Hello! If you are new here, welcome and thanks for coming! Follow along here, and on twitter for more writing about the business of American nature. If you like what you see, please subscribe! This entry visits the complex world of how conservation gets funded starting with government policies and regulation. If you know someone who might enjoy please share!
Photo: Hayden Valley, YNP from nps.gov
Growing up in the 1980’s I can remember when it was normal to finish your McDonald’s cheeseburger and toss the wrapper out of the car window speeding down I-75 (6 years old, no seat belts). This was livin’.
Embarrassingly, we did these things and it was as wrong then as it is now.
But I would imagine nearly everyone reading this can agree that although there may be some outliers still among us, most people today elect to stuff that wrapper back into their bag, or in between the seats to dispose of later, properly, in a waste bin.
How did we get to this collective moral code that transcends party affiliation and politics?
Yes. We may disagree on climate change, who causes it and how to solve it, but I would argue no one believes that hurling trash into the streets or dumping motor oil in a creek was ever considered acceptable behavior.
Photo: Smithsonian Institute
The conservation movement has come in waves, often inspired by singular events, such as the groundbreaking writing of Rachel Carson who so eloquently asserted conservation as a core American value and is in our DNA. Her book Silent Spring found a space in pop culture that academia was unable to reach, exposing the pesticide industry and inspiring the creation of the Environmental Protection Agency.
Mario Molina, winner of the 1974 Nobel Prize for discovering that CFC’s were destroying the ozone layer, also set off a tropic cascade of public awareness on the environment. People could visualize a massive hole in our atmosphere and physically hold the cause of it in their hand in the form of aerosol cans, like hairspray. And much like Carson’s writing this directly affected the bottom line of a billion dollar chemical industry creating a titanic tug-of-war between the values of American progress and conservation.
“The pleasures, the values of contact with the natural world, are not reserved for the scientist,” she wrote. “They are available to anyone who will place himself under the influence of a lonely mountain top—or the sea—or the stillness of a forest; or who will stop to think about so small a thing as the mystery of a growing seed.”
Rachel Carson, from a 1954 speech in Columbus, OH
There is no question that in America, the rivers are running more free and clear than they ever have and the air we breathe is the cleanest it has been in recent memory.
Interest in nature is at an all-time high.
Yellowstone National Park, among the backdrop of a pandemic, saw the highest tally of visitors in the month of September. Home values in rural, recreation hubs across the west, like Montana have sky-rocketed and outdoor gear sales are overwhelming the industry.
Photo: National Park Service
If Carson and Molina helped start a first wave of conservation, we may be experiencing a second surge.
The concept of protecting nature is overwhelmingly accepted by everyone. In a recent Gallup poll, 57% of Americans worry a great deal about the pollution of rivers, lakes and reservoirs and 66% have bought a product because it’s better for the environment.
Turns out, people really like clean air and water.
But with all good things, there comes a cost and the investment required is interconnected, complex and sometimes in dispute.
So how exactly is Nature “funded”?
Over the next several newsletters we will look at some of the financial mechanisms that brought us modern conservation, and some that will bring us into the future. In this newsletter we begin with different forms of government funding and regulation.
Policy
If we valued nature like a stock it should be simple, the product adds value for shareholders and society, the investment grows with sustainable returns, and everyone is happy.
As much as we all love free markets and innovation to solve problems, conservation didn’t start that way. If it weren’t for some landmark legislation and forward thinking policy makers, we may not be where we are today.
That’s right, conservation funding was born less out of innovation and more out of penalty.
Laws, like the Clean Air and Water acts, were phased in over time, you were not allowed to dump waste into the river behind your factory anymore, and vehicle emissions, for example, were monitored and regulated. Public opinion inspired change, the rules were followed, and there was no turning back.
Corporations, whether they liked it or not, had to comply with this changing landscape and some acutely embraced it as a new way of doing business to reach new customers. Some of the earliest forms of conservation finance came from this collective compliance and investment made by these major industrial entities.
source: EPA
Taxes and other economic Incentives
These command and control economic policies which were enacted by the Environmental Protection Agency, although effective, were met with controversy. This resulted in the EPA deploying more instruments to provide incentive for industries to comply, widening the impact by including tax rebates, and instituting product certification programs (Energy Star being the most famous). What has resulted over time is a combination of regulation and subsidy, that although effective, has been met with scrutiny in the most recent political landscape. While these economic policies are up for debate, many are still striving for market-driven incentives to this societal conundrum.
Direct payments
Tax incentives and regulation are just two arrows in the quiver of the federal government when it comes to funding conservation. Unfortunately these will never be enough. A recent Mckinsey study puts the gap in land and water conservation funding alone at between $20B-$45B annually. Thus, legislation has been enacted over the years to provide direct resources; namely, cash in the form of grants and targeted programs to invest directly into protecting nature in the United States.
One such program Congress recently authorized, as part of a historic piece of legislation, is the Land and Water Conservation Fund (LWCF), investing in these projects in perpetuity. These dollars (~$900M a year) go directly to initiatives from land acquisitions that provide more public access to recreation or protecting habitat for endangered wildlife. But seemingly with all bi-partisan legislation some would say the trade off for this permanent funding comes at a price. While the amount of money is staggering, the flow of cash comes directly from offshore oil receipts.
Photo: National Park Service
As we will explore over the next several newsletters, the financing of nature is complex. In the following newsletters, we will discuss how these policies and public opinion helped pave the way for more instruments to complement these government mechanisms. From the development of market rate returns on “green bonds” to the mysterious yet effective role that philanthropy and land easements play in the financial system of nature. The next wave is not only coming, it may be even more profitable.
Reflection:
But what if these policies had not been enacted?
Are there enough economic incentives for protecting nature to create a viable institutional class investment opportunity?
What is the “biggest bang for the buck” in conservation?
We will visit this in future Interior Analytics newsletters
TWIB Notes:
Do trekking poles help or hurt? Science weighs in on the cost vs. benefit analysis for your next backpacking trip.
Can nature be the solution to many of our problems and is now the time (mid-COVID-19)? Interesting analysis from Natural Capital Initiative.
Yellowstone picks vendor for automated, driver-less shuttle pilot concept for improving visitor experiences
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