August 2001

Environmentalists can drill oil too

By Graham G. Storey and John Charles

The House of Representatives has approved President Bush's plan to open a portion of the Arctic National Wildlife Refuge (ANWR) to oil and gas exploration, but a majority of Americans are opposed to the idea. According to a poll done recently for Newsweek magazine 48 percent of respondents believe that ANWR should not be available for drilling, 45 percent favor it, and 7 percent have no opinion.

The opposition is predictable given that ANWR is public land. As taxpayers we all own it, which means none of us actually owns anything. Because we cannot personally benefit, we have no reason to support drilling, or even learn about it. Most Americans probably would not even be able to locate ANWR on a map, let alone say anything specific about the wildlife of the region. Why should they bother to learn when they have no stake in the outcome?

This is a problem that has become widespread on public lands throughout the country where timber harvesting, grazing, and oil exploration have been placed off-limits. At first blush this may appear to be a "mandate" for environmental protection, but in fact it simply reflects the lack property rights. If we were to re-arrange those rights, many people would quickly develop a different point of view.

How do we know this? Because respected conservation organizations have been drilling for oil and gas for decades in delicate ecosystems. The only difference between those examples and ANWR is that the conservation organizations owned the land.

Until this past year, for example, the Audubon Society was in a partnership with the energy industry to extract natural gas from the Society's Paul J. Rainey Wildlife Sanctuary in Louisiana. Starting in 1941 natural gas was removed from the 26,000-acre preserve.

Splitting profits 60/40, Audubon limited development to ease the environmental impact, while biologists monitored the ecological health of the area. When the natural gas ran out, Audubon had made over $25 million dollars from the preserve. It used the money to support Society activities on the preserve and elsewhere; the area itself is still home to hundreds of species and countless birds.

Other environmental organizations also use their lands for profit. The Nature Conservancy's Niobrara Valley Preserve in Nebraska is self-sustaining through a variety of capital programs. Whether it is selling cedar posts for fencing, allowing hunting, leasing grazing rights, or selling bison from the preserve's herd, the managers have found a variety of ways to use the land while supporting the natural plants and animals on the preserve.

The only reason this isn't happening at ANWR is because no one owns it. If Congress simply gave part of ANWR to the Nature Conservancy on a 50-year lease and said, "do what you want with it, as long as we get 50 percent of any revenue," it's almost guaranteed that the Conservancy would be drilling before the lease expired. Why? Because incentives matter, even to environmental groups.

Only one-tenth of one percent of the refuge is sought after for oil exploration, yet the value of those resources is estimated to be between $80 billion and $320 billion. And mining technologies have improved so rapidly in recent decades that drilling can be done with very little footprint.

For example, in 1970, 65 acres of surface lands were necessary to tap 2,010 underground acres. By 1999, with the advent of lateral drilling and highly computerized techniques, only 9 acres were necessary to reach 32,154 acres of underground oil. Any conservation group that owned the rights to oil at ANWR could amass a fortune, with very little risk to the refuge.

It's always easy to oppose drilling on someone else's property. If Congress offered environmental groups a long-term lease to ANWR, not only would they be interested, they'd probably start a bidding war for the opportunity to protect the natural habitat with the proceeds from oil drilling.

Incentives always matter, even on a wildlife refuge.


Graham G. Storey, a former resident of Venetie, Alaska, is a research intern, and John A. Charles is environmental policy director at Cascade Policy Institute, a Portland-based think tank