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| 5812987 | Investment fund management method and system with dynamic risk adjusted allocation of assets | September, 1998 | Luskin et al. | 705/36R |
| 6253191 | Brownfields investing | June, 2001 | Hoffman | 705/35 |
| 20020188459 | Resource conservation method | December, 2002 | Erickson | 705/1 |
Jennings, P. Devereaux and Zandbergen, Paul A.; “Ecologically Sustainable Organizations: An Institutional Approach”; JSTOR; Academy of Management Review; vol. 20, No. 4; 1995; pp. 1015-1052.
Paul Shrinastava; “Ecocentric Management For A Risk Society”; Academy of Management Review; Jan. 1995; vol. 20, No. 1; pp. 118-134.
Smith, Jr., Fred L.; “A Free-Market Environmental Program”; CATO Journal; Winter 92; vol. 11, Issue 3; pp. 1-15.
REFERENCE TO OTHER PATENT APPLICATION
This non-provisional patent application claims priority to U.S. Provisional Patent Application No. 60/192,183, filed Mar. 27, 2000, the entire text of which is incorporated herein by reference.
1. A method for developing a natural process asset management method as a risk-reduction service, means to produce a performing asset or assets capable of offsetting the destructive use of an asset or assets performing a similar service elsewhere, a source of certified data by which to quantify risk, or a method to be licensed by which to market a product or service, certified and warranted to meet performance specifications to a prospective second party: a customer or customers in the free market, the steps comprising of: (a) developing an experimental process for improving the condition of a natural process asset that deviates from an accepted standard process, meeting conformance specifications to deliver performance expectations, performed by a first party, the property owner or his agents; (b) contracting for verification of the experiment and preparation of data collection performed by the first party with one or more persons constituting a third party, a certifying entity; (c) contracting for indemnity covering consequential damages due to said experiment only, not including hazards of pre-existing conditions, performed by the first party with a fourth party: one or more persons constituting the insurance function; (d) indemnifying said third party, certifying entity, for risk of failing to perform step (b) performed by a party of the insurance function; (e) conducting said experimental process performed by said property owner; (f) validating accuracy of data from said experimental process performed by said property owner; (g) validating that said experimental process was conducted according to said conformance specifications performed by said property owner; (h) characterizing the performance of the asset with a mathematical model or other quantitative process description thus completing a performance specification with known tolerances or limits, performed by said property owner; (i) verifying and certifying said data were properly validated, said experimental process was conducted according to said conformance specifications, that said quantitative process description is accurate, and that said experimental process achieved the expectations of said performance specifications within specified tolerances, performed by said certifying function; (j) determining a financial cost of said experimental process for restoring said natural process asset, performed by said property owner; (k) estimating extent and probability of damage to man-made assets and/or natural process assets resulting from a loss of said natural process assets, performed by said insurance function; (1) using said financial costs of steps (j) and (k) to re-evaluate existing indemnities resulting from to failure to restore said natural process asset successfully, performed by said insurance function; (m) defining a description of the functional boundary of each process unit, performed by said property owner; (n) combining functional units into a scale and/or configuration sufficient to constitute an economically viable product or service, performed by said property owner or owners.
FIELD OF THE INVENTION
Environmental regulation by government is structurally incapable of satisfying its mandate. The present invention is an alternative, free-market environmental management system designed to deliver a superior product, at lower cost, with an insured guarantee, and without regulatory oversight by government.
BACKGROUND OF THE INVENTION
Many people hold well-indoctrinated beliefs that government protects the environment from greedy capitalists at the prodding of selfless environmental activists. Those same people do not think of environmental activists as capable of damaging the environment. Neither of those beliefs is true any more. Meanwhile, adversaries of regulatory policy defensively argue that we are not really doing that much damage and that environmentalism costs too much for things that we must do to survive. The failing of those on the defense is that they rarely offer a preferable alternative to civic regulation other than “less.” It is easy to complain about government regulations, but no one will accept an alternative without checks and balances that value the public demand to protect ecosystem function.
The popular truism, that business and property owners are motivated only by greed and that this justifies government control, ignores the fact that the entire history of governments has been one of greed, corruption, and lust for power. Most people would agree that bureaucratic government cannot manage an economy because it is too dynamic and complex for centralized planning. An economy competes with only one medium: money. An ecosystem transacts on so many levels that we have only a very basic understanding of how it works. One should think, therefore, that any political system would be structurally incapable of optimizing complex ecosystem functions. The U.S. government was designed to prevent the accumulation of sufficient power to confiscate property, yet it strays ever further from its Constitutional intent by virtue of its power to control the use of property under environmental law. The power to regulate the factors of production is the power to control an entire economy. Such power has historically devolved to tyranny destructive to an economy and its people. It will not work for the environment either.
“Environmental protection” methods have caused severe ecological problems on lands that have already been disturbed and abandoned. There are hardly any pristine, temperate ecosystems remaining that are not already protected, and some of those are being protected to death. Activist claims and government plans are rarely subjected to objective scrutiny, focusing instead upon continued acquisition at the expense of private property ownership. The aggregation of virtually unlimited civic power over the use of natural resources renders enormous mistakes inevitable.
Commons.
Almost all environmental regulation concerns the use of a class of goods known as “commons.” These are goods to which no claim of property ownership is recognized and for which the unit price of use approaches zero. Following is an explanation of how commons arise and how a general failure to recognize certain principles has led us to a civic environmental management system.
Living beings compete for control of goods that have relative degrees of scarcity. Whether it is space for roots among competing plants, hunting range, or food stored for a winter's meal, control of goods matters to all living beings as a resource by which to compete and survive. Those goods of which humans retain control are defined as property. Humans survive by the use of property, whether it is one's body, food, shelter, or otherwise. To control the use of property is functionally equivalent to property ownership. Goods cannot be used or exchanged unless possessed as property, whether physically or by social contract.
Goods are not uniformly distributed. Humans exchange rights to control the use of goods in order to combine them to competitive advantage. The process of free exchange transfers control of property. Individual respect for tradable rights requires either respect for a social compact or physical enforcement against competing claims.
Mobility or continuity in a resource complicates the definition of property ownership. Unlike fixed property, mobile and continuous goods (e.g., air or water) can only be controlled by physical containment. For example, humans combine these mobile goods with other chemicals necessary for the biochemical processes of the human body to work. Perhaps the only time the air or water is actually “owned” is while contained within the body.
Are they really contained in the body? Humans can't store the value of air any more than they can stop sweat from evaporating. Humans must constantly exchange air and water with the surroundings. How is it, then, that the air or water is “owned”? Perhaps that which is owned is not the air or the water, but the operating series of biochemical processes that use air and water to perform work while they are contained within the body.
Just as the processes within the body combine inputs to produce and maintain the body itself, natural processes found within property boundaries transform mobile goods into many of the physical attributes of ecosystem assets. Those processes that produce an economic return and transform the state of mobile inputs into products for exchange are defined as “process assets.” There are two types of process assets: artificial, such as fences, machines, or chemical reactors; and natural, such as soils, living material, or the processes of the body itself. The latter of these will be called “natural process assets.”
Humans combine factor inputs with process assets to produce goods for economic exchange. The sum of process assets and factor inputs, called “factors of production,” are either purchased (such as land, raw material, tools, intellectual property, or labor) or merely collected and used without a cost of acquisition (e.g., air or rainwater). Factor inputs, collected without payment, will be referred to herein as “zero-priced goods.” Zero-priced goods include: (1) goods sufficiently plentiful that a discrete pricing mechanism is too costly to consider; (2) goods sufficiently difficult to contain that a discrete pricing mechanism is mechanically impossible; (3) goods without identified economic worth or use; and (4) goods with positive and negative worth, so closely balanced that their net market value does not justify a pricing mechanism.
Zero-priced goods are factor inputs for all economic goods. Their potential uses do not change unless a chemical or physical process alters their attributes. For example, the potential uses of oxygen change when it bonds with hydrogen. The uses of water change when it evaporates or inherits pollutants. The changes wrought by process assets upon factor inputs are the “transformation products” of those processes. The economic costs or benefits associated with transformation products, not included in the cost of goods sold, are “economic externalities.”
The notion of economic externality is the most important economic concept in the rationale for environmental regulation. Assume the manufacture of a product produces pollutants that cross the plant boundary suspended in a mobile, zero-priced good, such as air or water. The cost of the pollution is not borne by the producer of the goods for sale, nor is it reflected in the purchase price to the consumer. The cost of the pollution is external to the buyer/seller transaction because it is borne by those affected by the pollution, who supposedly derive no benefit from production or sale of the goods. Environmental regulations coerce the producer to incorporate the cost of pollution control into the product, thus forcing the consumer to evaluate its “true” cost compared to other purchase options.
Ownership of zero-priced goods is typically not defined or enforced by contract. To acquire ownership, one simply collects them for use. Their economic value is considered equivalent to the cost of collection, containment, and preparation. That many zero-priced goods are intrinsically valuable is not in dispute; a person certainly needs air to breathe and a commercial fisherman needs an ocean, but in everyday practice, we pay little or nothing for them. Few individuals attempt to own zero-priced goods because the cost of definition and defense of boundaries exceeds the benefits of restricting use by private property ownership. Among resource biologists and economists, environmentalists and politicians, these zero-priced goods have come to be known as commons.
Commons are a superset to zero-priced goods because they include resources that have economic value but their price is fixed at or near zero by social compact. Public parks, though valuable, are commons because no pricing mechanism can be agreed upon among those with an equal claim. Parks are used as if they were free and are, therefore, a commons. The term “commons,” then, will be reserved for those goods that, although they might have market value, are used as if the price of acquisition is zero.
