Tuesday, September 18, 2012

Privatizing the Great Lakes

Also available at mises.ca

The EPA has initiated a renewal of a forty year old agreement between the Canadian and American governments to "restore and maintain" the Great Lakes. When the Great Lakes Water Quality Agreement was signed in 1972, it was a media clown show. Nixon and Trudeau came out for the photo ops, claiming the agreement to be good for the environment. Forty years later, the agreement has failed to meet its arbitrary targets regarding pollution control, such as levels of mercury and lead.

This is foreseeable, since 1909 the International Joint Commission on Boundary Waters has held monopoly powers over the Great Lakes. Bureaucrats are appointed to manage water quality and to inform the public on progress of the agreement. Fortunately for the IJC, this new agreement pushes the public reports from every two years to three. Also in the new agreement, the issue of "persistent toxic chemicals" has been renamed "chemicals of mutual concern."

Clearly, the IJC bureaucracy and the subsequent government agreements the IJC is expected to implement cannot protect the Great Lakes in any efficient way. Environment Canada claims that,

The sustainability of the Great Lakes ecosystem is threatened. The ecosystem continues to experience ongoing biological, physical and chemical stresses, as well as new and emerging challenges like invasive alien species, new chemical contaminants and the impacts of climate change.

If this is true, then it should be obvious that the government is to blame. For over one hundred years the Great Lakes have been subject to state bureaus and government policy. If this is the result, then it's time to reassess the entire framework of how the Great Lakes are governed. It's time to reassess the approach to Great Lakes ownership. Clearly, it's time to privatize the Great Lakes.

In the Soviet Union, "…officials and academics insisted that… pollution was a capitalist, not a socialist, problem. It was the inevitable result of private corporations pushing off their costs onto the public sector [externalities costs]. Since the Soviet Union had no private corporations, by definition there could be no pollution." Hence the disappearance of the Aral Sea, a result of Soviet irrigation projects. Or the pollution of Lake Karachay.

This is not the case in Canada and the USA. Our state officials clearly state that the Great Lakes ecosystem is being threatened. Yet, the same problems that plagued the USSR plague the Great Lakes. For environmental preservation is not just a result of defining a problem and using tactics to overcome the problem, for if it were, one hundred plus years of IJC bureaucratic management should have the Great Lakes as clean as when the Europeans "discovered" them all those years ago.

Problems of pollution and contamination arise from lack of ownership. For this was the problem in the USSR. Lack of ownership disincentives individuals to look at the long-term effects of their actions. Because the Great Lakes are not owned in the same way an individual may own a house or a car, those in charge of preservation cannot reap the capital value on the market. This increases the chances of corruption, as IJC bureaucrats can line their pockets by allowing pollution rather than trying to curb it. Whether they willingly admit it (or realize it), bureaucrats tend to perpetuate problems for their own job security. The reverse is true with regards to private property ownership. As Murray Rothbard writes,

If a private firm owned Lake Erie, for example, then anyone dumping garbage in the lake would be promptly sued in the courts for their aggression against private property and would be forced by the courts to pay damages and to cease and desist from any further aggression. Thus, only private property rights will insure an end to pollution — invasion of resources. Only because the rivers are unowned is there no owner to rise up and defend his precious resource from attack.

The question then becomes: how does one go about privatizing the Great Lakes? There are several possible routes that can be suggested. One is that every individual in the bordering States and Provinces around the Great Lakes receive a certificate for claims of ownership. However, if these certificates correspond to a certain plot of water, then who is to decide who gets shorelines? And if an individual owns a share located far from shore, but has no means of reaching it, then how is he or she to determine if their property is being polluted?

Another proposal is that each individual in the bordering States and Provinces receive a variety of shares of ownership in various companies that own the Great Lakes. There are problems with this approach, like who gets to decide which companies own what and how much, but it may be an improvement from the first proposal and certainly an improvement from the status quo.

The third proposal for privatization is the homesteading principle. This Lockean principle claims that ownership is to be acquired by "mixing one's labour" with unowned resources. Under this approach, a man who owns a house on the shoreline can claim ownership of the water around his property. For this is may be where he keeps his boats or where his children swim.

Under the homesteading principle a team of fishermen may isolate a plot of water far from shore to facilitate breeding grounds for fish. A healthy fish habitat will increase their revenue and curtail fish depopulation.

Since water is fluid, an industry that thinks it can dump garbage into its homesteaded portion of the lake will soon find its pollution flowing into other people's property. This in turn causes the victimized individual to take the industry to court, rather than having to appeal to the whims of a bureaucratic agency. The same agency, by the way, that may have already been corrupted by the industry doing the polluting. Of course, the courts themselves may be a victim of crony capitalism, hence the need for private property over the functions of law and order. But that's another topic for another day...

This is by no means a definite conclusion on how to privatize the Great Lakes, but it should be clear that government ownership of resources, whether it be land or water, is incredibly inefficient. State ownership only exacerbates problems of pollution and contamination; it creates a "tragedy of the commons" where no one takes responsibility for environmental degradation simply because, technically, nobody owns the resource in question. If we wish to clean up and preserve the Great Lakes for future generations then we must apply the same principles of ownership to water that we have on land - however counterintuitive it may at first seem. For private property ownership is the only means to which sustainability can become a reality rather than an environmental buzzword.


  1. Private property ownership would kill the rights of people who would not own the land to get access to water.

  2. That assumes that the people surrounding the water are using the land for use rather than exchange. Surely, someone somewhere will tap into the consumer desire to own water, thereby using his coastal land as a means to achieve this end. Otherwise, people are free to fly over the coast lines and establish property in the water. The owners of the land on the shore don't own the sky.