Physical, Human, and Social Capital As Barriers to Environmental Policy Reform
Abstract: Why is environmental law and policy so resistant to change, even in the face of overwhelming evidence that the benefits of reform swamp the costs? Prevailing explanations fall broadly into three categories: (i) public choice, (ii) framing and education problems, and (iii) public doubts about the importance of the underlying environmental problem. This paper considers a fourth explanation: that physical, human, and social capital lock individuals, firms and organizations into a preference for the status quo. While a precise definition of capital is elusive, this article sets forth a working definition: a costly and long-lived asset that generates a stream of benefits. Durable capital is valuable because it provides productive benefits over a period of time or for a significant quantity of production. The problem with durable capital arises when some environmental problem emerges during its life that renders it less socially beneficial than believed when the capital was initially formed, and possibly even socially detrimental. If the continued exploitation of capital creates environmental externalities that were not appreciated (or consciously ignored) at its time of formation, a split in interests emerges: cessation of use of the capital may be desirable from the social point of view, but the owner of the capital will vigorously protect the capital to preserve the stream of benefits. This split accounts at least in part for almost every environmental problem that has ever arisen. The solution to almost every environmental problem requires a change or cessation of a practice, which inevitably embodies some physical, human, or social capital, and which therefore generates resistance.