Possibly thru courts
--Mediation
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Alternatives:
2. Quasi-market?
--Marketable permits
--Create markets for
transfer of property
rights (water use,
easements, oil/
mineral rights, air
quality)
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Alternatives (continued):
3. Command/Control?
--Regulations
--Permits/licenses
--Certification
--Taxes
--Label requirements
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Alternatives (continued):
4. Government
incentives?
--Subsidies
--Technical assistance
--Tax breaks
--Grants
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Alternatives (continued):
5. Government production of
environmental quality?
--Water/sewage treatment
--Plant trees
--Develop/restore wetlands
--Stock fish
--Create alternative
ecosystems (wetlands,
forests, ponds, lakes,
canals)
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Alternatives (continued):
6. Moral suasion?
--Woodsy Owl
--Smokey the Bear
--Pinky the Pig(???)
33
Market Failure & Property Rights:
Understanding may assist “common ground”
 One
reason for market failure:
– Property Rights not assigned
 Property
Rights
– --Defined by Society; not absolute
» Clean Air/Water?
» Private Property?
 Open-Access
Externality:
– Property Rights insufficient or unenforceable to
prevent general use, leading to
destruction/diminishment/damage of resource
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“Best” Environmental Quality Level ?
 Economics
provides
analytical tools
– Market
– Nonmarket
 Society
provides the
goals & ethical
standards
– Thru market, public
action or group
deliberation/
mediation
– Lives &
Livelihood
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Finding “Common Ground”
 May/may
not achieve
“best” environmental
level
 May be more
sustainable because
of interested parties’
acceptance/ownership
 May be more ethical
because of interested
parties’ mutual
cooperation & respect
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