6. Ethical Issues in Productivity

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6. Ethical Issues in Productivity
Stewardship Agricultural Water Use

• Larry D. Sanders Spring 2002

Dept. of Ag Economics Oklahoma State
University
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INTRODUCTION

• Purpose
• to understand the ethical issues related to
  agricultural
• water use
• Learning Objectives
• 1. To review an ag water use case study,
  identifying the
• situation, causes, ethical issues and
  alternatives.
• 2. To understand the nature of ag water use as
  an example
• of the larger issue of productivity vs.
  stewardship.
• 3. To become aware of generic issues related to
  water use
• and water quality, recognizing the ethical
  choices
• embedded in the public private
  alternatives.
• 4. To become aware of the process of finding
  common
• ground as an alternative for resolution.

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Stewardship of the land by farmersMyth or fact?

• Dustbowl Oklahoma?
• Recovery from Dustbowl?
• San Joaquin Valley wetlands destruction (CA)?
• Ogallala Aquifer depletion (High Plains)?
• Chesapeake Bay eutrophication?
• Colorado River salination siltation (AZ)?
• CRP/EQIP/WRP participants?
• Holistic farming?
• Farmer cooperation w/Ducks Unlimited, others?
• Destructive effects include
• Environmental contamination Habitat destruction
  Resource depletion

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Cases Irrigation Drainwater Contamination in San
Joaquin Valley

• Critical habitat for humans millions of
  migratory waterfowl
• 1/5 of North Americas waterfowl winter in San
  Joaquin Valley
• 6 of original wetlands remain
• Most waterfowl now use national wildlife refuges
  private duck-hunting preserves
• High mortality/deformation rate likely cause
  selenium poisoning from ag drainage into refuges
• Human health at risk w/Kesterson Reservoir
  selenium count 8 to 4000 x standard (1983)

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Irrigation Drainwater Contamination in San
Joaquin Valley (cont.)

• Ethical basis for public intervention
• Rights-based view
• Prevent humans harming other humans
• Prevent harm to wildlife environment
• Desire to stop actions harmful to humans
  waterfowl (stop the action that pollutes

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Irrigation Drainwater Contamination in San
Joaquin Valley (cont.)

• Ethical basis for public intervention (cont.)
• Utilitarian view
• Public action to prohibit/regulate actions where
  net social benefits less than net social costs
  (farmer practices result in pollution of waters
  that cause social costs to society that are
  greater than benefits to society)
• Desire to modify existing structure so farmer
  actions no longer impose net social cost
  (internalize the social cost by levying a tax on
  effluents if the farmer can afford the license,
  ok to pollute)

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Irrigation Drainwater Contamination in San
Joaquin Valley (cont.)

• Public resolution must be
• Legal
• Politically viable
• Enforceable
• Cost effective
• Technologically feasible
• Environmentally sound
• Ethically defensible
• Short term close drains that feed reservoir
• Long term resolve the toxicity of irrigation
  farming

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Irrigation Drainwater Contamination in San
Joaquin Valley (cont.)

• Productivity vs. Stewardship
• Maximizing production greatest output
• Productivity efficiency of production
  (increasing ratio of value of output to value of
  input)
• Stewardship maintaining certain environmental
  standards for sustainability
• Public policy producer both have goals to
  maximize production productivity
• Adequate, varied, affordable, globally
  competitive food supply that supports economic
  stability
• Rights-based utilitarian views used to support
  such goals
• Environmentalists 2 goals responsible for ag
  crisis environmental destruction ignore
  stewardship

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Irrigation Drainwater Contamination in San
Joaquin Valley (cont.)

• Productivity vs. Stewardship (cont.)
• Environmentalists 2 goals responsible for ag
  crisis environmental destruction
• Producers must increase productivity to improve
  profits
• Technology or externalizing costs primary ways to
  do so
• Easiest/most common negative externalities
  natural resource management (soil, water,
  habitat) of inputs or waste disposal
• Technology improvements may also result in
  negative externalities and/or environmental
  degradation (larger/less efficient fossil-fuel
  burning equipment, hybrids, chemicals), although
  some technology may reduce environmental impact
• Technology treadmill increasing debt levels
  minimizes long term positive impact

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Irrigation Drainwater Contamination in San
Joaquin Valley (cont.)

• Productivity vs. Stewardship (cont.)
• Result Stewardship often loses out to
  productivity
• Producers public policy based on rights-based
  view of individual freedom to choose /or
  utilitarian view of profitability wins over
  Environmentalists rights-based view of
  ecocentrism or rights of nature /or utilitarian
  view of welfare economics to internalize negative
  externalities
• Search for common groundamong moral preferences
• Environmental mitigation
• Compensation to re-assign property rights
• Purchasing rights

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Other case concepts in TMR6

• Texas Water War Edwards Aquifer
• Allocative efficiency resources should go to
  most valued use (willingness to pay willingness
  to sell marginal benefitsmarginal costs
  demandsupply)
• May provide utilitarian ethical foundation for
  commercial development
• Market failure private market does not provide
  social efficiency (marginal social
  benefitsmarginal social costs)
• Causes include externalities, public goods,
  inappropriate government intervention
• Solutions include private-private or
  private-society mediation, government
  intervention
• Conservation vs. Preservation