Under conditions of decreasing supply or increasing demand, zero-priced goods can rise in scarcity to the point where individual claims are subject to competition. People then expend effort to define property ownership as appropriate to their perception of unit value, positive or otherwise. A claimant will collect, unitize, measure, rent, mark, describe, and exchange property with increasing precision as its value increases. If the goods do not have discrete physical boundaries, then the limits of property ownership have to be defined in other ways, for example, by the manner of their containment or measurement. Once the boundaries to these claims are determined, property ownership appertains to an economic person, whether individual, partnership, corporate, or political. Thus, goods graduate from the status of commons to that of property. To establish the distinctions of property ownership among competing persons, then, requires definition of containment boundaries by contract.
Mobility and continuity render precise definition of property boundaries problematic when the scale exceeds containment limits. Even physical boundaries on land are not static: River channels move, ridgelines are subject to erosion, roads are relocated, even continents drift. In a very real sense, all goods are mobile. The claim to ownership of “fixed” property has thus often had much to do with human perception of permanence within specific boundaries. In part out of response to that mobility, humanly delineated boundaries now reflect artificial lines more often than physical land-marks. The manner in which human boundaries are set, often reflects the cost of measurement and definition for containment more than the distribution of resources.
The issue of mobility becomes particularly troublesome with continuous goods that move rapidly. Whether they are air, water, oil and gas, schools of fish, or migratory animals, as long as they are not contained it is difficult to define the boundaries of property ownership. Some goods move much more rapidly, such as reflected light off a form that someone finds pleasing, or information that provides a subjective perception of well-being in a natural ecosystem. These goods can move from place to place, instantly.
The economic value of these seemingly ephemeral goods is real. People know it. They notice a sense of loss when a customary use has been withdrawn. They get angry when a river that has been dammed engulfs the enjoyment they had, theretofore, derived. They resist the introduction of a shopping mall onto a childhood playground, even if they no longer live in the area. In each of these cases, there is definite sense that one has lost something that one “owns” or upon which one has a claim.
These claims are not always fanciful. A person may have purchased property because of the speculative value of the view, the quiet, the air quality, sparse population, or the availability of groundwater. He or she has a definite sense of ownership of those intangible goods, if not defined by contract, then by habitual use. Whether or not these valued factors were part of the purchase, they are so defended should that use be threatened or withdrawn.
It is difficult for a single person to make a claim against the loss of a use of private property for which they never paid. Because the contested use is inside private boundaries, the claimant enlists fellows to coerce surrender of control of the contested use by the property owner. External claims focus upon the transformation products of the property owner's use (or intended use) that exit the property in mobile commons. The complaints contend that those transformation products are damaging to the use of commons intended by those outside the boundaries. Where such claimants constitute a democratic majority, political means are available to press for legal specification regarding transformation products in commons that effectively restrict the use of property inside the boundaries to that of the majority preference. Hence is the argument that extension of a majority claim on the use of natural process assets transforms the resource into a “democratized commons.” Its use is restricted to the majority preference and little or no compensation is offered for legal restrictions preventing alternative economic uses.
To democratize a commons may seem like a good idea at first. In the long run however, is a terribly destructive thing to do to the rights of citizens. It is to convince a democratic majority that taking public control of a particular type of private property without just compensation is in the public interest. The means by which the majority effects collective claims is by controlling social assets, upon which the property owner relies to produce saleable transformation products, outside the boundaries of the property. Public transportation assets (such as roads, rivers or airspace) are necessary to transport supplies and goods for sale. Recognition of the value the property owner's money and bank account is a social resource upon which the property owner has a contractual claim. The police power of the state enforces contracts and maintains respect for private property, as is necessary for the conduct of commerce. Collective action to control any factor of production is a threat to the property owner's economic survival and the source of coercive power. It is a threat to the social compact by which private property exists.
To democratize a commons is also destructive to the contested assets. This is because the maximum number of people then have a power by which to extend their claims upon the use of the resource at a minimum unit price. Claims then proliferate without limit because their cost is virtually zero. There is then no motive to maintain, or improve the condition of the asset, or to invest in controlling the release of undesirable transformation products, because there is no prospect of a return on investment thereby. Private property is therefore effectively destroyed because it has no economic use.
The financial advantages of such tacit property acquisitions can be enormous. As long as a majority claim can acquire control of the use of private property, all it takes to manipulate a market is to buy out the competition with the public's money by manipulating public perception of transformation products. When the people who desire control of the use dominate political contributions, civic and civil powers collude and the individual property owner is easily forced to succumb.
It is to these mechanics that the Fifth Amendment to the Constitution was written to address uncompensated takings. For without a check on the exercise of democratic power to control the use of private property, such claims proliferate until private property virtually ceases to exist. The legislative branch therefore has limited power to directly effect democratic claims, but has every power to write laws regarding the discharge of transformation products across property lines to be interpreted and adjudicated in the courts and verified by administrative government. How transformation products in commons are valued and the manner in which they are discharged in commons then determines the limits of how property can be used.
The courts adjudicate damages resulting from negatively valued transformation products in commons. The few who can afford the investment in legal action and profit by taking competing resources out of production, have every reason to sponsor that first case against a weak target in order to extend subsequent claims over stronger rivals. This is particularly true when the rival property owner produces a different and competing substitute good. An example would be if a developer funded public concerns about the negatively valued transformation products of farming in order to render the use of farmland non-economic and ripe for development. A similar case would be an oil producer attacking the owners of nuclear power plants by sponsoring advocates of regulations concerning nuclear waste.
Lacking administrative capability, the courts seek both technical opinion and enforcement of the judgement from administrative government as a supposedly disinterested expert regarding the use and cost of transformation products. Control of use, and thus property ownership of that use, is effectively taken from the property owner and transferred to government. Regulation of transformation products is then effected through employment of a civic agent with police power to control the use of process assets inside the property boundaries.
Once political or legal means are established to acquire collective control of private property, there is an inverse supply/demand relationship between the degree of control demanded and its cost. Each case can extend the applicability of cited legislation. The rule of legal precedent lowers the incremental cost of successive acquisitions. The property owners gradually lose the ability to finance resistance. Absent a profitable use, the market value of the property approaches zero. After the repeated exercise of external control, a purchase easily covers any remaining claims by the impoverished property owners.
Invocation of police power requires enforcement that is an exclusive function of administrative government. As democratic claims proliferate, legislatures are overwhelmed with technical issues. Similarly, the courts are overwhelmed with cases that are protracted, expensive, and difficult to prove. Democratic demand for expediency exercised, through the legislative branch, has devolved much of both functions, legislative and judicial, to the administrative branch because it has both relevant expertise and police powers. This unconstitutional abrogation of the separation of powers combines all three branches of government into one that derives both its budget and power by manufacturing and enforcing claims on the use of property. The more externalities are identified, the more control is extended, and the more power to control the use of the asset(s) accrues to the enforcing agent. This process alienates the interest of the agent from the democratic majority. The asset has then devolved into a “socialized commons.”
A socialized commons is an even greater evil to ecosystems than a democratized commons, because the resource is under the control of an entity with no structural motive to prevent or eliminate ecological problems. Civic management of the environment not only does not work, it has every reason not to work. As ecological problems worsen, as the crises deepen, the claims and power acceded to a civic agent expand while the ability to fund a solution decays. History teaches that this is not a good thing.
The claims by which a commons is socialized are ironically often the same precedents as were used to extend the original democratic claim: i.e., by extending claims against the transformation products of the democratic use of the resource. With the legal precedents in place that were used to take control of the factors of production on individual property, the civic agent now has the legal tools to take control of all private property. Control of the use of land is now in the hands of an agency that is alienated from accountability to the public claim for healthy ecosystem function. The agency instead serves the limited interests of the politically dominant, who gain de facto control of the factors of production.
An example: Consider a ranch. What the rancher owns are the rights to use the assets within defined boundaries. These assets are employed selectively as factor inputs for a specific use, for example, selling beef. Natural process assets (fungi, native grasses, mineral soils, a creek, and soil bacteria) are combined with purchased factor inputs (fertilizer, grass seed, electricity, and diesel), to convert these inputs into starch, cellulose, sugars, and proteins (forage). The rancher combines labor, capital investments in artificial process assets (breeding stock, fencing, or a dam), intellectual property, and zero-priced goods (sunlight, rain, carbon dioxide, oxygen, and nitrogen) to produce transformation products of these processes and inputs. The rancher produces a range of economic transformation products: burgers on the hoof, milk, or logs on a truck. There are also non-economic transformation products of ranching: a pastoral view of the ranch, riparian nitrates, rainwater runoff, urine, feces, forest acreage, carbon dioxide, oxygen, and various other, perhaps unpleasant, gases for which the property owner does not account.
Most of the transformation products of the ranch are economic externalities: goods that do not produce an economic return and that affect the use of commons by others. The rancher earns no proceeds for the view or for brush control in the forest, and pays no penalty for horse flies, carbon dioxide, and methane. These are economic externalities of the rancher's operation.
Suppose the rancher sells some land to pay property taxes. A developer buys the land and converts the use to residential housing. The new residents enjoy the light reflected off the ranch as a view. They may use the ranch for other forms of entertainment, with or without the rancher's permission. They might have invested a marginal sum in the purchase price of their land, because of its proximity to the ranch. They don't particularly complain about the available meat, the quiet of the countryside, or the other positive externalities of the ranch, nor consider that its economic viability maintains open space. They like to go hiking there.
The residents inherit commons containing transformation products of ranching, some of which they consider deleterious to their residential use of commons. To have a case by which to enlist a civic agent in support of their claims, they must focus only upon the transformation products of the ranch operation that constitute negative externalities outside the boundaries of the ranch. They complain to the authorities about the taste of the water, its suitability for swimming or fishing, and the algae on the surface as transformation products in a mobile commons: water. The claimants focus exclusively upon externalities negative to their preferred use of commons as a vehicle by which to enlist a civic agent to enforce a collective claim. An enforcing civic agent is not necessarily a disinterested arbiter. The agent inevitably recognizes that to control the enforcement of the use of private property is equivalent to acquisition of partial property ownership. There is no corresponding propensity to weigh the total integrated economic impact of the ranch because positive externalities of the ranch or minimizing the cost of treatment have nothing to do with the claims against which control of the ranch is acquired. It is a system that focuses only upon harm.
