Question

The economics of public issues 20th edition ( CHAPTER 25-28): How important are property rights and their impact on the environment of life when discussing issues related to climate change, species extinction, ethanol added to gasoline, or recycling?

Answer 1

Species extinction

The central point of my testimony is that landowners and their concerns, which include their property values and property rights, are the key to the conservation of this country’s biodiversity, particularly endangered species. Unfortunately, one of main ways the United States goes about trying to conserve endangered species-the Endangered Species Act-is especially counterproductive because it is a penalty-based approach that often violates landowners’ property rights, and negatively impacts property values and the ability of people to earn income from their land.

Due to this approach, the Act discourages landowners from harboring and conserving endangered species, encourages landowners to rid their property of endangered species and the habitat necessary to support them, and discourages landowners from allowing scientists and researchers on their land to study endangered species.

ESA’s Penalties and Property Rights

It’s not hard to understand why the Endangered Species Act is so feared by landowners, which results in the Act being so counterproductive. By violating landowners’ property rights, the Act makes otherwise normal and legal forms of land and resource use illegal, such as farming, homebuilding and timber harvesting. Furthermore, through the Act’s prohibition on “harm” to listed species, the federal government can prohibit land use that merely occurs in a type of habitat suitable to a listed species even if the species is not necessarily present.

The ESA’s penalties are severe: $100,000 and/or 1 year in jail for individuals committing misdemeanor harm to a fish, bird, or even its habitat, which increases to $250,000 for a felony. For corporations the jail time is the same but the fines double to $200,000 for a misdemeanor and $500,000 for a felony. When these fines are combined with two other factors-(1) that there are no objective standards for what constitutes harm to species habitat so the process by which the federal government determines this is necessarily arbitrary and unpredictable for landowners, and (2) federal regulatory agencies have the ability to use the ESA to lock up vast amounts of land and resources-the Act’s fearsome reputation becomes apparent.

Property rights and the UNFCCC

The first of these frameworks addressed by Richard Lord was the UN Framework Convention on Climate Change (the ‘Convention’). It is the primary international forum for developing and applying law in relation to climate change. Article 2 of the Convention emphasizes the stabilization of greenhouse gas concentrations in the atmosphere at levels that avoid dangerous climate change. Its emphasis is on mitigation, or abatement, of rising greenhouse gas emissions. The objective of the Convention reflects the paradigmatic approach to climate change in the early 1990s: that climate change could be solved, and damage avoided, through the reduction of carbon emissions. Adaptation to the effects of climate change was off the agenda. To address it in any level of detail was to admit defeat. But progress on mitigation has been too slow and climate change impacts are today a reality.

Acknowledgment of this reality has caused a shift of focus onto climate change adaptation and, more recently, how to deal with loss and damage that arises when adaptation is no longer possible. The climate change negotiations are now as much about money as they are

about emissions, and have entered a new paradigm of loss and damage liability, insurance and compensation.Many elements of the international legal dialogue on climate change draw parallels with familiar concepts underlying tort and compensation. For example, ‘adaptation’ in the climate change context can be seen as equivalent to the private law obligation to ‘mitigate’ loss. Both terms refer to taking steps to reduce the degree of harm suffered by a prospective Claimant.

Similarly, the private law principle of “material increase in risk” (see above) and the UNFCCC principle of Common But Differentiated Responsibilities, or ‘CBDR’ both relate to the differential contribution of potential Defendants to the damage caused by climate change. There is, as Richard Lord termed it, a “convergence between the private law of fault and negligence and tort and damage, and the principles used by public international lawyers”.

Damage to property

An important feature of the UNFCCC framework are so-called ‘response measures’. Response measures refer to those measures that might be taken to combat climate change, for example, decreased reliance on fossil fuels. Petroleum exporting countries will be negatively affected by these measures and demand compensation for their losses. Calculating this loss is a topical issue: Richard Lord referred to a recent publication on ‘Unburnable Carbon’ (a thesis that states that either all of the remaining fossil fuels reserves will be consumed, leading the world far beyond the threshold for dangerous anthropogenic climate change, or fossil fuel resources

are significantly overvalued). Both in the international climate change context as well in domestic private law, the assessment and calculation of loss is a complex but central part of dealing with liability and the infringement of rights.

Discerning damage in the private law context is further complicated by the fact that there is no universal definition. ‘Adverse physical damage’ is generally accepted as a starting point. But many of the aspects of damage in the context of climate change are more subtle. Damage includes non-economic losses, and losses that arise without there being evidence of physical damage (for example changes in the value of land by virtue of proximity to flood plains). Damage might also depend on additional legal concepts: for example submerging a rock and submerging an inhabited island lead to different types of liabilities. Furthermore, unlike many private law claims, climate change damage cannot be calculated by looking at ‘net’ change or by application of set-off: damage might occur because of warming and cooling. Clearly, as Richard Lord concluded, the concept of damage in the context of climate change is very wide, and gross damage to property rights likely to be substantial.