Bozeman consistently ranks high among American towns. Unless one is allergic to cold, committed to scuba diving, or loves big cities, Bozeman is wonderful. Cultural and natural beauty abound, while considerate behavior and civility are normal, not aberrations.

Community involvement with music and the arts is exceptionally high; consider support for the Bozeman Symphony, Intermountain Opera, and chamber groups. Further, the number of environmental organizations based here is astounding, perhaps one organization for each thousand residents. Nearly all draw national support for local staffs. Further, Bozeman’s Greens have remarkable intellectual diversity.

Some thirty years ago, the Center for Political Economy and Natural Resources was created at MSU. The Center applied economic analysis to contentious natural resource and environmental issues involving topics such as forest, wildlife, wilderness, energy, and range policies.

This institute, an MSU “Center of Excellence,” was highly productive and creative. The “new resource economics,” now the dominant paradigm, came directly from the Center’s publications in academic journals. It attracted national attention and foundation grants.

As a result of this work, the Center drew the wrath of politicians and special interests threatened by exposure. Further, the specter of an alternative model for protecting our environment and enhancing wellbeing was anathema to precociously PC Greens. As a result of political pressures, some of which previewed today’s conflicts over converting food to ethanol, the MSU institute was terminated in 1982. (MSU’s president placed this bumper sticker over his desk: “Help Montana Agriculture: Eat an Economist.”)

Fortunately, good data and sound logic are hard to defeat. The Center’s approach gradually gained national acceptance not only in economics, but also within law schools and among responsible environmental groups.

Three Bozeman groups are lineal descendants of the original institute: FREE, Gallatin Writers, and the Property and Environment Research Center (PERC). Of them, PERC adheres most finely to an economic approach. It is “...dedicated to improving environmental quality through markets and property rights.” FREE shares an economic perspective, but seeks to be ecumenical, while Gallatin Writers, created with a major Ford Foundation grant, focuses on the intersection of culture and environment.

While I don’t speak for PERC, here is my view on the groups’ differing but complementary perspectives. In its early post-Earth Day years, the environmental movement focused on the Progressive Era’s central planning approach to environmental issues. This model assumed self-interest inevitably clashes with the interest of society. Conventional policy approaches proceeded from the correct assumption that markets often fail to address environmental concerns. Rather than advocating the redesign of institutions for mutually beneficial outcomes, environmentalists called for strong government action via commands and controls to curb man’s destructive tendencies.

Government intervention was, and still is, called for when distorted prices or poorly defined property rights foster environmental problems. Yet, centralized regulatory agencies are ill equipped to handle the complex ecological effects of economic activity. And too often, governments subsidize environmental and welfare losses. Consider ethanol from grain and America’s outrageous sugar subsidies.

Federal one-size-fits-all approaches to environmental legislation often neglect differences among diverse ecosystems and ignore local knowledge. As Harvard law professor Richard Stewart noted, “The system has grown to the point where it amounts to nothing less than a massive effort at Soviet-style planning of the economy to achieve environmental goals.”

More recently however, enlightened Green thinking (although not public policies distorted by narrow political interests) have accepted the importance of institutional design and the necessity of creating positive incentives to improve environmental quality. Progress, especially in a time of increased energy and resource costs, requires better social and institutional arrangements.

We need not only greater sensitivity to the environment, but also: (1) institutions, including private property rights, that create incentives to act responsibly; (2) prices that reflect all costs, especially environmental costs; and (3) a recognition that while markets coordinate wonderfully, they sometimes ignore that which is intangible and often lead people to destroy that which has no price and no owner.

Natural resource and environmental policy issues are scientifically complex and carry heavy emotional and ethical baggage. These are ingredients for error and acrimony. But, as leaders of environmental groups speaking at FREE conferences explain, economic tools can lighten the load.