The claimants and agent then focus action upon acquiring control of the use of the rancher's process assets. This is accomplished through regulation of the source of transformation products adverse to their preferred use. The representatives of the competing interests draft rules to be enforced by the civic agent. To manipulate distinctions of method and concentration as to benefit a particular treatment or use of the property is a temptation for corruption because it is at the discretion of the regulator.
As concentrations of transformation products in process outputs approach zero, even minute reductions in concentration can greatly increase the cost of treatment. Both claimant and agent are motivated to select attainment specifications that necessarily invoke the most expensive technologies. As the cost of compliance consumes a higher fraction of the sale price of the economic good, the return on the original use approaches zero. Once the return on assets goes negative, investment in improving technology to reduce production of negative externalities becomes negatively valued as well. No one would develop new control technology because no one could pay for it. If there is no return on the use of the asset, that use of the property will be abandoned, as it has become a zero-priced good.
Both claimants and the enforcing agent are motivated to focus upon concentrations of transformation products that are most difficult to control or attain because it is those properties that yield the greatest degree of control. The fight with the regulator devolves to one of seemingly trivial details regarding differences in specifications, measurements, penalties, and enforcement governing the rancher's use of assets. All of these considerations structurally diverge from environmental health because that was never the objective.
The higher the regulatory cost to control the transformation products, the more complete is the civic control of the use. Collective claims are treated as if they are property because they have speculative value by which to gain control of the asset. The civic agent or its sponsors start to measure and quantify the negative transformation products of the process appropriate to the perception of their value to a residential use. Rarely does either acquiring interest consider the possible unintended ecological consequences of their actions, among other reasons, because they have little experience in ranching and no accountability for the consequences, other than to secure their intended use. The legal process is thus immediately alienated from its purpose to establish justice and the regulatory process directed away from ecological health. As long as there are claims to extend upon the rancher, that use of the land is an asset with which to advance a civic career. There is little civic accountability for determining a successful balance among the competing interests in the use of the land, indeed, very likely the contrary is true. Ecological problems are a source of civic claims by which to control the entire economy, which is antithetical to the purpose of environmental regulation.
Another example: The rancher has a stand of timber. The rancher invests capital to plant trees on the land and uses a combination of zero-priced goods and natural process assets to support their growth. The rancher announces a plan to harvest the forest. The surrounding residents then complain that the transformation products of the timber production process harm their residential use of zero-priced goods. The air could carry dust and noise of chainsaws and helicopters. The light reflected off the property might carry a potential loss of “view-shed.” The residents claim that the rancher's use of natural processes that produce trees creates transformation products that degrade the economic value of their residential use of commons that leave the rancher's land. There is seldom a dollar value to such claims; the residents just want the rancher to stop cutting trees.
The residents focus the threat of potential harm to enlist democratic support from numerous urban claimants for protection of “priceless” resources by using similar arguments of harm to urban uses of commons. The runoff from the property might carry sediment into a reservoir. Logging trucks may damage roads. A majority can then exert democratic power to enlist a civic agent to exert coercive force over the rancher's use of collectively held assets, such as the road. Lacking sufficient political or legal power, the residents might enlist a Non-Governmental Organization (NGO) to “force” a civic agent into asserting control of the rancher's property. Where would the resources of the NGO come from? Those who had financial interests in the use of the property would have every reason to make such a tax-deductible donation, for example, a developer.
A civic agent has the power to execute coercion through jurisdiction over public roads, operating licenses, or permits upon which the rancher relies for the conduct of timber operations. The civic agent can block access to the harvest, or place specifications on the transformation products of the harvest such that the control measures are expensive enough to render harvesting the forest unprofitable. An example would be a “zero discharge” specification for silt from timber harvesting. However, erosion is a necessary environmental process that proceeds no matter what anyone does and always has. The smaller is the amount of dirt allowed in the creek, the more impossible it becomes to comply, until the timber becomes a zero-priced good.
The residents never once had to contest the property right of the rancher to cut the trees, but instead removed the option to sell them at a profit. The residents have thus converted the use of private process assets that grow trees within the rancher's property lines from outside the property boundaries. The trees are now worthless as timber, and their residual value is reduced to a specific set of uses: scenery, entertainment, and augmentation of residential value all accruing to the surrounding residents. They have gained control of the use of private property for nearly free, and its only product is thereafter a democratized commons, so called because the use is constrained to a preference determined by majority rule.
The rancher now has no economic motive to invest in the forest. It costs too much for too little return. Meanwhile, taxes have risen because of the proximity of the houses, traffic is making it very costly to make and take deliveries, and suppliers are going broke and leaving town. The cost of compliance is such that the feedlots along the freeway are now more competitive. The rancher tries to cash out whatever is left of the land value to a developer who has sufficient clout to overcome the objections of the local residents. The sale is at a considerable discount to the total resource and residential value. Everybody loses, except the developer.
If the residents have sufficient political power, they can get the State to buy the property as a public park. The use still accrues to the democratic majority and benefits the property value of local residents. If the urban democratic majority, that does not use the park, resists paying for the maintenance, then the forest falls into a state of mandated neglect. It becomes subject to local overuse, pest infestations, fire, and eventual landslides that might even take the residents with them. It happens. Everybody loses, except the civic managers who move to protect the forest from the public. They declare overuse a problem or cite sediment from development and nitrates from septic systems to be a threat to the same creek that the residents had used to take the forest from the rancher. The forest is now a socialized commons serving only the interests of the managing agent. As long as there is a problem with the forest or a nearby creek, the agent now has the power to control the residents. The focus of action will be upon regulating the public, not upon accounting the passive degradation that would require investment in the forest to repair. Indeed, the forest is now held hostage by the agent, who can demand payments to “protect” it by any means, regardless how inefficient. A civic agent has every reason to fail because failure generates justification for additional funding to solve the problem, transforming the forest into not only a hazard, but an economic liability.
In sum, the democratic majority premises its arguments upon externalities that result from the rancher's use of process assets. The employment of a civic agent extends the application of the rules that can then be used to control the residents by precedent, if not by uniform regulation. This example clarifies the legal road from a constitutional republic, to democracy, to socialism. The terminology used herein reflects the exercise of those means.
Collective claims upon private assets can only be exercised against uses of processes that induce externalities to collective uses of commons. The person who purchased the land loses asset value with each newly defined claim. Claims can be multiplied by reinterpreting transformation products as negative externalities. Subjective interpretations enlisting democratic power can be effected simply by manipulating popular opinion. As the cost of acquisition drops to the cost of publicizing subjective opinion, the size of acquisition required to provide the same perception of emotive benefit rises accordingly. The claims become ever larger. The greed for continued acquisitions is insatiable because they are acquired at minimal cost. As the claims proliferate, the asset value continues to decline in anticipation of additional claims and, eventually, any remaining commodity value of the land to its property owner is destroyed. The land is ultimately treated as if it is worthless because its assets no longer provide a predictable return upon investment. The ambiguity, scope, and number of claims eventually meet declining availability of property to take. The claims eventually overlap. The process is unsustainable. It has no means to weigh claims but political. Political struggles over resources with survival value have historically led to wars and revolutions.
Given that the ability to gain personal control of commons is based upon the ability to make a political sale, several factors come into play: (1) a simple justification to maximize the applicability of the claim to individual perceptions and desires; (2) a majority perception that acquisition comes at minimal personal cost; (3) powerful beneficiaries with sufficient personal interest and resources to fund and execute the taking; (4) collective benefits that are difficult to measure or long deferred; and (5) control of communications media to consolidate political forces becomes the means to control the factors of production and key to the control of wealth.
The need to maintain a sense of crisis leads to shortsighted decisions and the unconscious realization of self-fulfilling prophecies. It creates a smokescreen for the exercise of corrupt intent. The repeated application of mechanics like this lead to the unwitting vengeance of self-destruction. A system that so artificially distorts its priorities is not likely to render an objective resolution among competing risks, particularly when there is so powerful an ulterior motive. The more such competing claims proliferate, the more strident are the expressions of concern, the greater becomes the subjectivity of justifications for speculative measures with an increasing likelihood of grossly destructive errors.
To take appropriate action one must analyze the balance of risks under the variety of circumstances as exist. It would take an enormous number of experimental trials. Private capital can provide the necessary financial resources, only if it can regenerate itself. Donated and confiscated public funds cannot do the job. It is just too big.
It is astounding that so many potential risks associated with human action are so seldom weighed against the virtual certainty of errors of inaction. Every dynamic variation in nature has benefits for some individuals and adverse consequences for others; it is the nature of differentiated and competitive systems. It is not uncommon for species virtually to disappear, only to return years later after a natural disturbance, such as a fire, flood, volcano, or recovery from over-predation. To claim that any change in the distribution of natural populations justifies radical changes in land use could be appropriately regarded as extreme until science had proven otherwise. A management system that derives power by constraint automatically biases the system toward allowing no human intervention of any kind. If one prevents action and the crisis never materializes, one can then claim success, whether or not the threat was real. If on the other hand, the problem grows, the administrator can claim that funding was insufficient to solve it, without fear of accountability. This has been repeatedly true in the case of initial infestations of exotic pest species. The confining nature of the “prevent harm” ethic leaves its advocates with the constraint that control measures must be minimally intrusive, even if destructively ineffective. Under the control of those who derive their mandate by environmental problems, the patient will likely worsen, a victim of a self-fulfilling prophecy, no matter how much money is spent in resulting crises.
Any democratic system is manipulated by the politically dominant. It thus comes as no surprise that the property ownership systems the politically dominant propose are to be “collectivized” among the people, but administered by an agency dedicated to their interests. Under such a system, that frightened mob may well get the environmental crisis that they fear.
