AEI’s Robert Hahn and the Milken Institute’s Peter Passell appeared in the New York Times yesterday arguing for the net benefits of increased oil exploration. They estimated $2.1 trillion in revenues from increased oil exploration, versus $400 billion in production and cleanup costs, making the decision to drill “a no-brainer.”
Of course, net economic benefits are not the primary issue for opponents of drilling.
Many environmentalists argue that this calculation leaves out the biggest cost of all: the loss of the intangible benefits Americans get from knowing that the Alaskan refuge and outer continental shelf have been left untouched. Indeed, economists spend a lot of time thinking about such “non-use values,” if not much time agreeing on them. Still, our best attempt to get a fix on the non-use value of Arctic National Wildlife Refuge yields a figure of just $11 billion. In sum, this leaves about $1.7 trillion in tangible net benefits, so most people, one would guess, would still find the case for drilling to be compelling.
Some people, however, attach a much, much higher non-use value to the Arctic refuge, and their opinions count a lot because they are well represented in Congress.
On assessing this urge to maintain a cozy, green, psychic blanky, Hahn and Passell show remarkable restraint. They go on to make an interesting counter-offer to those who would foreclose oil exploration in ANWR and other “pristine” areas.
So here’s a question for them: If a big chunk of that $1.7 trillion could be spent on preserving wilderness that didn’t happen to sit astride vast quantities of oil, would you really choose to spend it on keeping human hands off the currently protected sites?
One could imagine a political bargain in which several hundred billion dollars went into a fund with a charter to preserve wilderness in the United States, or climate-stabilizing rainforests in Africa and Latin America. As little as $100 billion would go a long way: the projected cost of preserving the entire Everglades against the encroachments of the Florida economy is $11 billion, while a comprehensive restoration of 200,000 acres of Louisiana’s coastal wetlands would run to $18 billion.
For better or worse, “drill, baby, drill” is now widely viewed as the cure for what ails. Giving the public what it wants wouldn’t lower gas prices by any meaningful amount. But it would create an opportunity to move public opinion (and huge sums of cash) in the direction of good environmentalism and good economics.
I wish Hahn and Passell luck with their proposal. They will find willing volunteers from Big Oil to pay for their “pristinity offsets,” if I might coin a phrase. Oil companies seem so eager to spend countless millions on efforts to portray themselves as “responsible” global citizens — as if providing the energy essential for modern life weren’t enough.
One is forced to wonder, though: How many on the Left will rally behind this idea? It seems to me that, for every person who calls himself Green out of genuine ecological concern, there is another who embraces the agenda for reasons other than protecting the environment — which is used only as a rallying cry, or a bedtime story. For them, the real motive behind environmentally inspired energy poverty is to restrain the West, and particularly the U.S. economy.
In this respect, Hahn and Passell’s idea for pristinity offsets could function as a kind of watermelon test, separating the true environmentalists from the crypto-anti-capitalists.