Main Street Economy Spitting In The Ocean

Don't Despair for Restoring the Chesapeake Bay

Last Friday's newspapers carried a story about Dr. Kent Mountford, a scientist who worked for the Chesapeake Bay Program until 2000. In the article, Dr. Mountford expressed newsworthy doubt that the Bay can ever be restored. His doubt stems largely from his understanding of the physical impacts of the land development in the drainage.

Land development and population increase have doubtlessly had harmful effects on the Bay over the past forty years. But it is important to bear in mind that the decline in Bay ecosystems that became apparent in the 1970s preceded all that development. It is not clear to me - an interested non-scientist - that the restoration efforts employed to date would have reversed the Bay's decline, even without the development.

It is troubling that Dr. Mountford's doubt carries the authority of a scientist, even though it addresses a subject outside his expertise. As a botanist, Dr. Mountford can speak authoritatively about plants and ecosystems. He has also established a strong reputation as an historian, (like many others, I have enjoyed his columns in the Bay Journal). But I am less confident in Dr. Mountford's knowledge of economic theory and, particularly, the economics of natural resources and the environment. I would argue that, without that knowledge, he is not qualified to judge the prospects for restoring the Bay.

Dr. Mountford notes, tongue doubtlessly in cheek, that folks in the Chesapeake Bay drainage did not heed his warning that land development would do to the Chesapeake Bay what he had seen it do to New Jersey's waters. Given the inexorable incentives of profits from land development under current arrangements, the voice of a lone scientist, or even of a gang of scientists speaking against such development is analogous to a mosquito challenging a high-speed windshield.

The problem is that, even though the Chesapeake Bay's environmental problems can be most directly described in the language of the physical and life sciences, there is another layer of factors that explain why these problems develop. That would be the social and economic layer and that is outside the usual scope of the physical and life sciences. People do not yet seem to have really cottoned on to the significance of this.

Economics is the study of how people allocate scarce resources. Richard Scarry wrote a book called "What Do People Do All Day?" that provides a good, basic introduction. If people are allocating resources in such a way as to generate environmental harm, then you first have to be able to describe the technical side of the problem - what is harming the system and where is it coming from. But then, you need to understand the economic incentives well enough to figure out how to change them, so that people will change their allocation of resources (i.e., what they do all day).

With respect to the "land development" example, an economist might ask, what are the external costs imposed by land development? Accounting those, she might ask, where in the transaction chain is there scope for assigning those costs so as to effectively change incentives and mitigate the environmental harm? And, since we know that people need a place to live and that they prefer growth to economic stagnation or decline, she might ask, how can we minimize the economic growth impacts of these higher land development costs? There might be difficulties gaining political acceptance of the implied policy solutions, but they would stand a much better chance than a blanket request to stop development.

This is why I say don't despair for restoring the Chesapeake Bay. I believe that rational actors (society), when faced with sufficiently undesirable environmental outcomes, will insist that we use the best means available to fix those outcomes. Even if it is going to cost somebody something. When that happens, we are more likely to see the work of the physical and life scientists supplemented with effort from economists. Environmental outcomes may need to get worse for society to reach that consensus. But, given trends, it seems to me likely that in the not too distant future people will agree that "what we do all day" is, in part, maladaptive and unsustainable. Then we will seek more practical and effective answers to the economic basis of our environmental problems.

I realize, of course, that the worse environmental problems get, the harder they are to fix. But, I just said don't despair for (eventual) restoration. I didn't say all is going swimmingly for the Chesapeake Bay.

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