Property rights as a matter of natural law and as protected by the 5th Amendment really are that important. If the price for the control of land resources is but the deflection of the winds of political fashion, the available wealth to support, defend, and nurture the land is minimized. What ends up forgotten in the political acquisition of “commons” is the need to maximize the economic value of these goods to the land. With the declining public perception of marginal benefit is a declining marginal economic value of the land itself as is exemplified by the distress of farms, ranches, forestry, and mining, worldwide. If we should destroy the economic basis generating wealth found in resource lands, we will lack the tools, money, and knowledge to do the work of habitat restoration and enhancement. Without the objective efficiency of market-based capital allocation processes, the distribution of resources will not efficiently differentiate according to need.
Ecological issues are seldom simple. They vary considerably with different situations and over time. They often involve enormous costs to a few individuals and have public benefits that are difficult to measure. The economic value to the individuals who would gain control of those resources provides motive to invest in making the political sale, regardless of the technical or ecological compromises. It thus becomes unlikely that, in the heat of political and legal battle, the solutions offered will adhere to the principles of the scientific method. The idea that neglect is always benign presupposes that natural systems can fix any problem unassisted and contradicts the very purpose for regulatory policy. How then, do we devise an efficient and objective system that motivates and extends the state-of-the-art of ecosystem management?
Regulating Behavior by Civic Coercion.
Over the course of industrial expansion across America, civic authority selectively ignored or deferred governing decisions about accountability for economic externalities. Whether they were associated with manufacturing, agriculture, transportation, or resource extraction, government made all the final decisions about permits, leases, homesteading, or transportation subsidies. Government also chose to ignore pollution, erosion, or automobile safety until they were serious problems.
The early manifestations of civic management systems took two forms. The first was dispensation from responsibility for economic externalities (of which the history of pollution management is an easily understandable example). The second form was direct subsidy, examples of which are: mining claims, irrigation and flood control projects, public roads, and agricultural price supports. Individuals and corporations have gained these dispensations and subsidies by political and legal means.
A century ago, continuing economic progress was the consensus democratic goal and the political resource management system made it happen. People wanted cheap materials and supported the sale of government resource lands for virtually free. Such popular license was also a serious matter of cultural respect for private property rights and individual freedom. Only after a democratic majority of the voting public took interest in environmental degradation, did government force a change in policy. Though the priorities have changed, that transformation has employed the same political and legal means as originally used to abet the perpetrators. The intent to improve might seem to be genuine, but are the priorities truly any more ecologically sound? The policies of the last 150 years have much in common with the current proposals of environmental activists, namely, they presupposed democratic control of land; they were based upon the political value systems of the day; they mandated single methodologies over widely diverse conditions; they depressed the profitability of privately held forestland; they confiscated the use of resource land for the exclusive benefit of politically dominant urban populations; they were enacted through lawsuits; and there were rapid changes, with enormous economic consequences, under a crisis mentality, and without accounting for side effects.
The debate concerning whose preferred politically and legally coercive path must be used, fails to note that it is the political and legal process that is incapable of optimal, technical solutions. It is not a matter of whether we should allow people to do whatever they want, or whether humans must withdraw from ecological intervention to protect or repair the environment. Political and legal processes are simply the wrong tools with which to best manage dynamic and competitive ecosystems. The idea that government should hold a monopoly franchise to coerce politically preferred uses of private property, presupposes several errant assumptions, namely, that civic policy-makers are uniquely capable of environmentally appropriate economic choices in every instance; that administrative government possessing coercive powers is an objectively disinterested arbiter; that the unintended adverse environmental consequences to the regulation itself will not outweigh the benefits; and that there is no preferable alternative with which to motivate extension of the limits of land management technology.
Most of our critical environmental decisions have come out of courtrooms, structured upon an adversarial assumption: a winner-take-all battle, decided by the uninvolved and technically incompetent. The structural problem, with the use of legal processes to decide environmental remedies, is that they are shaped by bipolar outcomes: whether by adversarial legal process or two-party political system, bipolar decision-making systems are structurally biased toward conflict. Adversarial conflict inexorably proceeds toward a bipolar structure whatever the battleground. Bipolar opposition creates a numerical minimum of possible options because each adversary needs to maximize its contingent. It drives the bases of argument to reflect differentiating properties and reduces the possibility of acknowledging either common ground or external options. The very facts necessary to achieve a satisfactory synthetic solution may thus be omitted from the argument, entirely. Lawyers do not make as much money by ending a contest with an agreement or by finding that the whole point of contention was a mistake. There is little likelihood that a pair of adversaries will opt for a solution that reflects the interests of a third party. The cost of conflict and the subordination of ecological objectives to legal strategy preclude objective study of options appropriate to the resolution of disagreement. Both legislative and adjudicative proceedings sponsor supporting expert opinions, with consequently divergent bias. Legal training presupposes the projected assumption of artful dissemblance, discounting all testimony to the listener's personal opinions. Knowing this, when confronted with divergent testimony, politicians (predominantly lawyers) seek “experts in the field.” The points of discussion thus graduate to extremes, respective of their bipolar positions, and diverge from their scientific bases.
As legal strategies overtake other objectives within the activist organization, the collection of expensive data increasingly respects its source of sponsorship by the financial grantors for the research. The money source thus skews the data, much the way opinion modifies perception. The solution set, as intersects the interests of the legal opponent, is avoided as a possible point of unnecessary concession and weakened argument. This process taints the conduct of all science. When government and legal advocacy assume the principal role for the distribution of research funds, the propensity for scientists to serve sponsoring interests increases markedly. Technical decisions are seldom completely deterministic, made instead among countervailing properties that must be weighed. The more complex the system under consideration, the more likely that a large number of technical disciplines will apply. Few subjects are more complex, or involve more technical disciplines, than human interaction with ecosystems on a real project. There are, consequently, no experts who possess the intellect and experience necessary to weigh all practical and technical ecological considerations in even one instance.
The breadth of expertise on a public university campus should render their consultative product capable of integrating a wide range of technical expertise toward solving ecological problems. Unfortunately, the politicized structure of university “Environmental Studies Departments” precludes delivery upon that reasonable expectation. These venues control the process that produces “experts-in-the-field” for environmental testimony in court and before legislative hearings because they control the credential system that confers the status of expertise. Investigation of the distribution of faculty credentials therein reveals a large fraction of social scientists. The politicization of the sciences at universities is a testament to the degree that government and foundation grants have assumed so much control of the universities. It has rendered research results suspect and redirected scientific work toward the socialization of private process assets. It may be bad for science, but it has been an absolute bonanza for the “study-the-problem” business where universities and government have a virtual monopoly.
Besides a subsidized advantage in marketing expertise, the universities have a virtual lock on the raw material supply of graduate student labor. Once a professor receives a grant to fund a study project, he or she can then recruit graduate students to do the work necessary to earn advanced degrees. Graduate students need to specialize in order to get advanced degrees, which focuses their expertise upon a narrow topic. Thus, many of our “experts” are people who know an immense amount about very little, with a low probability that the subject matter will have application to a specific issue. If a problem has multidisciplinary requirements, then a postdoctoral candidate is the wrong “expert” for real ecological problems. The post docs, who aren't offered tenure, need jobs, and more importantly, they need jobs that provide a return on their investments in obtaining that credential. The professors, who distribute the grant money for graduate study, can strongly influence the opinions of the students with grades and potential faculty appointments. They can also influence private consultants, competing for consulting contracts, through the peer-review process.
When a technical team publishes a study report, it must pass peer review to be considered credible. In pure form, peer review is a wonderful thing. Through objective criticism, one learns what is missing, what is unnecessarily pointed or contentious, where supporting citations or data are needed, etc. A problem with peer review arises when conclusions are presented that are sufficiently controversial to upset the gravy train for funding. It becomes a career-threatening move to break ranks. Another factor involved in taking controversial positions is that of simple conservatism: the Precautionary Principle. No one wants to be the authority who said “Go ahead, there won't be a problem,” only to regret it later. It is an acculturated willingness to assume that to take no action is harmless, for which culpability is nearly impossible to affix, rather than an attempt to act on an objective degree of risk. It is simply safer to posture as “protecting the environment” than to say that a particular human enterprise is harmless, or perhaps, beneficial.
In order to meet the standards of scholarship, the thesis must properly reflect the evidentiary standards and verbiage of the specialty peerage. The result will be that few outside that group will understand the study well enough to question its conclusions, without technical experts of their own. The real meaning of the data can only be extracted from direct analyses. Research conducted while developing the present invention encountered technical papers whose conclusions were diametrically at odds with the supporting data! It is more common than one would think, that the political product of a study, its summary remarks, have little use other than to advance the particular agenda of the grantor. NGOs and government issue most grants involving environmental issues. The professors who manage these studies maintain their status by publications of the results; thus, their expertise is directly related to their ability to raise grant funding. No grants, no credentials. No credentials, no expertise. No grants, no cheap grad student labor. No labor, no data. No data, no publications. No publications, no grants.
Unfortunately, ecological health is not a thing to win or lose in a litigious fight. In many respects, the real barrier to the service of our charge is the adversarial assumption itself, because it assumes resolution through bipolar conflict. Optimal solutions cannot be subjected to the structural requirement of a binary outcome. Perhaps a competitive system among people striving to do their best for ecosystem health might be somewhat less destructive and more apt to engender cooperative behavior. Political processes, by which environmental prescriptions are currently mandated, are no better. Allegiances to voters no more create optimal syntheses of divergent philosophies, than do legal cases. They are still bipolar decisions that often mandate their compromises among extremes. In cases where one side does not win outright, the warring factions trade whatever they value least. The important factors go one way or the other, depending upon whom is in power, seldom reflecting a harmony of any philosophy.
Within the respective political constituencies, it is the extremists who take charge of the group agenda. These are the people who personally benefit enough to expend the energy toward their respective agendas. Extremists are incapable of either compromise or weighted analyses of relative risk because the competing extremists within their group will tolerate them as leaders only as long as the majority perceives that they are succeeding. Political and legal control systems are thus open invitations to corruption and manipulation by those with the most to gain. It is fanatic, “deep ecologists”, corporate grant-makers, and industry lobbyists who advance and define the agenda for environmental decisions, whether anybody else likes it or not. Political appointees prefer to adhere to the realities that are the source of operating cash flow. Public agency employees have the exposure to the costs and benefits of targeted legislation with which to extend influence beyond their numbers. They also conduct either direct lobbying efforts of their own or fund NGOs to do it for them. The system consequently grows irreversibly, without effective challenge.
