Re: AltInst: Marketable Wetlands

From: Robin Hanson <hanson@econ.berkeley.edu>
Date: Thu May 14 1998 - 17:10:33 PDT

George L. O'Brien replies:
>>>Permit wetlands owners to sell annual wetlands-support coupons,
>>>based upon the size of the property and its suitability as a
>>>nursery habitat. Shrimpers could buy the coupons, and redeem
>>>them with the State fisheries licensing agency in return for a
>>>discount on their commercial fishing licenses.
>>
>>A direct subsidy of wetlands, based also on size and suitability,
>>would create the same incentives to preserve wetlands, while avoiding
>>transaction costs of exchanging coupons. The coupons seems like
>>useless make-work.
>>
>I disagree. Direct subsidies (ie government payments) such as with the
>farm program have a tendency to create significant bureaucracies, system
>gaming (for example people were paid to take land out of circulation but
>then put twice as much fertizer onto their remaining land), as well as the
>creating enormous budgetary conflicts.
>Direct subsidies fail to take into account the underlying optimization
>problem that comes from central planning models.

In order to decide how much of a discount a shrimper gets on their
fishing license, you have to assign a value to the coupons for each
wetlands. This requires exactly the same level of central planning,
beureacracy, potential for gaming, and budgetary conflict. As you've
described them, coupons are just different way to move the money around,
not a different way to decide what is worth how much.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614

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Received on Thu May 14 17:24:13 1998

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