Natural Resources

Post image for The Remote Sensing Problem

Over at the Washington Post, in discussing the coming crisis in weathersats, the editorial board can’t resist taking an ignorant dig at George W. Bush:

The reasons for this outlook are many — some overspending on certain projects to the harm of others, costly congressional mandates that diverted resources, and a recent rocket accident. Even if those factors were ignored, says Dennis Hartman, the chair of the panel that produced the report, agency budgets would still be too low to keep the country’s earth observation system in reasonable shape. The NRC proposes restoring NASA’s earth observation satellite funding to the level seen in the late 1990s — before President George W. Bush reprogrammed money from those satellites into things such as manned spaceflight to Mars. That level stands at about $2 billion. [Emphasis added]

There were problems with George Bush’s space policy, but shifting funding to humans to Mars was never one of them. Bush’s plans were for a lunar return, not a Mars mission, though one was envisioned as a follow on in the 2020s.

NASA has spent exactly zero dollars toward sending people to Mars, unless you count the money wasted on an unnecessary new heavy-lift rocket which might, theoretically, play a role in such a mission decades from now, but whose primary mission is to sustain what remains of the Shuttle workforce with its jobs in key states and districts.

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Some analysts at Barclays attempt to understand the business case for Planetary Resources, and massively fail:

Their calculations are based on Nasa’s forthcoming OSIRIS-REx mission, which aims to launch a probe in 2016 to pluck samples from an asteroid called 1999 RQ36 and bring them to Earth.

The mission’s acronym stands for “Origins-Spectral Interpretation-Resource Identification-Security-Regolith Explorer” and Nasa hopes it will be home by 2023, with a couple of ounces of dirt. By then, the cost will have reached $1-billion – made up of $800-million for the vehicle, plus another $200-million for the rocket launch.

Since that outlay will return just a couple of ounces of material, the Barclays’ analysts say they could use it as a baseline to estimate break-even prices for asteroid mining. Using the metrics proposed by Barclays, the Financial Times commodities team estimates that copper prices would need to skyrocket from today’s $3.81 per ounce to $476-million for a similarly-funded space mining project to cover its costs. [Emphasis added.]

Ummmmmm…no.

First, this is a NASA mission, and NASA costs are always a poor proxie for how much it would cost private enterprise to accomplish something similar. For instance, SpaceX has spent about a billion dollars total developing two new launch vehicles and a reusable return capsule that it flew in late 2010, and is planning to fly to ISS next week. The Falcon 9 rocket itself cost the company about $300M. But conventional NASA/Air Force cost models predicted that it should have cost somewhere between $1.7B and $4B if developed under a traditional government contract. That is to say, it might have cost an order of magnitude more.

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Post image for How to Fix U.S. Water Policy? Less Government, More Market Pricing

Late last week I received an invitation to testify in the Water and Power Subcommittee of the House of Representatives Natural Resources Committee on H.R. 2664, “The Reauthorization of Water Desalination Act of 2011.” We’ve posted the full 20-page testimony; my oral remarks before the committee appear below. The push for politically juiced desalination projects is a diversion from the actual problem; the absence of market pricing to allocate water scarcity.

I am Wayne Crews, VP for Policy at the Competitive Enterprise Institute and I thank the committee for this Tax Day invitation to speak on H.R 2664, a $2 million annual desalination program that, while it won’t break the bank, embraces principles at variance with a lightly regulated and adaptable water sector.

While it does boast crucial working applications, desalination remains an energy-intensive, by-product-laden means of making expensive usable water, despite being an ancient process.

Happily, there’s no need for panic; Water is not getting more scarce overall; it’s an earthly constant, and the nation uses even less than it did in the 1980s.

But pricing and allocation of that supply do matter. To advance tomorrow’s water policy, we must, as we say at CEI, avoid having government steer while the market rows.

When linking research like desalination to human needs, private investors can test low-probability projects, counting on the rare success to offset multiple failures. Progress requires good at killing bad projects.

Federal funding to overcome so-called “market failure” in research, on the other hand, fosters numerous avoidable conflicts: over the merits of basic vs. applied research, over government vs. industry science; over assignment of intellectual property; Over public access to data. Meanwhile, taxpayer subsidies appear not to alter the ratio of GDP spent on R&D after all.

Government steering can create artificial booms, and politics has trouble balancing research portfolio tradeoffs: Why H.R. 2664’s brackish groundwater desalination instead of seawater or countless alternative water investments? The problem affects other sectors: Why nanotechnology instead of biotech? Or the hydrogen economy? Or Robotics?