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Issues OptionsWater Use

• SUPPLY
• Development (Dams, Diversions)
• increased water availability (industrial,
  municipal, recreation), improved ag production
  lower food prices, flood control
• reduced endangered species/habitat scenic areas
• Pricing or Sale of Rights--typically a
  state/local issue
• increased water costs conservation
• may reduce ag production
• water is more likely available

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Issues OptionsWater Use (cont)

• SUPPLY (continued)
• Management--typically a state issue (Feds may be
  involved if resource crosses state boundaries)
• increased water conservation reduced scarcity
• use more consistent with need
• reduced freedom value of water rights

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Issues OptionsWater Use

• SURFACE WATER RIGHTS
• Riparian (owner of land)
• Prior Appropriation
• GROUNDWATER RIGHTS
• Absolute ownership
• Reasonable use
• Restatement rule
• Correlative rights

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Issues OptionsWater Quality

• FREE MARKET--Point Nonpoint Pollution
• INPUT TAXES--Internalize costs

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Issues OptionsWater Quality (continued)

• REGULATION
• Key regs
• Clean Water Act (CWA)-1977
• Coastal Zone Management Act (CZMA)-1972
• Safe Drinking Water Act (SDWA)-1974
• Federal Insecticide Fungicide Rodenticide Act
  (FIFRA)-47 Federal Environmental Pesticide
  Control Act (FEPCA)-72 88 96
• Endangered Species Act (ESA)-1973
• Food Quality Protection Act (FQPA)-1996
• Performance Standards (flexibility)
• Prescribing/Proscribing Practices

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Issues OptionsWater Quality (cont.)

• Subsidies
• --Incentives (WQIP CRP EQIP CFO
  WRP Cost-sharing Green payments IPM)
• If agriculture treated as point source
• Water quality, production costs, food prices up
• Soil erosion, farmer freedom down

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Issues OptionsWetlands

• Definitional issue
• Free market
• Reduced wetlands, water quality, wildlife,
  habitat
• More land for ag, residential commercial use
• Regulation
• Swampbuster
• No net loss
• BMPs
• Subsidies
• WRP--1990
• Compensation

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WHEN PRIVATE DECISIONS AFFECT OTHER PEOPLE OR
THINGS

• Finding Common Ground thru
• mutual consent
• May be private, public or both
• May be direct, thru an intermediary or both

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Agricultural Practice Harms Human/Nonhuman
species

• Alternative Consequence
• 1. Do nothing --Harmed person(s)
• /or nonhuman
• species pay(s)
• Producer changes --Producer pays
• --Consumer pays
• --Harmed person/ species pays
  less/none
• Government accepts --Taxpayer pays
• responsibility --Harmed person/
  species pays less/none

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Whos to blame how to resolve?How to find
common ground?
Bull in the neighbors field
Private vs. Private
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Whos to blame how to resolve?How to find
common ground?
Odor from a large hog farm
Private vs. Public
Private vs. Private
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Whos to blame how to resolve?How to find
common ground?
Draining a wetland
Private vs. Environment (Public? Private?)
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Whos to blame how to resolve?How to find
common ground?
Closing a school or hospital
Public vs. Private
Public vs. Public
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Who to credit, who benefits is it a net benefit
to community?

• New farm/business brings jobs economic activity

Some folks lose -higher cost of
living? -lower quality of life?
-stress infrastructure
Some folks benefit -more income
-more profit opportunities -more vibrant
community
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Externalities

• Decision impacts someone or something other than
  the decision maker his/her operation
• Impacts may be costs (negative externality) or
  benefits (positive externality) or both
• Referred to as market failure

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Solution?

• Simple, if not easy
• Internalize these costs or benefits into the
  decision makers operation (fees, taxes, fines,
  penalties, subsidies, grants)
• Education
• Who decides?
• How to implement?
• Who pays?

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Alternatives

• 1. Free market?
• --Affected parties work it out
• --Possibly thru courts
• --Mediation

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Alternatives

• 2. Quasi-market?
• --Marketable permits
• --Create markets for transfer of property rights
  (water use, easements, oil/ mineral rights, air
  quality)

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Alternatives (continued)

• 3. Command/Control?
• --Regulations
• --Permits/licenses
• --Certification
• --Taxes
• --Label requirements

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Alternatives (continued)

• 4. Government incentives?
• --Subsidies
• --Technical assistance
• --Tax breaks
• --Grants

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Alternatives (continued)

• 5. Government production of environmental
  quality?
• --Water/sewage treatment
• --Plant trees
• --Develop/restore wetlands
• --Stock fish
• --Create alternative ecosystems (wetlands,
  forests, ponds, lakes, canals)

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Alternatives (continued)

• 6. Moral suasion?
• --Woodsy Owl
• --Smokey the Bear
• --Pinky the Pig(???)

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Market Failure Property RightsUnderstanding
may assist common ground

• One reason for market failure
• Property Rights not assigned
• Property Rights
• --Defined by Society not absolute
• Clean Air/Water?
• Private Property?
• Open-Access Externality
• Property Rights insufficient or unenforceable to
  prevent general use, leading to
  destruction/diminishment/damage of resource

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Best Environmental Quality Level ?

• Economics provides analytical tools
• Market
• Nonmarket
• Society provides the goals ethical standards
• Thru market, public action or group deliberation/
  mediation
• Lives
• Livelihood

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Finding Common Ground

• May/may not achieve best environmental level
• May be more sustainable because of interested
  parties acceptance/ownership
• May be more ethical because of interested
  parties mutual cooperation respect