In the state cases, ranchers’ grazing permits are less secure because they are shorter term and periodically put up for bid.If an environmental group wins the bid, the rancher loses the permit.Ranchers would like to eliminate the competition.If they cannot work within the system as Alyson Heyrend said, their only option is to make the best of a bad situation and engage in acrimonious political battles.This subspecies of bird had the smallest range of any North American bird.One population existed on a few thousand acres of marshland in Brevard County, Florida, and another was offshore, on marshy Merritt Island.When its habitat was reduced by draining marshes to increase pasture and the pesticides and water impoundments that were used to control mosquitos found their way into the food chain, the dusky seaside sparrow population plummeted.By 1972 only two males could be found on Merritt Island, and a few hundred managed to survive on the mainland.Herbert Kale and Allan Cruickshank, two local ornithologists, concluded that the dusky was living on borrowed time unless some of the lands could be spared from conversion to pasture.The agency now had to decide what it was going to do about the dusky.Was it going to lead the bird onto the ark, or strand it ashore?The choice was not easy.In 1969 Congress had appropriated $1.3 million for acquiring endangered species habitat.Several thousand acres of Florida swamp would cost more than a million dollars.Should the Office of Endangered Species save the dusky and lose, say, the American alligator or the key deer?What Solomon could tell the agency which course to follow?In 1972, the agency purchased 2,000 acres of land for $787,000, and over the next four years, it purchased another 2,000 acres for $1 million.What followed was a tragic comedy of errors.In particular, it allowed further drainage of the land it purchased.By December 1975, only eleven males were left in the area.The agency bought another 1,500 acres but inexplicably again failed to prevent drainage on the lands.None existed on Merritt Island.In a desperate attempt to save a portion of the gene pool, Herbert Kale, the vice president for ornithology of the Florida Audubon Society, wanted to try captive breeding.Because no female sparrows had been known to exist after 1976, his approach called for breeding the remaining males with females from a closely related subspecies.Continuing this process would mean the sixth generation would be 98.4 percent pure.After successfully breeding a first generation of healthy, fertile hybrids, Kale contacted the service for permission to proceed with his breeding project.’A new legal opinion said that the Endangered Species Act covered pure species only, and that federal money therefore could not be spent on hybrids.Several years elapsed without federal approval, but Kale remained dedicated to his task of saving the dusky.He arranged to work with curators at Walt Disney World’s Discovery Island, with Disney picking up the tab.Finally, after two years of bureaucratic delays, another legal opinion allowed Kale to proceed.Unfortunately, nothing went right.Old age, incompatible pairings, failed nesting, and a series of accidents led to extinction of the sparrow.Kale was bitter about the precious time that the project had lost due to bureaucratic bungling and lack of dedication.The service had paid lots of money for habitat that it had not managed properly.Such a position ignores the importance of entrepreneurship in generating new approaches to problems.Unfortunately, the Fish and Wildlife Service hampered the innovative effort of Herbert Kale to save the dusky seaside sparrow.Given the fiscal constraints on federal agencies, some environmental entrepreneurship is certainly called for.To make matters worse, government subsidies provide another source of perverse incentives.These subsidized water projects have exacted a heavy toll on fish and wildlife.Dams built along the Columbia River and its tributaries, for example, have effectively blocked fish migrations and inundated spawning areas.As a result, anadromous fisheries in the Pacific Northwest are declining and, in some cases, are on the verge of extinction.As a result of federal water projects, wild salmon runs in Washington, Oregon, Idaho, and northern California now number in the thousands and hundreds, where once they were in the millions.The first population to be officially protected as a threatened species under the Endangered Species Act was the Sacramento River chinook.After fish ladders were built to allow salmon and steelhead to negotiate dams, fish biologists discovered that young fish had trouble finding their way through the reservoirs behind the dams without the current to guide them.Hence, reservoir levels are being drawn down to provide more current, but this reduces water availability for agriculture and recreation.Alternatively, fish are trucked around or barged through reservoirs at enormous cost.In the end, these measures may cost more than $900 per salmon saved.These examples are ugly because they represent a senseless destruction of natural amenities fostered by our political institutions.Going for the GoodIn the 1930s, Aldo Leopold became the American conservation movement’s ’voice in the wilderness’ because he was one of the few who understood the importance of environmental entrepreneurship.Unlike so many in the movement who were putting all their eggs in the public stewardship basket, Leopold began espousing the need to balance wildlife policy by enlisting the services of the private landowner.He recognized that the private landowner was critical to the recovery of wildlife populations and that in