We should avoid fostering a “Declaration of Dependence” on federal dollars, because that will further mask water market prices.

Also, even as government funding comes with regulatory strings attached, it adds to risks and environmental problems by propelling risky technologies ahead of the free market’s ability to properly assimilate them. (The market’s role in regulation is something we might discuss in Q&A.)

This is important, because we observe in H.R. 2664 the seeds for new regulation propelled by the sourcing and externalities of desalination itself. Instead, market disciplines like liability and insurance must evolve alongside technology.

To me, preferred alternatives to subsidized Desalination are those institutionalizing the separation of water and state.

First, better pricing of existing supplies can make crises vanish; refer to my written testimony on this. Despite everything, gallons of water cost less than a penny, filling swimming pools and hydrating lush lawns in arid areas.

Second, improving infrastructure can reduce the waste that now depletes 17 percent of the annual water supply, as noted in a new CEI report by Bonner Cohen.

Third, better transport, including pipelines, trucking, and crude oil carriers can aid supply. Where’s the water pipeline aorta alongside and perpendicular to Keystone, one might say.

Fourth, improved trade between cities, farmers and NGOs can be essential to pricing and value.

A fifth option would be water sourcing alternatives including gray and wastewater treatment and reclamation; stormwater harvesting, and private conservation such as instream flow purchases.

Finally, we should reduce onerous permitting regulations that inflate desalination’s costs and defy the good in the H.R. 2664 vision. Otherwise, as water expert David Zetland notes, “if it’s possible to get [regulatory permitting] approval [to] raise prices so far, why not just raise prices and skip the project?”

A couple general observations:

First, as CEI’s president Fred L. Smith Jr. puts it, instead of trying to improve speeds by picking the particular R&D horses to run on the infrastructure racetrack, improve the business and regulatory track so everyone can go faster, and let jockeys keep more of their earnings. In the Appendix of my written testimony, I cover liberalization options to better enable a private sector flush with research cash.

Second, this is the water and power subcommittee, and I think it’s vital to step back and explore dismantling regulatory silos artificially separating our great network industries. That is, any investment in non-shovel-ready desalination while settling for 19th and 20th century infrastructure is sub-prime policy, particularly given that, as a free society becomes wealthier, creation of infrastructure should become easier, not harder.

The America of 100 years ago, with its paltry GDP, built overlapping, tangled infrastructure; we might have had an aesthetic problem, but never a natural monopoly problem.

The modern challenge is to welcome water resources further into the market process. We urgently need competitive market discipline to discover, not just desalination’s value relative to sourcing alternatives, but to discover the true value of water itself.

Since my previous post on media reaction to CEI’s press briefing on Thursday, Popular Science has provided a good report as well.

But in this post, I want to address co-speaker Jim Dunstan’s critique of the concept, which he presented at the event, and is now available on line at TechFreedom.

I should start by noting that Jim is a long-time associate, fellow free-market space advocate, and (I hope) friend. I didn’t want to get into the weeds of a debate on the subject at the event, particularly because he didn’t put forth any new arguments — his statement was simply a reiteration of the argument that I had already refuted in the paper itself. But briefly, like other critics, he cites the combination of Articles II and VI of the Outer Space Treaty to debunk the potential loophole that I postulate in the Issue Analysis:

The negotiators of the Outer Space Treaty (OST) knew that such [property rights] claims would never stop unless the countries agreed once and for all, that:

Outer space, including the [M]oon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other
means.

Article II of the OST couldn’t make it any clearer.

But wait, Rand and others argue that Article II of the OST only prohibits national appropriation, so individuals are free to do whatever they want in space. Well, not so fast. Article VI of the OST states:

States Parties to the Treaty shall bear international responsibility for national activities in outer space, including the [M]oon and other celestial bodies, whether such activities are carried on by governmental agencies or by nongovernmental entities, and for assuring that national activities are carried out in conformity with the provisions set forth in the present Treaty.

Since launching states are required to ensure that their nationals conduct their activities in conformity with the provisions of the OST, and the OST denies states the ability to appropriate celestial bodies through use, occupation, or by any other means, there is no way that the United States could directly recognize land claims in outer space that were made based on use and occupation, as the legislation Rand proposes would do. The “loophole,” as Rand calls it, simply doesn’t exist.

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Carlos Rafael owns over 40 fishing boats that work the waters off of New Bedford, Connecticut. One his boats recently caught an 881-pound bluefin tuna — one of the biggest catches ever made (the record is 1,496 pounds). Authorities quickly confiscated the fish.

