Marc Gunther

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Free Market Environmentalism

What does free market environmentalism mean? It means applying market solutions to environmental problems.

Case in point: Charging higher admission fees to get into the national parks.

Before we get to that, let me introduce you to Terry Anderson, the executive director of a group called PERC and author of a book called Free Market Environmentalism, who got me thinking about this idea. He’s not your typical environmentalist–-a bow-hunter, he killed a lion with a bow and arrow last spring in South Africa–-but he is committed to finding practical ways to preserve the character of the west, where he grew up.

Anderson may be an iconoclast, but other environmentalists are moving his way. No, the Sierra Club is not about to promote bow-hunting. But markets, once seen only as a cause of pollution, are increasingly being embraced as a way to make the world more green.

The evidence for this is everywhere–the so-called cap-and-trade regulatory schemes being proposed to curb global warming, individual fishing quotas that limit depletion of global fisheries, the rise of organic farming, GE’s Ecomagination initiative, the greening of Wal-Mart, and so forth. The climate (pun intended) has changed dramatically since 1991 when Anderson and his co-author Donald Leal published the first edition of Free Market Environmentalism. Back then, Anderson recalls, a book reviewer wrote that “free market environmentalism” was an oxymoron and that the authors of this book were the morons.

I met Anderson at Stanford, where he teaches a class on environmental entrepreneurs in the business school, and we spent some time together last weekend at a conference in Big Sky, Montana, sponsored by PERC, the Property and Environmental Research Center, a nonprofit he leads. (Disclosure: PERC paid my expenses, as well as those of other reporters at the event.) Anderson, I was pleased to learn, is not an ideologue; he says, for example, that we need government regulation of carbon to curb global warming. Instead, he’s a pragmatist who has thought a lot about how best to address the big environmental issues facing the west, from water rights to the energy boom to wildlife restoration to the decline of our national parks.

He and his PERC colleague, Holly Fretwell, and most everyone else who has looked closely at the parks, including NPS managers, agree as currently operated, the parks are in trouble. Infrastructure is crumbling, services are declining and museum collections are gathering dust, as the National Park Conservation Assn. points out. More tax dollars would be nice, but how realistic is it to expect Congress to devote money to the parks during a time of war, rising budget deficits, a national health care crisis, etc.?

Anderson’s recommendent would use markets: Charge people more money to get into the parks, he says. Right now, it costs $25 per car per week to visit Yellowstone–less than a family of four spends to go to movie and a whole lot less than the $200 (minimum) that it costs to take four people to Disney World. This is nutty when you think about it. Consider: Only about 8% of National Park Service revenues are covered by fees. What this means is that the average American taxpayer is subsidizing the Yellowstone vacations of people who are almost surely better off, if only because they can afford to fly or drive to Montana or Wyoming for an extended vacation. That’s not even to consider the British, German and Japanese tourists we are subsidizing. Meanwhile, the parks are deteriorating.

The obvious objection to charging higher fees is that they would keep poor people out of the parks. OK, says Anderson—let’s let anyone who earns less than $30,000 a year get in free. Or give people who can’t afford the higher fees tax credits to offset their costs. Either way, it’s hard to believe that higher fees would keep many people away.

PERC’s Fretwell calculated what it would cost, per person per day, to cover all the operating expenses of a number of parks. Here are her numbers:

Mt Rushmore $1.31
Zion $2.45
Grand Canyon $4.61
Yosemite $6.84
Yellowstone $9.24
Steamtown national historic site $42.39
Gates of the artic national reserve $415

You can see this isn’t a simple problem—some parks don’t get enough visitors, for whatever reason (remoteness, lack of appeal) to cover their costs with reasonable fees. But most do.

Putting the national parks on a pay-their-own-way basis would accomplish something else, too: It would align the interests of park managers and visitors. (I was going to say “customers.”) So as parks serve visitors better, more people will come, more money will come in, permitting more investment. This is known as capitalism. Right now, Congress and its notorious earmarks have too much control over park spending. One result is the infamous $1 million outhouse in Glacier National Park.

The parks will need and very much deserve government support for capital improvements and the like. They provide a public good, arguably even to those who never set foot in them—like the museum you never visit, but it’s nice to know it’s there. The bottom line, though, is that we need to think in more creative ways about environmental problems, particularly when the alternative is business as usual.

