December 3, 2003

A Letter from Economists to President Bush and the Governors of ElevenWestern States Regarding the Economic Importance of the West’s Natural
Environment.

To:
President George W. Bush
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
The Honorable Dave Freudenthal, Governor of Wyoming
State Capitol Building
Cheyenne, WY 82002-0010
The Honorable Kenny Guinn, Governor of Nevada
State Capitol
101 North Carson Street
Carson City, NV 89701
The Honorable Dirk Kempthorne, Governor of Idaho
700 West Jefferson, 2nd Floor
P.O. Box 83720
Boise, Idaho 83720-0034
The Honorable Ted Kulongoski, Governor of Oregon
160 State Capitol
900 Court Street
Salem, Oregon 97301-4047
The Honorable Gary Locke, Governor of Washington
PO Box 40002
Olympia, WA 98504-0002
The Honorable Judy Martz, Governor of Montana
P.O. Box 0801
204 State Capitol
Helena, MT 59620-0801
The Honorable Janet Napolitano, Governor of Arizona
1700 West Washington
Phoenix, AZ 85007
The Honorable Bill Owens, Governor of Colorado
136 State Capitol
Denver, CO 80203-1792
The Honorable Bill Richardson, Governor of New Mexico
Office of the Governor
Room 400, State Capitol Building
Santa Fe, NM 87501
The Honorable Arnold Schwarzenegger, Governor of California
State Capitol Building
Sacramento, CA 95814
The Honorable Olene Walker, Governor of Utah
210 State Capitol
Salt Lake City, UT 84114

Dear Mr. President;
Dear Governor Freudenthal;
Dear Governor Guinn;
Dear Governor Kempthorne;
Dear Governor Kulongoski;
Dear Governor Locke;
Dear Governor Martz;
Dear Governor Napolitano;
Dear Governor Owens;
Dear Governor Richardson;
Dear Governor Schwarzenegger;
Dear Governor Walker:

We are economists, and we are writing to express our concern about federal and state
actions that harm the West’s natural environment and, as a result, the economic outlook forthis region’s workers, families, firms, and communities.
The West’s natural environment is, arguably, its greatest, long-run economic strength. The
natural landscapes of the western states, with wide open spaces, outdoor recreational
opportunities, and productive natural-resource systems underlie a quality of life that
contributes to robust economic growth by attracting productive families, firms, andinvestments. The West’s natural environment, however, faces serious challenges thatthreaten to undermine its contribution to the economy. These include air and waterpollution, urban sprawl, the extension of roads and other development into roadless public
lands, and fragmentation of habitat for native fish and wildlife.
The economic importance of the West’s natural environment is widely recognized. Last
year, for example, the Western Governors’ Association, recognizing that “There is a lot atstake,” reaffirmed its adoption of the Enlibra Principles for guiding policy and decisionmaking regarding natural resources and the environment.1
The seventh of these principles is, “Recognition of Benefits and Costs – Make Sure All
Decisions Affecting Infrastructure, Development and Environment are Fully Informed.”2
We endorse this principle, and we commend each of you for your commitments to apply it to
the actions of your administration. Despite your commitments, however, many state andfederal actions are causing additional environmental degradation, increasing the risks offuture degradation, or slowing efforts to reverse past degradation. These actions harm theeconomy—across the West and in each of the states. They diminish the economic well-beingof many residents, divert natural resources from their highest and best use, reduce the1 Western Governors’ Association, “Principles for Environmental Management in the West.”
http://www.westgov.org./wga/policy/02/enlibra_07.pdf. p. 2.
2 Ibid. p. 6.

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environmental amenities that are essential ingredients of the West’s quality of life, andpass to future generations the costs of cleaning up this generation’s environmental messes.
We ask each of you to renew and strengthen your efforts to secure for the West both ahealthy environment and a prosperous economy. Toward this end, we ask you to initiate areview of your administration’s actions affecting the environment and the economy. This
review should:•

Identify actions having a significant impact on the environment and fully describe thebenefits and costs of each.

•

Reinforce those actions that strengthen the economy by protecting or restoring
environmental quality.

•

Arrest those actions that damage the economy by degrading the environment.