Fishing is a heavily regulated industry, and Rafael took every precaution to make sure his giant catch was within the rules:

Rafael, who in the last four years purchased 15 tuna permits for his groundfish boats to cover just such an eventuality, imme­diately called a bluefin tuna hot line maintained by fishery regu­lators to report the catch.

When the weather offshore deteriorated, the Apollo decided to seek shelter in Provincetown Harbor on Nov. 12. Rafael imme­diately set off in a truck to meet the boat…

However, when Rafael rolled down the dock in Provincetown there was an unexpected and unwelcome development. The authorities were waiting.

So he had a permit, he let authorities know right away, let them know it was an accidental catch, and they still took it away. Why?

Because Rafael’s men caught it with a net. Bluefin tuna are only allowed to be caught with fishing rods.

A dejected Rafael told the Cape Cod Times, “We didn’t try to hide anything. We did everything by the book. Nobody ever told me we couldn’t catch it with a net.”

At this point, it appears that Rafael will not be charged with a crime. The government, however, will sell his fish and keep the money. Most people would call this stealing; the government calls it asset forfeiture.

Post image for House Republicans’ Shortsighted Proposal to Fund Roads through More Drilling

Recently, Republican members of the U.S. House of Representatives have proposed opening up more federal land and offshore areas to natural resource extraction. Such a move would both increase domestic energy production and raise government revenues through royalty payments. During the current economic slump and resulting fiscal crunch, anything that can increase the quantity of energy supplied and reduce government deficits should be lauded. But what some Republican members of Congress propose to spend these revenues on is far from laudable.

Led by House Speaker John Boehner, some in the Republican caucus wish to pour oil and natural gas lease revenues into the Highway Trust Fund, which has suffered from severe shortfalls for several years now. Right now, a six-year surface transportation reauthorization proposal (“the highway bill,” the previous multi-year reauthorization expired 777 days ago) from House Republicans needs to find an estimated $75-$100 billion in additional revenues in order to fully fund their bill, and proponents of such a funding mechanism argue that this will help close the gap. Many in the free market energy community are also applauding.

However, both groups fail to appreciate the long-run dangers of moving from the current (and longstanding) “user-pays” principle to a “taxpayer-pays” principle. They ought to pay more attention to the concerns of free market transportation scholars, such as the Reason Foundation’s Robert Poole and the Independent Institute’s Gabriel Roth. Since the Interstate program was established in 1956, federal highway spending relied on the “user-pays/user-benefits” principle. The idea was to tax road users (on fuel, tires, etc.) and then use the tax revenues to fund maintenance and capacity enhancements. This makes sense, as one would expect user tax revenue to approximately track user demand. Revenues were deposited into the Highway Trust Fund, which is partially shielded from the highly politicized appropriations battles that take place over most funding. This concept has long enjoyed broad bipartisan support.

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Sometime today, the UN estimates that world population will hit 7 billion people. Some people are worried about how those 7 billion mouths will be fed. Here’s Paul Ehrlich in 1968′s The Population Bomb, when world population was not yet 4 billion:

The battle to feed all of humanity is over. In the 1970s the world will undergo famines – hundreds of millions of people are going to starve to death in spite of any crash program embarked upon now.

Not so much, thankfully. Ehrlich and other people who live in bed-wetting fear of their fellow man forget that people are more than stomachs; they are also brains. And brains have an increasing return to scale. The more of them there are, and the more they can interact and exchange with one another, the faster they can outpace the rumbling stomachs.

That’s why real world per capita GDP is 16 times higher than it was before the Industrial Revolution — even without correcting for the increased quality of goods. Including that omission would bring the increase to something like 100-fold, according to the economist Deirdre McCloskey. And this is per capita; remember, world population has increased about 7-fold since 1800.

The data are simply astonishing. Seven times as many of us are each at least 16 times and as much as 100 times better off than our great-great-great-great grandparents. This is the single most important event in human since the Agricultural Revolution. It is so important that McCloskey calls it the Great Fact.

And the data show no signs of the Great Fact reversing itself, or even slowing down. if anything, China and India’s recent partial embrace of liberalism has quickened the brain’s still-incomplete conquest over the stomach.

Former CEI Warren Brookes Fellow Ron Bailey has more at Reason. Elsewhere, Steven Landsburg thinks that current human population might be too small.

Post image for White House Involved in FDA Approval of Genetically Engineered Salmon?

