Document Type

Article

Publication Title

West Virginia Law Review

Abstract

Professor Lewin's short comment on my lecture about regulation and contract in environmental law raises, in thoughtful fashion, some difficulties with my thesis. They deserve some brief comment in reply. To set the stage, Lewin accepts my two initial premises for dealing with environmental problems. First, that the appropriate level of environmental harms should be determined with reference to a hypothetical test that asks what level of pollution would be accepted by a single owner of the entire world (or any isolated sub-system thereof) who had to internalize all the gains and losses of his own decisions. Second, that in a world with multiple actors, the trading of rights to pollute is normally a good thing, so long as the rights of third persons are not diminished by the exchange. The voluntary exchange benefits both parties to it, while the protection of thirdparty rights through coercive legal means insures that third-party losses do not exceed the gains of the immediate parties to the transaction. Both of us recognize, indeed insist, that this system is not foolproof. Mistakes can be made in the estimation of the measurement of environmental losses and in the anticipated gains from private exchange. But all rival systems of environmental control are prey to these errors. The best we can hope for, therefore, is to create a set of incentives to induce actors, both private and public, to seek out the optimal solution. Notwithstanding some broad areas of agreement, Lewin and I part company over both theoretical and practical issues. At the theoretical level, he believes that I have chosen the wrong "single owner," the large corporation which is risk neutral with respect to environmental harms. He would choose a very different single owner, the loving, risk-averse parent who cares deeply about the environment, her children, and her children's children; someone, in his words, who worries about "the effects of acid rain and the hole in the ozone (layer]" (p. 896). His view is that the difference in choice of the single owner will clearly influence the patterns of use and consumption within the system. Where intangible benefits are given pride of place, and where risk aversion is the dominant position, we should not expect otherwise. The identity of the single owner therefore influences the mix of choices that will be made, within the incentive structure that both Lewin and I believe is appropriate.

First Page

901

Volume

93

Publication Date

1991

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