In the remainder of this letter we describe the linkage between environmental quality andeconomic prosperity, identify some of the environmental policies and activities harmful towestern economies, and express eight principles for capitalizing on the environmenteconomy linkage.

Environmental Quality Is a Major Source of the West’s Long-Run, Economic
Strength
In the distant past, the West’s natural resources were widely abundant and important to
the economy primarily when they were converted into something else. We converted forests,
mineral deposits, and streams into lumber, metals, and hydroelectricity; valleys, wetlands,
and hillsides into agricultural and urban landscapes; and land, water and air into waste
repositories.
Today, conditions have changed.
Some important elements of the environment are scarcer. The population anddistribution of many native species have diminished markedly. Similarly, the suppliesof roadless lands, free-flowing rivers, and unexploited marine areas have diminishedand, although there have been some notable improvements recently, much of the West’s
air and water remains degraded.
The structure of the western economy has changed. Though still important,extractive industries (logging, mining, and commercial fishing) and agriculture now
play a smaller economic role because their ability to generate new jobs and higher
incomes has declined. Across most of the West, a community’s ability to retain andattract workers and firms now drives its prosperity. But if a community’s naturalenvironment is degraded, it has greater difficulty retaining and attracting workers andfirms.
The economic costs of environmental degradation are rising. As the West’s
population increases, so too do the damages (current and future) from exposure tohazardous pollution and the degradation of environmental amenities. As their habitats2

shrink, many native species face an increased risk of extinction. Reversing this trend
becomes more expensive over time. As ecosystems are degraded, they provide fewer
economically valuable services, such as cleansing the water in streams, andcommunities therefore must provide replacement services with water-treatment plants
and other costly investments.
The economic benefits of protecting and restoring environmental quality arelarge and increasing. As the West’s population increases, the West enjoys greater
economic benefits by avoiding exposure to hazardous pollution, maintaining scenic
natural vistas, extending the availability of recreational opportunities in clean
environments and on public lands, and sustaining the existence of undeveloped lands
and healthy ecosystems.
Misleading price signals slow economic growth. Inefficient pricing of many natural
resources encourages waste and diminishes economic productivity by allocating
resources to low-value uses, while higher-value uses languish. Subsidies to irrigation,
logging, public-land ranching, and mining prop up activities that would not take place
under efficient, market conditions. Underpricing of urban roads, municipal-industrial
water, and pollution emissions sends false signals regarding the true cost of urban
sprawl, and the true value of free-flowing streams, and clean air and water.
Climate change poses significant economic risks. Global warming threatens to alter
winter snow fall in the West’s mountains, increasing the risk that runoff in important
rivers will fall short of summer demands for water; raise sea levels, increase the risk ofcoastal flooding, change the distribution of habitats, and increase the risk of extinction
for some threatened and endangered species.
As these and related changes evolve, the economic health of western communities
increasingly will depend on the health of the environment. Long-run prosperity will derivefrom efficient, effective efforts to conserve increasingly scarce environmental resources,
protect high-quality natural environments, reverse past environmental degradation, andmanage congestion in both urban areas and on public lands with high recreational use.
Resource-management policies and economic-development activities that significantly
compromise the environment will likely do more economic harm than good.

Many Current Policies and Activities Degrade or Threaten the West’s
Environment and Jeopardize the West’s Prosperity
Numerous governmental policies and activities affecting the West’s natural resources,
which purportedly help the West’s economies, are doing just the opposite. Here are a few
examples:Inadequate investment in parks. The federal government has failed to maintain theinfrastructure and environmental quality of national parks. State and local governments
have done the same with their own parks. These failures have weakened the West’s
economies by reducing the attractiveness of nearby communities to workers and firms andby eroding the foundation for the outdoor recreation and tourism industries.