A couple of days ago, Talking Points Memo’s Jim Kozubek reported that the Food and Drug Administration had finally decided to approve AquaBounty’s genetically engineered salmon for human consumption, and that the “evaluation is now under review at the White House’s Office of Management and Budget.” I’d seen the TPM article, but didn’t write about it at the time because premature reports of FDA being on the brink of approval have been filtering out through the media for several years now. (I filmed a TV interview for Fox News’s “Your World With Neil Cavuto” way back in 2005, when it looked like an approval was right around the corner, for example. And I talked about it again on John Stossel’s show last year.) But a friend of mine asked today why an FDA approval decision would have to get a second look from the White House, so I thought that would be worth discussing.

As the TPM article mentions, the AquaBounty salmon has been hugely controversial. Wild Atlantic salmon grow to full adult size in about three years, in part because they only grow six or seven months per year. As water temperatures decline in the late autumn months, a genetic switch turns turns off the gene that produces growth hormone, so the salmon can conserve energy through the winter. Energy conservation isn’t as big a problem for farmed fish, though, because they have easy access to food all year and little exposure to predators. So, AquaBounty engineered Atlantic salmon with a promoter (the genetic switch) from an Arctic fish called the ocean pout, attached to the growth hormone gene from Pacific Chinook salmon. And, voila! The engineered salmon grows year round and reaches normal adult size in about 18 months, lowering the cost of raising them and lowering the price of fish in grocery stores. Here’s the packet of scientific information FDA prepared for its scientific advisory committee last year.

Environmentalists don’t like it, of course. In part because ocean pen-raised farmed fish are known to occasionally escape into the wild, meaning the AquaBounty salmon could theoretically interbreed with wild salmon, with potential impacts on the wild gene pool. And in part because they just don’t like biotechnology. To address the arguably legitimate concerns, the AquaBounty salmon will only be raised in contained, inland pools, not open water pens, and they”ll be farmed only in Panama, where, if they do escape, the ambient water temperatures will be too high for them to survive. AquaBounty also uses two other breeding techniques that, with a 98 percent degree of certainty, produces only female fish that have been rendered infertile. So, even if they were to escape and survive, nearly all of them would be incapable of successfully mating with wild fish. Also, because the AquaBounty fish will be searching for food during the early spring months when wild Atlantic salmon are breeding, it turns out that the engineered fish have an extraordinarily low mating instinct. (Insert ribald, ex-wife joke here.)

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The Maryland State Board of Education passed a new curriculum requirement on June 21, 2011. Instead of gaining competence in math or science, students are now required to graduate with a proficiency in “environmental literacy.” This is merely a euphemism for indoctrination into climate alarmism and a “green” agenda — both are tools the left uses to justify intervention into the market economy. As I write in The Washington Times:

According to the program’s curriculum, environmental literacy means turning children into central planners. For instance, it instructs students to “[d]evelop a strategy for fair distribution of a limited amount of energy available within a community,” and to create a “plan for the fair consumption of goods” and “eliminate…unnecessary consumption of goods.

Since the state is not providing funding for the requirement, it is very likely that the teaching materials will come from left-wing environmentalist groups such as the No Child Left Inside Coalition, which supports Maryland’s new curriculum and “environmental education” on the whole. If Maryland wanted to provide its children with a richer education, it ought to think about ways in which to improve reading, science, and math proficiencies instead of introducing politically driven environmentalism into schools.

In The Washington Times, I explain in more detail the threat that the new curriculum poses to Maryland’s young students.

Post image for An Alaskan Mining Project: One Example of How Environmental Regulations are Strangling the U.S. Economy

Rick Manning of Americans for Limited Government notes here that one of the reasons the American economy is stuck in neutral is that investors in new projects are being stymied by environmental regulations. The example he gives is a huge proposed new copper and gold mine in Alaska called the Pebble Project that is being studied to death.

The co-owners of the Pebble Project are a British and a Canadian company. They want to invest billions of dollars in a mine that would probably create close to a thousand high-paying jobs for at least fifty years. It would also add tens of billions of dollars to the American economy and pay billions of dollars in royalties to the State of Alaska, which owns the land and subsurface rights.

The Pebble Project’s owners have reportedly already spent $125 million on the environmental research reports required to open the mine. But opponents have petitioned the Environmental Protection Agency to deny a Clean Water Act permit for the mine before the owners have even applied for an operating permit. Incredibly, the EPA is seriously considering this outrageous petition. And even more outrageously, EPA Administrator Lisa Jackson this spring attended and spoke at a reception for opponents of the mine, which was hosted in the Supreme Court by retired Justice Sandra Day O’Connor!

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