If the current trend in increasing regulation is not brought under control and cost-benefit consideration brought into the equation, we will be doing much to destroy our own economy and livelihood.
If a person seeks to see into the future, one should look at the present. Agriculture, as well as most of the rest of the U.S. economy, is vitally dependent on energy and other critical inputs. The cost and availability of these inputs sets the bottom line for the cost of production.
Extreme rises in energy costs in recent months are a major cause of the falling stock market. One cannot take out of circulation the additional expenditure required for energy without reducing investment fund availability. Economically unsound environmental restrictions compound the problem.
The situation in California is a case study in altruist environmental regulation and economic populism gone wild. What economist in his right mind would expect a regulated top price for electricity to consumers and an open unregulated wholesale price to do other than what it did? That is to price itself out of the market.
So long as excess capacity is available in state or for importation there is little pressure on the wholesale price, therefore, the regulated artificially low price to consumers escapes unnoticed.
But, when demand continues to rise and available power does not — trouble is brewing. It was obvious that demand was increasing — not only in California but also in those neighboring states from which excess power had been available. Each supplying state's own growth took more and more of its available power. This coming shortage had to have been known to all.
This is where extreme environmentalist come in. Environmental interests have forced extreme regulatory limitation on power plant construction both from the cost perspective to the plain prohibition. Hydroelectric power has been a major source of non-polluting electric generation. However, environmental interests have virtually stopped hydroelectric construction under the guise of not blocking fish migration upstream.
Now they are even causing destruction and removal of some existing dams on the same “fishy” grounds.
Anti-nuclear activities have caused so much regulation to be placed that no nuclear power plants have been built. Thus, as demand has gone up — the available power supply has gone down with little or no way to increase supply.
There appears to be only two major avenues for a solution 1) either allow the retail price to rise to the point of destroying business and surpass users' ability to pay — obviously not an acceptable solution at this point or, 2) set a fair rate of return and relax environmental restrictions to make construction of new generation capacity economically feasible.
What does this have to do with agriculture? Not only does unsound regulation run up input costs, look also at the TMDL regulations and potential restriction on agricultural run-off. We all know farmers should use any and all feasible means to minimize run-off during high rain periods. No one really knows what, if any, damage ag run off does to major rivers. No one really know if ag run-off is the major culprit — if there be one.
But regardless of the reality of the situation, EPA's current course of action will ultimately result on all farm run-off being required to have a permit from EPA or the state. At any time EPA decides that the level of “pollution” is too high it could then ask all permit holders to ratchet down their “discharge.”
This is not an unrealistic perception. The penchant for regulation and the unrealistic goal of many extreme environmental organizations which seems to hold sway with EPA and many states and local governments will sooner or later encompass and choke agriculture.
We must have reason and balance in environmental regulations. If the current trend in increasing regulation is not brought under control and cost-benefit consideration brought into the equation, we will be doing much to destroy our own economy and livelihood.