Environmental Economics of Creation Stewardship

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Environmental Economics of Creation Stewardship

By: John A. Baden, Ph.D.
Posted on July 27, 2011 FREE Insights Topics:

FREE just completed a conference for religious leaders, “The Environmental Economics of Creation Stewardship.” Participants came from a dozen states and even more denominations. All agreed we are indeed blessed to live here. Hiking, riding, and rafting near Gallatin Gateway testify to an environment worth conserving. And this is a great place to learn how to appreciate and conserve nature’s bounty. Participants agreed to read 150 pages by respected economists, ethicists, and analysts before arriving. This provided background for the ten formal sessions.

We’ve had twenty years experience producing similar conferences for federal judges, and this is our fifth summer with religious leaders. Still, religious leaders continually offer new challenges, notably their diverse approaches to environmental and social policy and to sources of moral authority.

Although they may disagree on theology, nearly all are committed to increasing their faiths’ contributions to environmental stewardship. Our task is to provide them with better economic understanding. We stress the importance of entrepreneurship and identifying tradeoffs when considering alternative policies.

For example, saving (or reintroducing) endangered species usually requires some real cost or sacrifice of opportunities. Wolves are surely important to greater Yellowstone and probably are beneficial on balance. However, their mere presence implies both financial and psychological costs; it is ethically irresponsible to ignore them.

Good intentions can be reinforced by economics analysis. Without it, special interests dominate policy. Witness corn ethanol and federal irrigation projects. Such efforts masquerade as the public interest. Actually they generate waste, corruption, and subsidies, predictable consequences of political allocations.

The crusade against global warming engenders a host of vexing problems. Some of the most vulnerable and less resilient people are those most exposed to risks, both of climate change and of efforts to avoid it.

We believe the most ethical and effective approach to environmental policy flows from a political economy perspective. It considers tradeoffs among competing values. Just as a church must choose between investing in energy conservation and sending funds to its foreign missions, a nation must budget among competing alternatives, e.g., subsidizing research or Green energy.

In some circumstances governmental actions are warranted, for example in controlling pollution, helping protect common pool and migratory resources, and defining and protecting property rights.

Alas, some religious leaders see an inherent conflict between a market economy and environmental stewardship. They favor expanded governmental regulation and active management. This is a naïve option given our history. No society has been governed by Green Guardian Angels—and in this world none will be.

Another positive role for government is the critically important role in creating institutions that align self-interest with good stewardship. This is the defining feature of intelligent policy design. This political economy approach also promotes responsible liberty and economic progress, complements of stewardship and creation care.

The political economy perspective can help religious leaders see through self-interested “solutions” that harm the environment and disproportionately affect the worst off. Even good intentions have unintended consequences. If we subsidize ethanol, farming patterns and food prices change. The increasing price of corn tortillas, a staple of the Mexican diet, is partially the result of successful special interest group pressure in the U.S. Farming K Street is lucrative indeed as 40 percent of America’s corn is diverted to ethanol.

Even in wealthy countries, environmental quality is only one of several competing values. For example, people also pursue education, health, and convenience. Environmental goals are more easily achieved when they enjoy broad popularity. However, citizens’ support for the environment declines if large sacrifices are required. In the Green arena, efficiency matters.

If religious leaders successfully champion Green virtue, they will buttress good intentions with appropriate incentives. They will be alert to unintended consequences of proposed reforms. What, for example, are the effects of increased CAFE mileage standards and mandated wind energy on the poor? Economics helps explain why some choices have positive and others negative consequences for social and environment wellbeing.

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