Tuesday, September 9, 2008

Managing Alaska

Amidst all the excitement of the Sarah Palin announcement -- and we are thrilled -- we've had a side conversation about Alaskan fishing. My boss is a former salmon fisherman on the very Bristol Bay where the Palin family fishes (and for which their eldest daughter is named). Here's a short video showing what they do:

For a few weeks each year, the salmon come up Bristol Bay by the millions to spawn in the streams where they were born. For the fishermen, it's a bonanza. Boats cover the bay with nets and drag in fish until, my boss says, the boats are literally sinking.

But there's an obvious danger. When you're pulling in fish like that, how do you make sure enough survive to keep things self-sustaining?

It's interesting to learn that salmon, like deer, are their own worst enemies. So many fish are swimming upstream that if fisherman don't diminish their numbers, they will crowd each other out. Letting all the fish get through would actually result in a smaller number of next-generation survivors then culling them first. Which is to say, man is not entirely an intruder: we have a role to play tending the garden.

Nonetheless, it can obviously be overdone. We've all heard of over-fishing, whether or not we know where it happens. What to do?

The obvious answer is government oversight -- and that's what they do in Alaska. The government determines what hours you can go out each day. One day might be 9am-4pm, the next day 7am-7pm, the next day 3am-noon. From what my boss tells me, the numbers are not immediately intelligible: the point is to limit fishing, and to change up when fish get through, presumably to preserve some diversity among the animals. Well-managed fishing means the fish survive to the next generation.

But it seems to me -- someone correct me if I'm missing something -- that there are different ways to manage the harvest. Government is the obvious choice, but is it the best? As I noted in my posts on managing urban neighborhoods, government tends to prefer over-simplistic methods, and democratic government is especially prone to short-term thinking: re-election next year means finding solutions that sound good in the short-term, not the long-term. And because you only need 51% to get elected, there is no incentive for politicians to care for everyone. There is no incentive, for example, to maximize who gets to take part in the fishing.

What if Bristol Bay was managed by private land-owners? As I argued previously, a private owner worries not only about the profit he makes today, but also about re-sale value. If a private investor created Bristol Bay, Inc., his financial interest would be to manage the waters so that many fish were caught every year, both now and far into the future: overfishing would greatly diminish the value of the property. The standard assumption is that a private owner would just strip all the value, then move on; but that would not in fact be in his own interest. He could get more money from selling a Bay that continues to produce.

The same might be said of Alaska's oil fields. The common assumption is that oil moguls would take all the money they could, while destroying the future value of the land. But so doing would hurt even them. If a private investor owned the section of ANWR where oil could be taken, his financial interest would dictate a method of oil extraction that allowed the land to produce for a relatively long time and still have high re-sale value down the road.

This argument, of course, has limits. Some things deserve to be kept purely as treasures. Perhaps, for example, the ANWR oil moguls would see little resale value in the survival of a rare species of seal; perhaps they would judge that the sole breeding ground of the species was also the best place for their refinery, and determine that they could make a lot more money puting the refinery there than preserving the seals. And perhaps the world would be better off in some intangible way if those seals survived.

But let's be careful to distinguish the two questions. One question is how a resource is best managed so as to survive long-term. The other question is how to preserve treasures that cannot be priced. The question of how best to manage the salmon stock, for example, should not be confused with how best to ensure the rights of the Yup'ik eskimos who live there. Government can step in to preserve the Yup'iks without therefore having to manage the salmon.

The government can tell the ANWR moguls that they can own and manage the land, but they must preserve the seals. Private enterprise can better manage the oil resources, and can in fact better determine how to harmonize the needs of the seals and the needs of the oil industry. Rather than letting politicians make short-term, interest group-based determinations of what means are best -- for example, dictating where the drills go, what methods are used, etc. -- the government should simply tell the oil moguls, if the seal population goes down, you will pay.

The best way to make them pay would be a simple threat to revoke the charter. The state of Alaska should auction off charter rights to the highest bidder, with certain restrictions. If, for example, the seal population went down, the charter holder would simply lose his rights to the land, and the land would again be auctioned off. Perhaps the same company would win the auction again -- but the price of diminishing the seal population would be having to buy the land a second time. The profit for the people of Alaska, of course, would be significant.

This policy allows the government to set clear mandates (the seal population must go up every year), but allows private enterprise to determine how to achieve those goals, and how to harmonize them with other legitimate goals, such as oil extraction. And private enterprise can pursue these goals with means that match long-term interests instead of short-term politicking, with the flexibility of individual initiative instead of parlimentarian wrangling. The best way to manage Alaska is to get the politicians out.