conservation as in business, incentives really do matter.He knew that farmers and ranchers had to survive financially and urged that we create an institutional environment favorable to private stewardship.6Regardless of the resource in question, the key to entrepreneurship is secure private property rights coupled with the freedom to contract.Bourland had to specify what International Paper was supplying to hunters and recreational users and what was expected from them in return.He had to discover the price people were willing to pay and work with timber managers to supply the environmental amenities.Willey had to specify what he wanted from water users and what he was willing to supply in return.Because he was not marketing the water directly to those who demand salmon and steelhead habitat, he had to discover a secondary market in electric power production that allowed him to muster the financial resources to compensate farmers for forgone water use.In both Bourland’s and Willey’s cases, the contract had to be monitored to ensure that the goods were delivered.It is one thing to lease land for commodity production, such as timber harvesting, where the output and its value are well known, but it is quite another to do so for wildlife habitat, where the requirements for producing wildlife habitat are not well known and people are not accustomed to purchasing this good through the market.These costs of specifying and monitoring contractstransaction costs, as economists call themincrease with the number of parties to the contract and can be sufficiently high to prevent private solutions.In both cases, the land areas are large enough to accommodate the requirements of the wildlife.But the contractual problems are greater if providing the habitat necessitates contracting with tens if not hundreds of landowners, each with a small share of the land required.With transaction costs much higher, the feasibility of privately providing wildlife habitat declines.The entrepreneur will only be able to cover the higher contracting costs of amassing land for wildlife habitat if the value of the wildlife is extremely high.7Transaction costs also may make it difficult to get people to pay for environmental goods.For example, if people enjoy viewing wildlife and can do so from a public road, a private provider would have to erect a high fence to exclude nonpayers.This is what zoos do, but the cost of exclusion is not trivial, and the nature of the good almost certainly changes because seeing an animal in a zoo is not the same as seeing it in the wild.To the extent that the cost of excluding nonpaying customers is high, people can ride free on the efforts of the entrepreneur to provide wildlife habitat.The result is that providers of environmental goods will be undercompensated relative to what people are willing to pay, thus making it more difficult to generate private entrepreneurship.Governmental agencies may control land areas large enough to accommodate migrating species, and where they do not, the agencies can use the powers of government to regulate private landowners to provide wildlife habitat.How do agencies know what amenities the public wants, and how does the public know whether the agency is providing them?What are the incentives faced by bureaucrats?Will their entrepreneurship be switched on to produce what the constituents want or will it be channeled to maximizing bureaucratic budgets?These are questions that all too often are not asked.Restrictions on hunting markets make it more difficult for landowners to profit from providing wildlife habitat.Governmental regulation can undermine the security of property rights and thwart entrepreneurship.The quintessential example is the Endangered Species Act, which actually penalizes landowners whose lands harbor wildlife by restricting the activities from which owners can profit.If water cannot be sold or leased by irrigators to environmental groups interested in maintaining or increasing stream flows, those groups will have little alternative but to seek regulations that guarantee minimum flows.If ivory cannot be marketed through legitimate channels, poaching will be the only way that people can turn elephants from a liability into an asset.As the lowering of the Iron Curtain showed, pure socialism provides ugly results.Mixed management of resources, such as federal land management, national parks, and federal water projects, is somewhat better, but the results are still bad.By law, national forests are managed to achieve the ’combination [of land uses] that will best meet the needs of the American people .Senate Bill 1194, sec.An exception in recent years has been the conservation reserve program.Over 36 million acres of highly erodible land has been taken out of production.Even in this case, private action is not out of the question as evidenced by the nonprofit Rocky Mountain Elk Foundation’s efforts to raise private funds to lease or purchase habitat in more densely populated areas.Free Market Environmentalism.Pacific Research Institute for Public Policy.Priming the Invisible Pump.Are We Solving the Right Problem?Political Economy Research Center.Let Rights to Water Be Traded.Turning a profit on public forests.Political Economy Research Center.Conservation economics [1934].The Economic Organization of Wildlife Institutions.In Wildlife in the Marketplace, ed.The Butterfly Problem.Park Will Close Campground and Two Museums.Stocks at Risk from California, Oregon, Idaho, and Washington.The American West and Its Disappearing Water.Department of Interior.National Park Service, Budget Division.Department of the Interior.

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