What price must the salmon pay to keep power rates low

Error message

User warning: The following module is missing from the file system: bf_profile. For information about how to fix this, see the documentation page. in _drupal_trigger_error_with_delayed_logging() (line 1156 of /home1/freeeco/public_html/includes/bootstrap.inc).
Print Insight

What price must the salmon pay to keep power rates low

By: John A. Baden, Ph.D. Tim O’Brien
Posted on November 23, 1994 FREE Insights Topics:

HOW HAS Forbes magazine, the self-described capitalist tool, become a green advocate? The influential people at Forbes see markets as the most ethical and efficient means to coordinate much of society.

In contrast, political management implies economic inefficiencies and ecological destruction. These are logical consequences of political incentives.

A recent Forbes feature by Ellie Winninghoff explains how government subsidies promote environmental harm. Here is a sordid story of socialism for the wealthy and duplicity by politicians whose opportunism trumps their environmentalism.

Three-fourths of the Pacific Northwest's electricity comes from hydroelectric dams. Many of these, including Bonneville and Grand Coulee, were financed by the taxpayers through the Bureau of Reclamation and Army Corps of Engineers.

Once built, the feds subsidized electricity, making power here far cheaper than in other regions of the country. Nearly $1 billion in annual subsidies keep Washington's power prices at about 3 cents per kilowatt hour. Industrial consumers such as Alcoa, Kaiser Aluminum & Chemical, and Reynolds Metals pay even less.

But insulating households and businesses from the real costs of power production has negative consequences. In addition to lost revenue, these costs include diminished salmon runs, lost wild rivers, wasteful irrigation and additional coal-fired power elsewhere. These dams, along the Columbia and Snake, strangle formerly rich salmon runs. Salmon populations are only 15-25 percent of their 19th century levels. Some runs are gone.

Here's how dams effect salmon. When hatchlings move from the upriver spawning beds to the Pacific, the slack, warm waters of reservoirs and the blades of hydroelectric turbines take a high toll. Mortality runs about 15 percent per dam. When mature salmon swim from the Pacific to the inland Northwest, the big dams again pose a formidable obstacle. Even with fish ladders, upstream travel has a mortality of 5-13 percent per dam.

With 14 major dams on the main stem of the Columbia, and 10 on the Snake River, mortality quickly mounts. The Grand Coulee and Hells Canyon dams completely block salmon from the upper stretches of these rivers. Transporting hatchlings around dams and using hatchery fish has sorry results; hatchery fish are weaker and more disease prone than wild salmon. Thus, in spite of expensive efforts, the runs are dying. Ecological health declines, outdoor recreation suffers, and a perpetually renewable resource is lost.

In the Northwest the price of electricity is less than its cost. With rates kept at 3 cents per kilowatt, Northwest consumers use 60 percent more electricity than average Americans. This compares to New York's 10.2 cents, Califomia's 9.7 cents, and Florida's 7 cents. In an age when power can be wheeled around the country, this implies huge unnecessary economic and environmental waste.

Insulated from the information and incentives communicated by prices, people don't respond to changing values and ecological conditions. Continued high consumption, not conservation, of electricity is encouraged by subsidized power. And greater use of electricity favors running turbines to maximize production with continuing damage to remaining salmon runs.

This story of dams and salmon illustrates a principle of political economy. Once subsidies are created, they persist. People view them as entitlements. Major electricity users, especially aluminum companies, invest in politics to keep power subsidies. Our representatives and senators seldom act in a principled way if that raises voters' electric bills to fair market rates.

Dams generate not only power but also opportunistic politicians. For example, in 1982, then-representative Al Gore of Tennessee invited William Niskanen, an economist nationally respected for both his intelligence and integrity, to his office. Gore asked for a casual, informal meeting to discuss Niskanen's planned research into the pricing policy of federal power agencies. The Tennessee Valley Authority (TVA) was important to Gore, and so he organized a manipulative ploy to protect his constituents' pork - cheap TVA power. Niskanen arrived to find not the promised casual conversation, but rather TV cameras and other congressmen. Gore staged the meeting as a Star Chamber interrogation for the consumption of home districts.

Gore's showmanship paid off. Oregon's Mike Hatfield, a Republican, passed the "Niskanen Amendment." This act prohibited government officials from studying how market pricing could improve federal power pricing. The subsidies remained unexamined and unchallenged by those best positioned to do so.

This tale of political privileges and opportunism does not imply that markets are perfect. Market prices will poorly reflect the value of salmon or of free flowing rivers. But market-driven power production and allocation won't subsidize environmental harm as federal hydropower has done for five decades. With vested interests behind each dam, the feds radically increased stakes in subsidies. Adjustments are difficult, salmon suffer, and ethics erode.

The problems which flow from federal power subsidies exemplify the complementary interests of groups such as the Environmental Defense Fund and National Taxpayers Union. Greens, fiscal conservatives, and supporters of reduced government all favor the elimination of power subsidies.

The question is, will the new political leaders realize the potential to harmonize economics, ecology, ethics, and growing demands for limited government?

While we hope they will act in a principled manner, we should not confuse our hopes with our expectations. Yet, as Al Gore said on page 236 of his book, Earth in the Balance, "a pattern of dysfunctionality need not persist indefinitely, and the key to change is the harsh light of truth." And when dams break, the truth may flood out.

Enjoy FREE Insights?

Sign up below to be notified via email when new Insights are posted!

* indicates required