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Reduced protection for roadless public lands. By opening roadless lands to vehiculartraffic, mining, logging, grazing, and other development, usually at a net cost to the US
taxpayer, the federal government has expanded the supply of that which is alreadyplentiful and common at the expense of that which is increasingly scarce and unique. Suchactions fail to account for the benefits non-motorized visitors receive from these lands andfor the loss of the considerable economic benefits—recreation, high-quality water, wildlife
habitat, spiritual values, and more—that public lands provide when they are undeveloped.
The loss of these benefits undermines one of the cornerstones of economic strength forcommunities throughout the West.
Slow action to conserve threatened and endangered species. Congress has failed toprovide adequate funding, and federal agencies have dragged their feet when called upon toconserve threatened and endangered species. These actions jeopardize the economic outlook
for western communities by increasing the risks to species with high economic value,
protecting inefficient and often subsidized activities harmful to both the species and theeconomy, and raising the ultimate costs of conserving the species.
Slow clean-up of polluted sites. Federal agencies have not requested and Congress has
not provided adequate funding to clean-up Superfund sites promptly. Some state and local
governments have slowed the clean-up process. Delayed clean-up of these sites harms the
economy by extending westerners’ exposure to hazardous materials, diminishing the valueof nearby properties, impeding economic-development activities near polluted sites, andgiving polluters additional incentives to pollute in the future.
Ineffective response to risks of global warming. Current research results are
sufficiently robust to conclude that global warming poses significant economic risks to theWest, including increases in coastal flooding, more frequent severe storms, and reductions
in snowpack resulting in lower summer flows of important rivers and streams. These risks
are perpetuated and strengthened by the failure of Congress and the White House to takedecisive action to curb emissions of carbon dioxide and other global greenhouse gases.
Inefficient management of public forests. Federal and state forest managers
emphasize the production of logs, forage, minerals, and other commodities without fully
accounting for adverse impacts on services, such as recreation, provision of clean water instreams, sequestration of carbon, and the existence of roadless lands. These actions reduce
the overall value of goods and services derived from public forests.
Lack of appropriate incentives for resource conservation. With subsidies andinefficient pricing, federal, state, and local policies encourage waste and discourageconservation by hiding from consumers the full costs of resource-intensive activities, suchas exploration for oil and gas, irrigation, public-land grazing, and congestion on urban
roadways and at public-land recreation sites.
Unreasonable exemptions from environmental review. Federal resource managers
have granted exemptions for military operations, logging, exploration for oil and gas,
operation of motor vehicles on roadless public lands, the use of some pesticides, theemission of air pollution, and other activities. Also, de facto exemptions occur when federal
and state agencies fail to enforce environmental laws. The economy is harmed when
activities are allowed to proceed even though their economic costs outweigh their benefits.

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Unnecessarily divisive approaches to economic/environmental issues. The
costs—to individual workers, families, firms, communities, and the economy as a whole—of
the changing relationship between the economy and the environment are worsened byfederal, state, and local actions that promote misunderstanding and divisiveness rather
than cooperative problem-solving. Especially divisive and costly are proposals and decisions
that presume the economic benefits of an increase in an extractive, agricultural, or
development activity necessarily exceed the costs, even when the evidence indicatesotherwise. Recent examples include proposals or decisions to:•

Encourage road development, vehicular traffic, and other development on lands withroadless or wilderness qualities, including national parks, national forests, andlands administered by the Bureau of Land Management.

•

Promote energy consumption rather than conservation.

•

Relax restrictions on emissions of water and air pollution.

•

Forgo U.S. leadership of efforts to shape a prompt, efficient and global response to
climate-change risks.

•

Relax restrictions on the use of or exposure to potentially harmful substances.

We Encourage You to Adopt Initiatives that Promote Both a Healthy Environment
and a Healthy Economy
We ask each of you to initiate a review of the economic effects of actions taken by youradministration that have a significant impact on the environment. The primary objective of
this review should be to identify and correct those actions that are harming the economy bydegrading the environment. It also should highlight the merits of those actions beneficial toboth the environment and the economy. We urge you to act promptly.
We also urge you to implement appropriate policies and procedures to increase thelikelihood that future governmental actions will capitalize on and reinforce the evolving
relationship between the West’s environment and its economy. These initiatives shouldincorporate these eight principles:
Principle #1: Environmental protection has economic benefits as well as economic costs. It
has positive as well as negative impacts on jobs and incomes.
Principle #2: Some economic interests in natural resources are mostly local but,increasingly, the interests are broader in geographic scope: regional, national,
and even global.
Principle #3: To discourage waste, prices for the use of environmental resources shouldreflect the full costs and benefits to the economy, exclusive of subsidies.
Principle #4: Given their stewardship responsibilities regarding the environment, it isappropriate for governments to encourage or undertake activities that protect
the environment and to discourage or prohibit those that do not. It is also
appropriate for government to own and use land and water resources to5