Government mandates end up as fixed prescriptions because civic agencies are inherently stabile. Nature is neither static nor compliant to specification. If the conditions upon which rule systems operate change over time, then static prescriptions end up being misapplied. We have allowed administrative government to also function as legislator, police, prosecutor, and judge, as funded by the penalties collected. With that much power in control of the factors of all economic production, it is a system motivated to tyranny.
To a bureaucracy, problems justify a cash flow. Those responsible for managing ecological problems are motivated to expend time and resources to acquire and retain new administrative turf, not to eliminate the need. Any civic investment in a new problem thus requires new people and a new administrative body in addition to the old, justifying a new infusion of cash. Problems can thus be considered the assets of the regulatory enterprise. When those problems are a source of income or a sense of personal purpose or social power, just try prying them loose. There are tens of thousands of such people in the regulation industry. They collect paychecks and watch them disappear, just like everybody else. It would be daft to assume that they are, by virtue of either their individual intent or the purported purpose of their work, either evil or benevolent. If you want a place to spend infinite money, and you want it all to go down the drain while the problem gets worse, you couldn't find a more demanding welfare case than “The Environment.” There are no checks on this system to assure that it is producing a product that meets the objective requirement to be beneficial. If the system backfires and produces a counterproductive result, there is no mechanism by which it would voluntarily reorganize.
The inherent complexity and intensity of democratic struggles over land use is the reason the decision-making process was delegated to appointed panels of experts in State boards. Unfortunately, as the power of both activists and lobbyists has grown, as rules have propagated into thousand-page manuals, and the competing interests of numerous federal agencies and court cases has come into play, the pressures on these panels of political appointees have left them with both fewer options and conflicting results. Management by appointed boards has consequently devolved to its political and legal origins. The complexity of government rulemaking entrenches a system of opposing lobbyists, either side dependent upon the continuing existence of the civic agency. The only experts in implementation, then, are the direct beneficiaries of regulatory complexity and continued contention. Civil agencies are, thus, inherently likely to develop maladaptive systems.
From the perspective of system-design, punishments for rule violations are means to deal with system failures. The further a practitioner drifts toward the criminal side of legal timber practice without facing prosecution, the greater the competitive advantage in the bidding war for the resource product. Because interpretation of the rules is subjective, a reasonable doubt threshold is difficult to attain. To be fined one must go beyond the bounds of the law. Although a bad actor can lose his of her license, that person can always work under the supervision of another. It just doesn't work. One reason for this mess is that many rule changes are written with ulterior motives. Lawyers demand documentation by which to prove a case. Activists seek to magnify the administrative costs. Practitioners want rules that can be met without ambiguity. The system's attributes end up becoming more important to the transacting participants than is its purpose, which is why so many environmental regulations backfire. The system is broken. It needs a competitor.
Political Manipulation of Asset Value by Regulation. The preceding discussion presupposes that the civic environmental management system is well intentioned, but structurally flawed. The former is no longer entirely true. Once government gets its hands upon the factors of production, it isn't long before industry leaders recognize a patronage system for what it is. When a system is capable of either handing them an oligopoly or destroying them, the politically dominant will learn to take advantage of it to survive. Those with sufficient political pull are obviously tempted to manipulate the deal and sell out their competitors.
The corporate winners use their profits to start a tax-exempt foundation with which to fund political advocacy without the annoyance of campaign contribution limits and the advantage of deniable culpability. They use the charitable donations to lobby politicians, fund groups of NGO activists, and gather data supporting specific legal action as benefits cases sponsored through the NGO. The regulatory system thus ends up a triumvirate among NGOs, industry monopolists, and government regulators. The mechanics work as follows:
1. There are economies of scale associated with regulatory compliance, as with any other cost of production. Capable compliance to rules becomes a barrier to entry and a means to target existing competitors.
2. Rules can be tailored to the advantage to those possessing property with favored attributes. Competitors can be targeted by similar means.
3. Selective enforcement, through bribes, friendships, and political connections, is a problem as old as government itself.
4. Regulatory constraint of supply can raise the capital value of assets in production through monopoly profits.
Private interests sponsoring environmental groups seek to control the asset value of resources that affect commodity prices, chiefly of energy, food, housing, raw materials, and minerals. It is easy to do. One need only successfully attribute harm to a majority interest in the use of a competing resource. These can be either direct competitors or suppliers of a substitute good.
There are numerous tools by which political forces implement political influence of asset value. Examples include tax policy, land use and zoning law, the threat of eminent domain, and regulatory specifications as affects specific industries, locations, markets, or constituents. The purpose of this demonstration is to represent how the politically dominant manipulate environmental regulation to improve the investment return on assets. Political and legal advocacy can be a very a good investment. Tax-based control of use occurs when an asset is taxed as property against what government has determined to be the “highest use” as opposed to that in which it is employed. If the return on assets is insufficient to fund the taxation that use has been effectively taken. Influence is exercised through a few badly paid local planners or politicians. An example is that a developer might find a profit on lots purchased for speculative purposes by advocating adjacent open space through civic acquisition. Urban speculators can influence rents through consolidation of greenbelts around cities by zoning law, public open space district acquisition through eminent domain. The cost of public purchase is suppressed through aggressive enforcement of environmental laws to specifying minute concentrations of pollutants or demanding specific measures for protection of habitat for endangered species. In this case, the beneficiary of the civic acquisition does not pay for that asset.
The public has ceded unconstitutional acquisition of control of resources through laws favoring NGOs that purportedly advocate for environmental protection in the courts, citing increasingly extended interpretations of harm according to existing environmental law. The legal representatives of these corporations cycle through a revolving door as political appointees in civic regulatory agencies. Public acquisition for the purposes of manipulating the value of resources that produce energy is now conducted on a grand scale. Nuclear power has been entirely withdrawn through NGO lawsuits. Species (for example salmon) have been maintained as endangered over the entire Pacific Northwest even when present in record numbers after a cyclical downturn. Billions of dollars worth of electricity was foregone with no demonstrated need and no objective benefit to the fish. The nation's largest deposits of low sulfur coal were acquired through Presidential Executive Order. Gas reserves on the Western Slope of the Rockies and all Pacific Coast offshore oil and natural gas were similarly confiscated, and access to tens of millions of acres of public lands were denied for similar purposes as justified for forest protection. Environmental NGO activist lawyers now sit on the Boards of Directors of major electrical producers who refused to produce plant capacity. The resulting energy crisis across the West has produced tens of billions of dollars in additional revenue to those fossil fuel companies remaining in production. Meanwhile, public land managers ignored the dire warnings of forest professionals that such set asides would induce disastrous fires and seven million acres of those forests burned in the year 2000 alone to confirm that prediction.
The exercise of power in political systems is just too much temptation to trust its players to manage ecosystems out of altruism. It puts the politically dominant in control of all economic factors of production. That leverage is too great to trust our future and our freedom. One has to wonder how it is that such civic acquisition strategies, functionally equivalent to conspiracy, could operate on such a scale for so long. People don't have to exercise conspiracy and collusion consciously for it to be such, particularly when governmental institutions are dominated by an entrenched group whose ideas and perceptions are immune to challenge and unconstrained by accountability. A functional conspiracy can be constructed merely out of acculturated personal preferences and social affiliations at the golf course, in civic organizations, at work, or just among friends. These social groups are powerful people: academics, lawyers, planners, politicians, real estate agents, financiers, and developers, who all share a similar focus to implement their preferences by the means at their disposal. Bureaucrats consider the exercise of preferences to be an entitlement of the assumed expertise associated with a civic mandate. Except for a very few individuals among the development community, the present inventor's research did not discover evidence of evil intent or conscious conspiracy, although there was indication of obvious manipulation, preference, and willing obedience to questionable “requests.”
Instead, there is a larger evil. It is an individual sense of entitlement, acculturated through the entire regulatory, activist, media, political, and legal community. It is the subjective propensity to project “what should be done” with private property in service to personal preference and without accountability for the results. This is, by definition, what it is to covet. It is a self-deception, by which one entitles oneself to take the use of property without buying it first. It takes so long for the results of this kind of thinking to manifest, there is so much struggle involved, and there is so much self-reinforcing subjectivity within a powerful social group, that it really isn't hard to misattribute the results and fail to see the consequences of one's own invisible hand. This greater evil is inherent to socialized commons. Nobody would think that it is optimal that nature should be managed under a system that knows only coercion. It isn't logical to expect expertise from inexperienced urban youth, blinded by fashionable ideology. One shouldn't expect solutions from bureaucrats with a structural motive to perpetuate problems, nor should ecosystem management algorithms be designed by politicians and lawyers.
To accuse capitalism of environmental damage because of “greed” on the part of individuals belies the fact that the system we are using has been government resource control, all along. It has always served whomever happened to be in power, whether by political payoff or by majority support. Lawyers, foundations, academic grant hustlers, and NGO grandstanders, many of them ignorant of resource management practice, are now mucking about with the environment just as destructively as any timber baron or strip miner ever has, and on a scale of which they could never dream.
The sheer scale and intensity of the catastrophic fires, the unabated spread of weeds, and the misery that has befallen so many “reintroduced” predators, all have resulted from misguided efforts to force nature to comply with human dreams, coupled with the civic resources capable of making huge mistakes. All are all-too-commonly followed with finger pointing, backtracking, and denial, with the ubiquitous excuse of “insufficient funding.” “Mother Nature” is being reduced to a welfare case. It is not fixable by “new leadership,” more money, or higher standards of professionalism. A regulatory system inherently does not work because its motivational structure can not be designed according to natural law. Nature is dynamic, adaptive, competitive, and uses distributed risk to integrate individual interests. Free Markets have all of those attributes along with the prospective intelligence and creativity of human beings.
