 illustration by Doug Potter |
Resort, representatives from the Political Economy Research Center (PERC) in
Bozeman, Montana, extolled the virtue of market-based solutions to
environmental problems. For example, in areas with water shortages, PERC
suggests that there be a market for water and water rights. Those who can pay
more for the water will use it in the most efficient manner. The same holds
true, they insist, for other environmental issues, including endangered species
and parks. In short, explained PERC executive director Terry Anderson, “free
market environmentalism is privatization wherever possible.” The solution, he
says, is to codify property rights that can be traded, bought, and sold. And
make whoever wants to use the park, see the endangered species, or drink the
water, pay for their privilege.
But the folks from PERC were quick to acknowledge that market-based solutions
don’t always work. That was particularly interesting given that the conference,
held on Jan. 31 and Feb. 1, was conducted at the Barton Creek Resort, which
lies at the geographic and political epicenter of the debate over land use in
the Barton Springs watershed. The resort is surrounded by land owned by New
Orleans-based Freeport-McMoRan, which has been battling the city for years over
the development of their property. Jim Bob’s, which was used during the
conference for some small group discussions, is named for Freeport CEO Jim Bob
Moffett. (PERC officials said they were told during the planning of the
conference that the locale would cause some controversy, but they said there
wasn’t another place in Austin where they could hold the event.)
Market incentives may work when selling water, but protecting that same water
from pollution is another matter. Richard Stroup, a senior associate at PERC,
was asked if there are market incentives that can convince companies not to
pollute. The answer: There aren’t any. “You just have to say stop,” said
Stroup. So preventing pollution from a power plant, oil well, or mining
operation cannot be done any other way, he explained, except through the police
powers granted to government.
Over a fine lunch, in a dining room overlooking the hyper-green golf courses
of Barton Creek Country Club, Anderson was asked what can be done to protect
Barton Creek, Barton Springs, and the Barton Springs Salamander. Are there
market incentives to save those resources from damage caused by development in
the Barton Springs watershed? Once again, the short answer was: No.
Using PERC’s terminology, then, the clear, clean water in Barton Springs, and
the salamander that lives there, are property rights owned by the citizens of
Austin. And the only way to protect that property right from contamination by
upstream residents is to require local, state and federal governments to use
their authority to prevent pollution from occurring. We don’t have to ask
nicely. In fact, we have to demand, repeatedly, in a rather loud voice, that
they may not, under any circumstances, pollute our water.
The PERC conference was attended by about 25 journalists from central and
south Texas. And aside from a few rather odd pronouncements from Stroup,
including his belief that companies should not have to reveal the pollutants
they discharge from their plants — it’s an issue of privacy, he said — the
conference was interesting. To read essays such as “Environmental Protection:
The New Socialism” and “Community-Run Fisheries: Avoiding the Tragedy of the
Commons,” visit PERC’s web site: http://www.perc.org.
Rough times for OPIC
It’s been a tough 18 months for the Overseas Private Investment Corporation(OPIC). They got hammered by Freeport-McMoRan after cancelling a $100 million
political risk insurance policy they carried on the company’s vast Grasberg
gold copper and silver mine in Indonesia. Now the once-obscure federal agency
finds itself the target of an odd alliance between environmentalists and budget
hawks. The agency is also being scrutinized by Congressional investigators who
are looking into fundraising activities by the Clinton Administration.
In the wake of cuts made last year to social welfare programs, OPIC and other
federal programs that benefit corporate interests are a politically appealing
target. And a coalition that runs across the political spectrum — from the
conservative Competitive Enterprise Institute to the Friends of the Earth —
are claiming that OPIC is one of a dozen programs ranging from energy research
to highway construction that will cost federal taxpayers more than $11 billion
over the next five years. Axing OPIC alone, they claim, will save taxpayers
$281 million over that time period.
Launched in 1971, OPIC provides loans, loan guarantees, and political risk
insurance to American companies operating in 140 countries around the world.
Until recently the agency, which employs 180 people, enjoyed relative
obscurity. But two years ago, environmentalists began criticizing OPIC for its
financial support of projects that include logging in the forests of eastern
Russia, large-scale fishing ventures in the North Pacific, and gold mining in
Indonesia and South America.