protect the environment and to support others who desire to own and use
resources for the same purpose.
Principle #5: Governments should continually seek to improve the efficiency of theirenvironmental- and resource-management programs without compromising
their responsibilities. These programs may include a mixture of regulations,
incentives, and public ownership of resources. They should aim to bring about
as high a level of environmental quality as possible for a given expenditure.
Principle #6: To understand the full, potential economic consequences of a pending
resource-management decision, one should consider the potential reversal
costs if the decision should yield undesirable outcomes.
Principle #7: The benefits and costs of environmental protection and degradation fall
unevenly on different groups. Anticipating and mitigating these effects can
reduce the controversies over the West’s environment and economy. Having
the winners compensate the losers, for example, could serve this principle.
Principle #8: Owners of natural resources have both rights and responsibilities. Bothprivate- and public-property owners have rights to use their properties inways that do not unreasonably harm others or restrict their rights. Clarifying
and respecting the rights of all parties—including future
generations—affected by the uses of environmental resources remains anecessary condition for effective environmental management.

Conclusion
We are not saying that resource-intensive industries (agriculture, timber, commercial
fishing, and mining) do not play an important role in the West’s economies. They areimportant today, and we expect they will remain important in the future.
We are not saying that the shift away from industries and activities harmful to theenvironment will not hurt some workers, families, and communities. It has in the past andit will in the future.
We are not saying that protecting and improving the environment can be accomplishedwithout costs, nor are we saying that governmental entities should disregard such costs. To
the contrary, we are calling for consideration of the full range of costs and benefits ofpolicies, decisions, and activities that affect the western environment and, hence, its
economy.
We are not saying that no progress is being made in capitalizing on the link between
environmental health and economic prosperity. Many private-sector firms and publicagencies have taken actions to reduce their negative impact on the environment and foundthat they saved money.

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Rather, we are saying that nearly all communities in the West will find they cannot havea healthy economy without a healthy environment. Moreover, there exist many
opportunities in the West to improve both the environment and the economy, for example,
the elimination of inefficient subsidies would make more money available for other public
services or to reduce debt. The longer these opportunities languish, the fewer will be theWest’s jobs, the lower its incomes, and the poorer its communities. Conversely, the sooner
we seize these opportunities, the sooner the West will enjoy more jobs, higher incomes, andgreater prosperity.
We are saying that the economic pressures to arrest and reverse environmental
degradation will increase. Those who promise that workers, firms, and communities tied toenvironmentally harmful activities can avoid these pressures if only the environmental
laws, such as the Endangered Species Act, were set aside raise false hopes. The pressures
are independent of specific laws. Even if such laws are repealed, the costs ofenvironmentally harmful activities will continue to rise and jeopardize the economic
outlook for affected communities. Public officials can best promote long-run economic
prosperity in the West by encouraging efficient transitions away from harmful activities
toward those beneficial to both the environment and the economy.
We are requesting that you recognize the important role the environment plays inwestern economies and take the steps we’ve identified to strengthen these economies byprotecting and enhancing the quality of the region’s natural environment.
Sincerely and respectfully,
The following individuals have endorsed the contents of this letter. Institutional references
are provided for identification only.

State
ArizonaName, institutional affiliation
Bonnie G. Colby, The University of Arizona
Dennis Cory, University of Arizona
Ron Trosper, Northern Arizona University

California

Dennis J. Aigner, University of California, Santa Barbara
Kenneth J. Arrow, Stanford University
Ted Bergstrom, University of California, Santa Barbara
Christopher Costello, University of California, Santa Barbara
Robert Deacon, University of California, Santa Barbara
Stephen J. DeCanio, University of California, Santa Barbara
Anthony Fisher, University of California, Berkeley
Lawrence Goulder, Stanford University
Steve Hackett, Humboldt State University
Michael Hanemann, University of California, Berkeley