Regulatory government is a tremendously crude system. Compare the number of variables it can handle, the speed of decision-making, and its operating overhead costs against the sophistication and flexibility of a free market. Compare the predictive capacity, adaptive response time, and efficiency of the Chicago Board of Trade, against a County Planning Department. Compare the complexity of producing a permit review to the manufacture of an automobile or computer. There is no comparison. The question really is: How would a free market, motivated to reduce or avoid costs, choose to incorporate the cost of externalities into the conduct of operations? Let's take a look at some clues from existing private regulatory systems.
Existing Private Regulation: Certification Systems as Partial Solutions.
There are several existing certification systems that demonstrate the present invention's applicability to environmental law. Each has deficient properties. The first regards manufacture of electrical appliances, and the second, forest certification.
Insured Certification in Manufactured Goods. Certification companies have no incentive to corrupt their standards for the benefit of any particular industrial concern. The reason is that they have earned their public confidence in diversified markets. The loss of confidence in any one of them would spell total loss for all. In this system, a second level check on their behavior is the financial cost of the reinsurance they carry, based upon their record of misjudgment.
Consider the example of electrical appliances. This industry recognized, long ago, that electrical appliances carry potentially fatal hazards. The products were subject to misuse and damage. Production standards were variable. In order for public confidence to be maintained and to protect manufacturers from either government mandated production standards or capricious lawsuits, Underwriters' Laboratories (UL) was constituted. UL manages tens of thousands of products, without need for civic oversight. Considering that few people worry about the safety of their appliances, can you imagine having to go to Congress or a bureaucracy for every new type of wire insulation? That is what we are doing with the environment. Civic compliance destroys innovation because they have little structural motive to nurture it.
Existing Environmental Certification as Applies to Forestry. The following is a comparative discussion of three existing forestry certification systems.
Type 1: Voluntary Guidelines of Industry Associations. The largest forest certification program in the world is under the American Forest & Paper Association (AF&PA). This organization is comprised of large, industrial producers of pulp and lumber. The purpose of such industry-based organizations are obvious: Weed out the bad actors, retain competitive productivity, and deflect political and legal pressure from environmental activist organizations. The AF&PA certification is a self-policing system. The organization proposes its own standards and requests self-certification of its membership. Because the system is designed by an industry association, it might be specified to the advantage of the big players that fund the association budget. It is easy to bias specifications to favor the attributes of property held by specific owners. No matter what the level of integrity of its membership, the system has a discernable potential for conflict of interest in verification because there is no independent auditing function.
A structure like this will lose a political battle under accusations by environmental NGOs looking to support their organizations by fees for verification “services.” “Independent verification” by activist organizations is subject to its own inferred conflict of interest on the part of the environmental NGOs themselves. The NGOs' claim of sole legitimate authority for accreditation of third party certification is akin to the acquisition of market share by political extortion.
Setting aside NGO business ethics, there are legitimate questions about their technical competency for this kind of oversight and no reason for them to extend their standard of competence. Given that the paper industry is a competitive business, this industry rightly fears the kind of political leverage that the NGOs represent as well as the potential violation of confidentiality regarding intellectual property. Such process distinctions can be critical in consideration of approval or disapproval of a specific technology, for example, a type of genetically modified tree or specialized machinery that might have taken years (and millions of dollars) to develop.
There will probably be no way to avoid third party verification. What remains is who should do it, how it should be verified, and who is financially responsible? The AF&PA system design does not accomplish these goals.
Type 2: Third Party Chain-of-Custody System, Audited to Performance Specification by an Accredited Non-Governmental Organization (NGO). There is something intuitively appealing about third party audit systems. It is the reduction of conflicts of interests, a motivational check in the system. The key assumption is the auditor's manifest disinterest, professional expertise, equitable treatment of customers, and financial accountability. Though this system may have preferred applications, unfortunately, the execution of the prototypes has exposed serious deficiencies that necessitated the development of the current invention.
This type of certification uses independent audit to a performance standard or specification. It has components that are desirable. There are also critically deficient attributes for most environmental applications. So far, the way it has been implemented has manifested many, but not all, of the structural problems to be detailed to demonstrate the evils of unaccountable monopoly and the structural deficiencies in conformance specification in environmental certification systems.
There are two corporations now operating this type of forest certification program: Scientific Certification Systems Inc. and the Institute for Sustainable Forestry (more commonly known as the Rainforest Alliance). Both are accredited by the Forest Stewardship Council (FSC). There are several more companies with current applications for accreditation to the FSC, most notably the Certified Forest Products Council (CFPC). If the AF&PA surrenders to activist pressure and seeks FSC accreditation, it would make the FSC the only certification program of this type in every town, otherwise known as a global forest certification monopoly.
The FSC is a NGO incorporated under Mexican law, based in Oaxaca. It derives its accreditation from the likes of the International Union for the Conservation of Nature and Natural Resources and World Wildlife Fund through their member organizations: Greenpeace, the Sierra Club, Friends of the Earth, and the Environmental Defense Fund (to name but a few). The FSC carries a lot more weight behind it than that: the Ford Foundation, the Rockefeller Foundation (Standard Oil), the Pew Charitable Trusts (Sun Oil Company), and Prince Bernhard (Shell Oil), among others.
The FSC program is organized as a chain-of-custody system. It regulates forest practices by control of the customer base through “green” labeling. The idea is that, if the supplier adheres to FSC specifications and operational requirements, and subscribes to independent verification services provided by FSC accredited auditors, they can use the FSC logo on a “green” label. The label allows the supplier to claim the endorsement by the FSC for their standards of practice, certified by the accredited auditor. All that remains is to track the product through the entire supply chain so that an impostor cannot sell goods as certified. There is supposedly a reason for impostors to want to do this. FSC market research indicates that 80% of customers say that they will pay higher prices for products with green labels. That claim is suspect when it comes to construction materials.
Early applications of the labeling and chain-of-custody principles were applied to the case of “dolphin free” tuna or vegetables marketed as having no detectable pesticide residues. These products require no integration into higher order levels of complexity: the fish stays as fish and the vegetables don't change composition unless they are integrated into prepared foods. There are a limited number of things a fisherman has to do to comply and, other than the difficulty of auditing a boat at sea unobserved, it is pretty easy to determine if they are killing dolphins or not. Once the fish is off the boat, it is canned, labeled, and boxed immediately. It is also relatively easy to audit the vegetables by testing samples taken from a store. It gets a bit more complex with timber products.
The essential problem with chain-of-custody systems, is that wood is a raw material that is integrated into a wide range of processes and products: structural lumber, fencing, pressboard, sawdust for pulp, moldings, all in various grades and various lengths. The boards do not come off the log in order and some logs can't make many of the products at all. The boards do not occur in proportions that match demand. The mill must store a few pieces and keep them separate from non-certified logs while they run enough logs to accumulate a saleable unit, particularly of larger sizes or higher grades. It is an expensive inventory problem.
Chain-of-custody is a supply problem of major proportion unless the mill owns sufficient certified forest acreage. If a smaller mill operator sells only certified goods, then they must buy logs only from certified forests. These are often further away, with higher trucking costs and uncertain deliveries. If they must mix log sources because either the supply of certified logs or demand for certified wood is insufficient to keep them busy, inventory management becomes extremely complex. If the composition of demand changes, one is left with either an expensive product deteriorating in inventory or selling it to one who will not pay extra for green labeling. The double inventory factor also greatly increases the complications of optimizing the utilization of materials by highest value grade, which decreases the profitability of the lumber. It also falls afoul of the ecological principle of best use of resources. It either means that the mill operator must have sufficiently high production volume that these inventory accumulations are not a problem, or compose all inventory of certified product.
The amount the consumer has demonstrated willingness to pay for the benefit of certified lumber has been insufficient to offset these lumber production and construction inefficiencies induced by the certification process itself. The property owner just doesn't get very much for the initial investment, much less the additional operating costs. When one contemplates how certified-content, in-house construction might be verified, or would serve as a market advantage, the benefits of green labeling start to appear increasingly suspect. Once someone sells lumber into a house, does the property owner know if it is all certified wood inside the walls? Not all the lumber produced ends up in the final product. Poured concrete foundations use a great deal of wood that ends up unusable or discarded. How would anyone track whether certified wood was used there, by poking through dumpsters?
Worse, if contracts are negotiated among suppliers and retailers for exclusive use of green labeled products there are serious concerns about collusion and restraint of trade. The entire “chain-of-custody” method may well have worked for cans of tuna, from which people can choose among brands on a supermarket shelf, or for vegetables, because the consumer can choose a different store. It is not so applicable to lumber, some of which may be in the frame of a house and not in the sub-flooring because such products may not be available. People are much less likely to distinguish among houses by green labels than among cans of tuna or stores selling vegetables. There are too many ancillary considerations in the purchase of a home that have much more bearing on buying decisions, such as location. Customers usually won't pay a higher price for a house built of certified wood to offset the higher product cost or the difficulty of finding an alternative supplier. When the product has a sole source, such as a book, the decision of whether the book is made of certified paper becomes ridiculous. One can't pick an alternative source of a book and still buy the product.
When asked about these problems, the FSC answer is that chain-of-custody is not a requirement of FSC certification. It is, however, required if the mill wants to put the green label on the wood to get that higher price “promised” by FSC market research. Without the label and the chain-of-custody, the mill can't get the higher price unless there is a customer so rich that they don't care what the price is. If the mill gets the higher price, a lot of good material is wasted getting the specialized product the customer wants at net adverse environmental impact. If the mill can't get the higher price for all of what was cut, what good is it?
There are more problems with FSC certified systems than chain-of-custody. First, the FSC not only claims it can get the mill a higher price for its product, it claims that it is a legitimate judge of expertise in the certification of all forests worldwide. It is demonstrable that legitimate disagreement and ignorance still exist about the best way to manage various single types of forest even where we have been managing those forests carefully for a long time. Thus the FSC claim of expertise, or even its reason for existence, can't be validated.
