Confused thinking on the environment at Catallaxy

A post over at Catallaxy suggests that policies of preventing the exploitation of oil and gas reserves near national parks in the US harm the poor (mainly blacks) and are therefore unacceptable - there is even the suggestion in the original news story* that such policies are racist . It is at best a partial story and in conceptual terms highly misleading.  The general intent by Catallaxy is to poke fun at the middle class affluent in a way reminiscent of populist left-wing attacks on reason.

The decision to limit exploitation of oil and gas reserves (or any other marketed good) because of conservation concerns (or concerns over any non-marketed good) is one that revolves around a social cost benefit analysis of the respective options.  Oil and gas products are marketed whereas conservation values are not so it is more difficult to get a feel for the present value of the latter types of outputs.

More effort is involved in valuing conservation assets but various indirect procedures can be used (advice from experts and scientists, travel cost method, contingent valuation and so on).  A premium should, of course, be added to the conservation values - a quasi-option value  - since the decision not to proceed with development of the oil and gas deposits is reversible while the decision to proceed with these developments is much less readily reversed to reinstate conservation values.  In addition, technical progress in the future will yield new sources of energy but not new conservation assets and, if you believe the environmental luxury good hypothesis, people's values switch toward conservation as they become more affluent. Environmental red necks tend to be working class.  Both of these factors intensify the case for taking care with the destruction of already over-exploited natural environments.

All this is basic resource economics and provides a rational basis for being conservative about certain natural resource destructions.

The cost benefit comparison proposed involves ignoring distributional impacts and is largely efficiency-based.   This is essentially the 'second theorem of welfare economics' - maximise the value of society's outputs first and then (if necessary**) make transfers to accommodate the specific interests of particular disadvantaged groups such as the poor.  One can raise qualifications about the general applicability of this result but it works well in the current setting.

If it is mainly middle class affluent people who seek conservation outcomes then, on this account alone, they should pay for those outcomes and transfers should be made to those suffering the costs. But this has nothing to do with the case for making the conservation versus development issue using efficiency-oriented cost-benefit analysis.

The point is to value things at their social worth something a libertarian blog like Catallaxy should understand.  Economics is, in my view, a discipline which sensibly protects the environment.

It is foolish to sling-off at environmental activists because they are middle class or rich and because some of those bearing the costs of development restrictions have lower incomes. To a very large extent environmental equity and efficiency issues are separable and those committed to free markets should always target efficiency leaving the tax and transfer mechanism to address distributional issues.

* It is a generally ignorant account which suggests that poor inner city blacks will suffer most the effects of higher energy prices if the deposits are not developed.  This fails to recognise that energy prices are globally determined with the local developments being discussed having only a limited, short-duration impact on prices. Both rich and poor are impacted on by any higher prices.

** The poor do not need to be compensated for every policy that runs against their interests if they already receive huge transfers from those more wealthy in order to effect general redistributive concerns. In the present setting specific benefits to the wealthy of conservation might be consider a payback for redistributive taxes. This is an important since it is generally not necessary to provide specific compensations for every project.

Update: In a comment Tim Lambert points out that the source of the claim that protecting conservation areas is racism is CORE (Congress on Racial Equality) which receives funding from ExxonMobil.  CORE has been an active supporter of climate change denialism and opposed (for example) the listing of polar bears as endangered species on the grounds that such protection damaged poor black Americans.