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Amy Horne, Sierra Business Council
Daniel Ihara, Center for Environmental Economic Development
Charles Kolstad, University of California, Santa Barbara
Stephan Kroll, California State University, SacramentoPeter Kuhn, University of California, Santa Barbara
Carol McAusland, University of California, Santa Barbara
John M. Marshall, University of California, Santa Barbara
Wade E. Martin, California State University, Long Beach
Roger Noll, Stanford University
Richard B. Norgaard, University of California, Berkeley
Kenneth Small, University of California at Irvine
David Starrett, Stanford University

Colorado

Lee J. Alston, University of Colorado
Janis M. Carey, Colorado School of Mines
Katherine Carson, Affiliation: United States Air Force Academy
Brad Crowder, U.S. Environmental Protection Agency
Graham A. Davis, Colorado School of Mines
Nicholas Flores, University of Colorado
Philip E. Graves, University of Colorado
Marie Leigh Livingston, University of Northern Colorado
John Loomis, Colorado State University
Pete Morton, The Wilderness Society
Jennie Spelman Rice, Consulting Economist
Linda Stanley, Colorado State University

Idaho

Joel Hamilton, University of Idaho
Peter M. Lichtenstein, Boise State University
Christine Loucks, Boise State University
Gundars Rudzitis, University of Idaho
Tesa Stegner, Idaho State University
Robert Tokle, Idaho State University

Montana

Richard Barrett, University of Montana
Douglas Dalenberg, University of Montana
Tom Power, University of Montana
Ray Rasker, Sonoran Institute and Montana State University

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NevadaMary Riddel, University of Nevada, Las Vegas
Kimberley Rollins, University of Nevada, Reno
Douglass Shaw, University of Nevada, Reno

New Mexico

Robert Berrens, University of New Mexico
Alok K. Bohara, University of New Mexico
Chris Nunn Garcia, New Mexico Highlands University
Kristine M. Grimsrud, University of New Mexico
Tom McGuckin, New Mexico State University

OregonRandall Bluffstone, Portland State University
Trudy Ann Cameron, University of Oregon
Tom Carroll, Central Oregon Community College
Kimberly A. Clausing, Reed College
Ronald B. Davies, University of Oregon
David Ervin, Portland State University
Eban Goodstein, Lewis & Clark University
Joe Kerkvliet, Oregon State University
K. John McConnell, Oregon Health & Science University
Don Negri, Willamette University
Noelwah Netusil, Reed College
Ernie Niemi, ECONorthwest
Arthur O'Sullivan, Lewis & Clark College
Andrew J. Plantinga, Oregon State University
Carl M. Stevens, Reed College
Ed Whitelaw, University of Oregon

Utah

Arthur Caplan, Utah State University
Therese Grijalva, Weber State University
Robert J. Lilieholm, Utah State University

Washington

Gardner Brown, University of Washington
Ken Casavant, Washington State University
Dan Hagen, Western Washington University
Steve Henson, Western Washington University
Hart Hodges, Western Washington University
Ray Huffaker, Washington State University

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Karin Sable, University of Puget Sound
Kate Stirling, University of Puget Sound
Norm Whittlesey, Washington State University

Wyoming

David Aadland, University of Wyoming
Ed Barbier, University of Wyoming
Tom Crocker, University of Wyoming
Robert W. Godby, University of Wyoming
Jason Shogren, University of Wyoming
John Tschirhart, University of Wyoming

Other states

Daniel Bromley, University of Wisconsin
Dallas Burtraw, Resources for the Future
Ujjayant Chakravorty, Emory University
Paul N. Courant, University of Michigan
Ronald Cummings, Georgia State University (Univ. New Mexico, emeritus)
Robert Haveman, University of Wisconsin-Madison
Thomas S. Jayne, Michigan State University
Matthew Martin, Economy.com
Kenneth E. (Ted) McConnell, University of Maryland
Michael R. Moore, University of Michigan
Rodney B.W. Smith, University of Minnesota
Robert Solow, Massachusetts Institute of Technology
John Sorrentino, Temple University Ambler
Ivar Strand, University of Maryland
Dave Tschirley, Michigan State University

For information about this paper, please send inquiries to:
Ed Whitelawth
c/o 99 W. 10 Avenue, #400
Eugene, Oregon 97401
phone: 541-687-0051
email: whitelaw@eugene.econw.com

Please cite this paper to Ed Whitelaw, editor.

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