Second, the FSC subordinates its ecological management to political and social goals. It starts out with the “accreditation” of the FSC itself by its requirement for adherence to all UN treaties, ratified or not: “In signatory countries, the provisions of all binding international agreements such as CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora), ILO Conventions (International Labor Organization), ITTA (International Tropical Timber Agreement), and Convention on Biological Diversity, shall be respected.” This hierarchy immediately politicizes and socializes the claim of accreditation on the scientific conclusions of the subject organization. For example: There are unspecified commitments to “maintain community well being.” Who determines what that means? There are requirements to “conserve economic resources.” What those are, is subject to economic variation and subjectively-determined as well. There are requirements to “maintain biological diversity” even though some forests naturally go through periods of near monoculture. The UN guarantees the “rights of indigenous peoples,” and those guarantees are written into the bylaws of the FSC. What happens if a tribe of “Native Americans” makes a property claim against the land? Are the property owners required to surrender it?
Given that the FSC is a supporter of the Convention on Biological Diversity, and that the Global Biodiversity Assessment specifically endorses the Wildlands Project, does that mean that the use of the land must eventually conform to the whims of the Seville Strategy of the IUCN and, therefore, the Wildlands Project? Does this mean that a forest as certified under the FSC, no matter how well managed for production, must eventually be surrendered to a status of “no entry”? It is, at least, a tacit violation of U.S. law, to agree to contractually require adherence to the terms of rejected treaties.
Third, there is no regulatory benefit to FSC membership because it subordinates its verification to all local laws. There is no added value if the laws are in error or in conflict with those rejected treaties; indeed it is an overlay of additional bureaucracy and puts the property owner in a position of serving multiple masters with differing opinions.
Fourth, there is no consideration of offsetting funds or mechanisms for risk management or means to minimize the cost associated with certification to FSC principles. Nor is the certifying body accountable to fix the problem if they are wrong. If the practitioner fails or makes a mistake, there is no backup.
Fifth, there is no motive for the property owner or his practitioner to improve the limits of best practice for their specific situation. There is, instead, the assumption that the FSC is the seat of knowledge, standing in judgment of the certificate holder for their specific combination of circumstances. How is that any structurally better than the expertise of the local authorities?
Sixth, the FSC is about forests. Who decides the value of other ecosystems affected by the forest, relative to the local circumstances? What if the forests have grown over meadows. Do they care about those? There is no structural means to identify the relative contribution of resources specific to an individual property and foster the best superposition of countervailing interests in that location.
Seventh, because this type of certification is audited to performance criteria, the inspections are subject to the interpretations of the inspector. The interpretation differs from audit to audit, based upon the interests and goals of individual inspector. This is a recipe for graft and extortion, not to mention a headache for the forest property owner.
Finally (and in the judgment of the author, the most egregious failing), once a critical mass of forests are certified by the FSC, what is to keep the environmentalists from changing their minds as to what constitutes sustainability and/or acceptable performance specifications? These organizations are, after all, beholden to their global benefactors. The rules of the group are likely to be defined by the most radical members of an internal structure of bipolar stability. What if someone in the organization dreams up a requirement for “cruelty free” redwood?
If there is an internal coup d'état in one of the governing NGOs, then there is a shift in control of the entire political food chain. What is to keep the social welfare crowd from hijacking the forest from the property owner and the environmentalists to make houses for the poor? What if the NGOs at the UN decide that these specifications are to be subject to an overriding global social need? Isn't this a recipe for disaster?
Thus, the FSC operates very much like a protection racket without the protection. It has but one advantage to the property owner: Because it is the only certification system blessed by environmental NGOs, the property owner and timber operators might be left alone to take care of their forests if they seek the appropriate blessing. These “protection benefits” have been illusory. When there has been dispute with local government over what constituted best management practice, the accredited auditors have historically been of no help, whatsoever. Reports from those interviewed suggest that they fall back upon the “adhere to local laws” aspect of their bylaws and defer to the local authority. Thus, the most important reason that the timberland property owners and foresters have for certification ends up producing no real benefit. The FSC system, however well meaning it might be, is still unaccountable political control of a resource on multiple levels subject to multiple authorities. It is yet another way to lay increasing external claims upon the wealth of the land.
Type 3: Process-Based Systems Audited by Standards Organizations. This third type of certification has favorable environmental properties, in that it starts as a process certification and not a performance standard or conformance certification. There are two organizations offering such certification products, the International Standards Organization (ISO) and Canadian Standards Administration (CSA) (whose product is traceable to the ISO 14000 environmental process specification). The ISO is accredited by UNESCO (which leads us back to the FSC) but so far has had a fair track record for scientific independence, given its technical origins and composition. Neither of these products enjoys support by environmental NGOs. The ISO 14000 process specification is currently in the process of developing a chain-of-custody system, which would be equivalent to restraint of trade by treaty to a bureaucracy accountable to no one.
“Performance” certification systems are designed to prove that the product is adequate. They more seldom address the distinctions of how the processes are designed and optimized to produce that product. They do more for verification to the specification than the improvement of the process design. They do less to integrate quality systems into the mechanics of continuous process improvements than to organize the enterprise around paperwork. More manufacturers adhere to the ISO 9002 manufacturing quality system, which involves verification of process conformance to specification, than the ISO 9001 document that includes a controlled process for design validation. Most manufactured products derive their production and quality problems out of design related problems. So it is with process designs as well.
The purpose, for any certification system design, is to imbue confidence in its ability to verify the trustworthiness and competence of those under audit. What performance specifications do provide is the sense of emotional security attendant to a deterministic outcome. They make people feel good without necessarily knowing why and are thus an easier political sell. Validated compliance to specification does not mean that something will work (much less be optimal), only that the practitioner can prove compliance. That's how the military gave us $200 hammers. It took $200 to prove compliance to specification. It did not make for better hammers.
There is no point in taking the position that anybody knows what is “best” in environmental management. “Best” should be a verified means by which these things are learned, tested, and subjected to independent review upon consideration of the conditions specific to the location in question, not an outcome. It should always remain an elusive target to be pursued with vigor. Our understanding of ecosystems is too ephemeral and the circumstances too dynamic and varied for conformance goals to work among living ecosystems.
To attempt to write a specification that describes the form of an outcome of an environmental product is fraught with the same complications as led to the California Forest Practice Rules comprising over 1,000 pages. Performance specification (rule-based) systems may feel good to customers, but they are not dynamic, adaptive, diverse, competitive, or capable of differentiation—quite the contrary. How is the design of the specification itself to be verified?
It is here that the opportunity and superiority of process certification systems have their greatest opportunity. It is how you do, what you do with stuff, that changes its state. One can verify that one did what one proposed and then measure how it worked. It is here that the bulk of research must be directed, not only to come up with good ideas, but to devise systems by which a practitioner identifies and tests the efficacy of the way process improvements are developed and tested. Specification systems fail because deviation is not allowed.
That is what is not being done with either the ISO or CSA products. These certification systems are designed to prove that the systems the operator uses will deliver a specified output, usually determined by the local authorities! They thus end up functioning as a conformation specification. That they are a form of process validation is an improvement.
Unfortunately, the process specification systems of the ISO not only rely upon chain-of-custody as a benefit; they do little to systemically push the limits of best practice from the design control perspective discussed. They offer no regulatory dispensation. They do nothing to financially manage risk and offer no weighting mechanism for decision-making, nor do they have a financial stake in the successful conduct of experiments. Without these, the ancillary environmental and financial benefits to be discussed in this and proceeding chapters cannot be realized. We can do better than that.
The Need for an Improved System.
Ecosystems are diverse, dynamic, and change irreversibly. They are subject to random events of enormous scope. They operate in an interdependently competitive manner. Their species undergo random mutation, are capable of near monoculture, and are subject to ruthless extinction. Nature is an entirely objective judge of fitness, not to be underestimated. The civic environmental control system enjoys a monopoly assumed to be natural. The extent of its powers is unchecked, irreversibly acquisitive, maladaptive, unaccountable, and indissoluble. Its motivational structure is to perpetuate, extend, and accrue problems rather than to complete a job and cease operation. The concentration of civic power inherently attracts corruption, incompetence, and manipulative greed. It has been thus since the dawn of civilization. It is why the Constitution instituted limited government to guarantee the unalienable rights of citizens.
Plants and animals compete for scarce resources in a manner similar to laws of supply, demand, and indifference, much as people do. Business now applies many of these economic laws by quantitative computer models in its research toward predicting commodity market behavior. Manufacturers must have some idea what the demand for a product might be or they may size capacity incorrectly, either losing early market share with high margins, or wasting capital invested in a “turkey.” Investors must have an idea how to weigh a prospective risk associated with an action. They offset that risk by hiring insurers to understand how to quantify and efficiently manage the capital to mitigate an error in judgment. Much of that investment in analytical tools is thus available and applicable toward the management of risk in environmental systems.
Human intelligence is not only adaptive and competitive, it is creatively prospective. The chaos of speculation among independent interests can provide the focus and energy necessary to quantify and model productive ecosystem potential and rapidly adjust the models to new information. A free market in risk management can discount the present value of the respective contingencies into a real picture of weighted options. These are the real blessings of and mandates to personal responsibility, not achievable under a coercive system, wherein people are habituated to avoid blame based upon retrospective experience. There is simply no civic authority that has such capability to manage risk adaptively, as does free enterprise.
Political motives have historically been far more corrupting than a managed and audited profit motive under the rule of enforceable contract law. Political corruption is usually harder to detect or redirect because the individual profit to politicians can be indirect, non-pecuniary, or hidden to avoid prosecution. Civil power relies upon third party audit to make reliable investment decisions. Civic enterprise has the power and scale to avoid scrutiny. The organizational motives of either a civic or non-profit enterprise are thus harder to identify or attribute than is a financial profit on the books of a publicly traded enterprise. When one looks, the economic motives are easily identified, even if the profit via manipulation of the power of government is obscured. The problem is: What alternative do we have once the corrupt motives and acts of the government/NGO cabal are identified and publicized? Which system is inherently more likely to subject its acts to trustworthy verification?
