David Lucas owned shoreline property that the South Carolina government told him he couldn't develop, even though his next door neighbors developed their property. South Carolina's regulation made his shoreline property virtually worthless. Lucas sued and the U.S. Supreme Court forced the South Carolina government to pay Mr. Lucas $1 million. Once the state was forced to pay Lucas $1 million, they changed their minds about the worth of keeping the shoreline undeveloped. In fact they sold it to a developer.
Costs born by others will have less of an effect on our choices than when we bear them directly. Environmentalists love it when the government can force private citizens to bear the burden of their agenda as opposed to requiring that government pay landowners for property losses due to one regulation or another. It's cheaper and that means government officials will more readily cave in to environmentalists' demands. In other words, regulations that stop a landowner from using his land because of the red-cockaded woodpecker, or prevent a farmer from tilling his land because of an endangered mouse, or prevent a homeowner from building a firebreak to protect his home produce costs that are privately borne. If government had to compensate people for regulations that reduce the value of their property, more intelligent decisions would be made. Besides, if a particular measure will benefit the public, why should its cost be borne privately?
Environmentalists go berserk whenever there's talk of drilling for the tens of billions of dollars worth of oil in Alaska's National Wildlife Refuge. Why? It doesn't cost them anything. Here's what I predict. If we gave environmentalists Alaska's National Wildlife Refuge, you can bet your last dollar that there'd be oil drilling. Why? It would now cost them something to keep the oil in the ground. The Audubon Society owns the Rainey Preserve in Louisiana, a wildlife refuge. There's oil and natural gas on their property and they've allowed drilling for over half a century; not allowing drilling, in the name of saving the environment, would have cost them millions of dollars in revenue.
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