Last fall, when OPIC submitted a five-year reauthorization package to
Congress, environmental groups teamed with fiscal conservatives, including Rep.
John Kasich (R-Ohio), chairman of the powerful House Budget Committee, to
oppose the agency’s measure. OPIC ended up getting reauthorized for just one
year, and it must push another reauthorization bill through Congress by
September 30 to continue operating.
Jim Sheehan, a research associate at the Competitive Enterprise Institute, a
conservative Washington-based think tank, says American taxpayers shouldn’t
help fund corporate ventures. “These corporations are large and profitable,” he
said. “They ought to be able to get credit on the private market.”
For their part, environmentalists believe OPIC has been too secretive about
its activities. Doug Norlen of the Pacific Environment and Resources Center in
Washington, DC, said, “If OPIC can’t operate in an open, mature manner, then we
ought to be questioning their basic existence.”
But eliminating OPIC may not solve anything. Critics of the environmentalists
say that if OPIC is dissolved, American environmental groups will have limited
ability to monitor American ventures overseas. And instead of dealing with
OPIC, companies will go to similar organizations in other countries, like
Australia’s Export Finance and Insurance Corporation or Canada’s Export
Development Corporation. Or worse, companies will get their insurance and
financing from the private sector, which has no environmental standards at all.
A better alternative: harmonize environmental standards among bilateral and
multinational lending agencies. That way, the World Bank, OPIC, and other
lending institutions would follow the same environmental guidelines when
insuring or financing a project.
Congressional investigators are currently scrutinizing OPIC’s ties to James
Riady of the Lippo Group — which is in the spotlight after giving big
donations to the Clinton administration — and Freeport. For instance,
investigators are looking at OPIC’s decision to reinstate Freeport’s insurance
in April of 1996. OPIC had apparently prevailed over Freeport in arbitration,
and the company was ready to concede defeat. But according to documents
obtained by the Chronicle under the Freedom of Information Act, OPIC
president Ruth Harkin sent a hand-written note to Freeport CEO Jim Bob Moffett
on April 8 that read, “I’d like to meet with you once again to see if we might
find some alternate solution.” Eleven days later, the two announced that OPIC
was reinstating Freeport’s insurance. Why?
Well, Indonesia happens to be the hottest gold play in the world right now.
The recent discovery of the Busang deposit on the island of Borneo (see “Naked
City”), could translate into at least $25 billion worth of gold, and companies
from around the world are flocking to Indonesia. Apparently, Indonesian
dictator Suharto pressured the Clinton Administration to reinstate Freeport’s
insurance because it could have caused difficulties for other miners moving
into Indonesia.
According to sources close to OPIC, after the agency reinstated Freeport’s
insurance, Harkin bragged that she had convinced Moffett to contribute $100,000
to the Democratic National Committee. According to Federal Election Commission
documents, Freeport-McMoRan gave the DNC $40,000 on August 26. On September 6,
the wives of Freeport’s top executives, Chief Financial Officer Richard
Adkerson, vice chairman Rene Latiolais, and chief investment officer Charles
Goodyear, wrote checks to the DNC totalling $35,000. Four days later, Moffett’s
wife Louise wrote a check to the DNC for $2,500. That’s $77,500 of the
$100,000.
And here’s another twist: Sources in Washington say that Congressional
investigators are looking into Clinton’s decision to designate a large national
monument in southern Utah. The area contains vast amounts of coal that would
have competed with Indonesian coal from the island of Borneo. Riady’s Lippo
Group would have lost money if the Utah coal came on line. Stay tuned. This
story keeps getting bigger.
Free booklets on rainwater harvesting. A spiffy new book on rainwater
harvesting can be had for the asking from the Texas Water Development Board.
The 62-page book offers all kinds of info on rainwater catchments, from tank
tips to rainfall patterns. To get one, write to: Conservation Section, TWDB,
Box 13231, Austin, 78711-3231. You can also get a video on rainwater harvesting
by contacting the Center for Maximum Potential Building Systems, which
co-produced the book with TWDB, by calling 928-4786.
This article appears in February 21 • 1997 and February 21 • 1997 (Cover).