Over the last century, there is a record of nearly 100 million deaths of citizens, by deliberate starvation and execution, at the hand of their own governments. People commonly respond this historical observation with statements such as “that wasn't the U.S. government” and “U.S. citizens enjoy rights under the Constitution,” even while insisting upon violation of the Constitutional property rights of others in order to get what they want. Constitutional rights didn't matter to them when they belonged to farmers, ranchers, and forest property owners, but now that these precedents have given eventual control of the use of all land to government, why should people think that “they” won't come after them and their property.
It is paradoxical that the very scientists who advocate biology education based exclusively upon the theory of natural selection, should also advocate the exclusive use of deterministic management systems for competitive ecosystems. With such an ubiquitous example of successful Darwinian economy, and in the name of preserving Darwinian ecosystems, it is bizarre that a society founded upon free-market capitalism and private property rights has assumed that civic control of ecosystems constitutes a “natural” monopoly. With an unbroken history of democracy leading to tyranny, it is frightening that a successful society, founded upon republican principles of limited government, should justify an irreversible accrual of power in the hands of a demonstrably incompetent and historically destructive master.
It is time to break up the civic (governmental) monopoly in environmental management with the introduction of a capable competitor: the free market itself. The problem with that has always been identification and manipulation of checks and balances within the market with which to motivate the individual to account for externalities associated with their uses of their property. The good news about a free-market management system is that the motives of those in business are less confounded with religion or political power. They are thus easier to understand and manipulate because the principles are simple.
Markets can identify the means to find financial benefit in the services that land provides, as long as they are free to do so. Under current law, we are illegitimately saddling with regulatory liabilities, and declaring private assets to be public property, confiscating its preferred uses into democratized commons and all too often serving the selfish interest of a few in the process. We all have that compulsive urge to think about what “should be done” with somebody else's land. We want to assume that we have a “right” to dictate the use of private property as a collective good, instead of purchasing a contract for that use. Civic acquisition robs investment value into those very uses we so highly prize. It is a process of enacting what are, in effect, public acquisitions of what are legally constrained to be zero-priced goods. Once the control of those uses succeeds to a civic agent, the objective means to evaluate and weigh individual cases has been destroyed, devolving to political struggles, as reflect specific interests, not all of which are altruistic.
One would think that highly educated stewards of the land, selling diverse products as appropriate to the topography and resources, willing to invest their own money, and committed to long-term ownership and the improvement of ecosystem function, would be a good thing. Unfortunately, without at least adequate profitability in the investment, it won't happen. Does that mean that these investments have to be wildly profitable to make a free market in ecosystem management a reality? How can an environmental management system justly motivate industrial interests to develop an advancing level of stewardship in order to survive? How do we focus on motivating the kind of forest management and development that represents the best balance of public need and technical capability? How might a market, trading these products, be structured so that the owner maximizes profit through an objective balance between resource extraction and other productive land uses? How do we do that without the unnecessary cost of civic oversight or possible corruption?
SUMMARY OF THE INVENTION
The present invention challenges the assumption that environmental “protection” through politics, regulation, and lawsuits can work for either nature or humanity. The invention operates upon the premise that people can make rational choices based upon an objective measure of self-interest that incorporates the interests of others, and that free markets have the ability to rationalize abstract interdependent interests through marketing services managing actuarial risk. The proposed system rewards rigorous risk assessment, research, and accountability. These principles support responsible expression of individual freedom and protect unalienable property rights.
The invention is a business model, capable of financially accounting the objective value of ecosystem resources into the conduct of operations. That accounting renders ecosystem components and subsystems into tradable assets. The invention applies identified principles of natural law into a detailed structure and explains the rationale for each component, complete with necessary checks and balances. Together, the structural components of the invention produce a regulatory system that is motivational instead of coercive.
Proposed applications of the invention suggest specific pilot programs with which to address complex environmental problems, many of which have eluded existing rule systems: timber and fire management near residential development, exotic species control and pesticide management, the Endangered Species Act, and site-specific septic system management. This application for patent includes examples of how the structure of the system produces the ability to manage highly mobile assets such as water quality, migratory animals, ambient noise, or reflected light in the form of a view-shed. It provides a foundation for the privatization of civic holdings forbidden under the Constitution.
The free-market regulatory system will offer working professionals and university academics within the existing civic system a preferred career choice to civic indenture. The program can start on a small scale as numerous local enterprises in competition with civic regulation, and displace government regulation where it proves to be superior.
The proposed civil verification system provides privately certified environmental management with an insured guarantee. The certifying body audits practitioners to validated process specifications. A competitor in the verification business has every reason to assure that their customers perform at both minimal risk and cost because they reinsure the practitioners. The program requires continuing research and education on the part of the practitioner toward extending the state-of-the-art of resource management practice. Insured Certification, as proposed, must supersede civic permit authority for those under coverage. The system generates necessary accounting data to determine the financial worth of insured ecosystem assets at risk, as part of the conduct of certified operations. This is similar to the manner in which industrial insurers developed our understanding of financial risk, through direct measurement of the scope and probability of an insured loss. The practitioner compiles the data from records of habitat restoration and hazard mitigation projects along with the continuing research as required. That data serves other valuable purposes within the system.
As risks are identified and accounted, investments to reduce or offset that risk become profitable, thus immediately improving the conduct of operations. The use of pooled risk also serves to counterbalance experiments that are more aggressive against those that are less intrusive. Uses of parcels and the nature of risk reduction investments can thus differentiate according to their local attributes. Crude pricing schemes begin to take form with which to trade rights to use those ecosystem assets, capable of offsetting other accounted risks. Ecosystem assets can thus have financial worth, as long as they can be bundled into valuable units. To reduce the cash flow requirements necessary for financial viability, one must reduce the transaction overhead of trade, in contracts for the use of these assets. Transaction volume also helps promote accurate appraisal of ecosystem resource value and reduces the cost of administrative overhead yet further.
Recognition that natural process assets are worthy of investment will induce investors to contribute capital to successful risk-reduction and risk-offset asset-management enterprises. Stock ownership can engage self-interested consideration of others, holding competing assets as overlays within a particular geographical region or spread over the entire planet. Many resource assets are mobile, or have such low unit value that their minimum economies of scale can wildly exceed the bounds of traditional property lines. The solution is to create a property definition of uses of ecosystem process assets that transform the state of these mobile resources. Such process units could operate on a noncontiguous, global scale and overlay other economic land uses that may well have their own boundaries.
The structure of the invention is a synthesis of the following components: certified conduct of insured operations in lieu of civic permit; validated operational processes; audited ecosystem data; valuation of risk through the accounting of mitigating operations; continuing education and research to extend the state of the art; use of a legal description of ecosystem assets as dynamic models describing bounded processes, capable of offsetting operating risks; and civic respect for Constitutional principles protecting unalienable private property rights. These components are structured in service to the following principle: to improve ecosystem health, invest in shares of private enterprises selling uses of natural process assets priced by their ability to offset environmental risk.
Unlike rules, which are simpler in concept than application (e.g., the Forest Practice Rules), one does not need to fully understand principles in order to use them. Nobody fully understands gravity, but everybody knows how to use it to the degree that the applications of the law of gravity, as describes its behavior, are understood. Everybody viscerally understands the laws of supply and demand. A management system, structured according to natural law, will be ultimately easier to use. External assessments of risk and claims against the uses of property are incorporated into the price of either insurance or investments in assets, capable of offsetting those risks. Brokers will offer the services as package deals. Standard units of account will develop through trading.
People don't think about natural laws, because they are immutable descriptions of seemingly obvious truths. That doesn't mean that all the manifestations will be simple. The combinations of applications will be as complex as the cost of overhead will support and the ecosystem under management demands.
BRIEF DESCRIPTION OF THE DRAWING
FIG. 1 is a general schematic of the present invention to assist the reader in understanding the architecture supporting the examples discussed in this Specification. A brief glossary describing the terms on the drawing as apply to this specification follows. In each instance, each entity, whether owner, insurer, or provider of certification services can be individual or multiple entities. For purposes of clarity, these definitions may include lists of applicable synonyms applied to specific examples in this application that are subsets of these more general terms.
PRINCIPAL ELEMENTS
The Insurance Function markets contracts for indemnification services to restore process assets to original condition or for less than contractually satisfactory performance, settles damage claims resulting from losses due to operations, pools capital for investment to reduce both premiums and reserve requirements, conducting actuarial analysis to price premiums, defines the scope of coverage contracts, and funds research and development of new technologies to reduce the magnitude of covered risks. Synonyms are: insurer, insurance, reinsurance, insurance company, and insurance industry.
The Certifying Function audits performance to contract between the Property Owner, the Insurance Function, and the Free Market, introduces measurement technology, and provides validation services. Synonyms for the Certifying Function are private certification, certification process, and certification system. Providers of the Certifying Function include: certifying company, third-party certification enterprise, certifying entity, certifying agent, certifying body, certification enterprise, etc.
Process Assets are resources within a bounded area that transform the state of commons into marketable goods and services. Related terms used in this application include ecosystem assets, natural process assets, resource assets, and land assets.
Property Owner controls, manages, and contracts for services to manage the performance of process assets, invents or introduces new management methods, and is responsible for the performance of process assets to contractual specifications. Related terms used in this application include: property ownership, landowner, practitioner (as an agent for the property owner), etc.
In this instance a Free Market is one whose pricing and exchange mechanics are not under control by an agency of any regulatory government or affiliate (such as the Federal Reserve or the IMF). Its participants are constituted of all legal persons. Although it does include trades in use of process assets that offset risks, these are not “issued” by any agency, but by those who can prove they have a performing process asset capable of providing a speci