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6. Ethical Issues in Productivity & Stewardship:

Agricultural Water Use

Larry D. Sanders Spring 2002Dept. 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 farmers:Myth 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 America’s 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 ground”among 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 benefits=marginal costs; demand=supply)– May provide utilitarian ethical foundation for commercial development

Market failure: private market does not provide social efficiency (marginal social benefits=marginal 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 & Options:Water 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 & Options:Water 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 & Options:Water 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 & Options:Water Quality

FREE MARKET--Point & Nonpoint Pollution

INPUT TAXES--Internalize costs

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Issues & Options:Water 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 & Options:Water 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 & Options:Wetlands

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 Consequence1. Do nothing --Harmed person(s)

&/or nonhuman species pay(s)

2. Producer changes --Producer pays--Consumer pays

--Harmed person/ species pays less/none

3. Government accepts --Taxpayer paysresponsibility --Harmed person/ species pays less/none

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Who’s to blame & how to resolve?How to find “common ground”?

Bull in the neighbor’s field

Private

vs.

Private

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Who’s 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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Who’s to blame & how to resolve?How to find “common ground”?

Draining a wetland

Private

vs.

Environment

(Public? Private?)

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Who’s 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 benefit: -more income; -more profit opportunities; -more “vibrant” community

Some folks lose: -higher cost of living? -lower quality of life? -stress infrastructure

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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 maker’s 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 Rights:Understanding 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