Ted Turner's Montana Adventure

The highlight of my trip to Montana last weekend was a visit to the Flying D, Ted Turner's ranch. It's a breathtakingly beautiful place, and an interesting one, too, because Turner is raising American bison, protecting the environment and trying (and mostly succeeding) at making money. (Not that he needs it.) Probably having more fun, too, than he did in the last few years at Time Warner. Below is a picture of Russ Miller, who manages Turner's ranches, and a few bison. Yes, he looks a little like Ted. I wrote about Turner's ranch today in my CNNMoney column. Here's how the column began:

Bozeman, Montana --"I don't want to own every ranch," Ted Turner once said. "I just want to own the ranch next door."

This is the kind of thinking that has made Turner, the restless 67-year-old cable television billionaire, the largest private landowner in America. Turner, the former vice chairman of Time Warner, who left the company's board in May, owns 15 ranches in seven states, covering 1.9 million acres. That's 3,000 square miles - bigger than Delaware or Rhode Island.

A visit to one of those ranches - the 113,000-acre Flying D ranch in southwestern Montana - demonstrates that the Turner ranches stand out not only because of their size, but because of the values that drive them.

You can read the the column here.

The 'Story' of Wheat Montana

When Dean Folkvord finished high school in 1978, his father Dale bought a wheat farm near Three Forks, Montana. Their only plan was to sell wheat. Since then, they have built a company Wheat Montana,, that sells wheat, mills flour, bakes bread and operates eight casual restaurants. Their story illustrates how farmers can make a direct connection to consumers, and thereby create an alternative to conventional, commodity agriculture—which isn’t working well in much of the rural west.

The conventional agricultural model still dominates, of course. It’s based on feeding the most people, at the least cost, with commodity products, grown with lots of chemical inputs. It drives down prices paid to farmers, and it’s one reason why Montana is a poor state—45th in the nation in household income.

Folkvord, 46, has blazed a different trail. Wheat Montana, as he explains it, does more than sell wheat, flour and bread—it tells a story, and helps to forge a link between the consumer and the family farm. (A picture of his family adorns Montana Wheat’s bread and flour packages.) Most farmers, when business is good, expand “horizontally” by buying more land. By contrast, Folkvord has expanded “vertically” up the value chain, capturing a bigger share of the prices people pay for food. As a result, his company today employs about 190 people, and provides work for another 100 or so through suppliers and partners.

This past weekend, I’ve been learning a little about agriculture, mining, land use and conservation issues in the west at a conference in beautiful Big Sky, Montana, sponsored by PERC (The Property and Environment Research Center), an NGO that promotes market-based solutions to enviromental problems. Disclosure: PERC paid the expense of reporters who attended the event. More about PERC in a posting later this week.

Folkvord came upon his business model by necessity. He wasn’t making enough money as a wheat farmer in the early 1990s, and so built a bakery. “We really didn’t want to get into the bread business, but we felt it was something we had to do,” he says. The same goes for his first bakery and deli, which he opened, with trepidation, right by the farm; he and his dad figured they’d sell sandwiches to local farmers and ranchers, as well as a few travelers driving by on nearby I-90. “People showed up from Seattle and Minneapolis and they wanted expresso,” he says. “All I knew about expresso was that I didn’t like it,” he says. He ordered expresso machines from Bozeman and learned how to make lattes. “We realized, wow, there’s something going on here and all of a sudden we were in the food business,” he says.

Today, Wheat Montana has eight retail outlets—bakeries and delis—around the state, and Folkvord’s looking to expand to Washington state and eventually California. “It plugs into a trend out there in America where we might be getting tired of fast, fried food and people want foods that’s fresh and good for you,” he says. (Although the popular cinnamon rolls aren’t exactly slimming.) He sells fresh bread in five states, with wheat varieties being his big seller. Wal-Mart’s the biggest seller of his flour. And he ships wheat kernels to specialty bakeries around America, including Spring Mill Bakery near my home in Bethesda, Md.

Interestingly, Folkvord’s products are not organic. His farm gets only about 12 inches of rainfall a year, the growing season is short and it’s at an altitude of more than 5,000 feet. Half his land lays idle each year to replenish the soil, he’s got weed problems and he says it wouildn’t be practical to go organic (although other Montana farmers grow lots of organic wheat). Instead, he has his flour and bread tested by a third-party to make sure they contain no artificial chemical. and markets them as “chemical free,” GMO free and “better than organic.” Yes, there’s some pressure to go organic, but he stands behind the healthfulness of his break and says, “We’re Norwegian and bull-headed and we’re not going to change.”

Recently the Folkvord family sold a big stake in Wheat Montana to outside investors. They are looking for capital and expertise to get national distribution for their products and for the chain of deli. “The Big Sky’s the limit,” says Folkvord. Does this mean they are no longer a family farm? We could argue about the family farm but you can drive to Three Forks and see the wheat fields for yourself. Just try to find the ‘farm’ where Pepperidge Farm grows its wheat.