Watershed Restoration as a Public Good

Society often misunderstands watershed restoration as an activity with no product. This misunderstanding is predicable given the complex economic nature of restoration. Because of this, those supporting restoration must be able to articulate how restoration fits within our country’s economic framework. This blog post attempts to explain this.

Within the economic framework of the United States, healthy watersheds are a public good. Everything else comes from this formulation. Public goods have two defining characteristics. First, nobody can be excluded from the benefits arising from them. Second, additional people utilizing public goods do not diminish the utility of others. A healthy watershed qualifies on both counts. These two characteristics prevent public goods from being bought and sold on the open market. This is both an asset and a liability to watershed restoration. On one hand, the benefits of restoration accrue to all people in the watershed. On the other hand, little incentive exists for individuals to restore watersheds on their own, because no single person reaps all the rewards or bears all the costs. In this case, the individual self-interest that guides economic markets in the United States leads to outcomes that harm society. In economic-speak, this is called a market failure. Market failures prevent the goods and services arising from watershed restoration from being bought and sold in traditional economic markets. Thus market failures are what cause people to misunderstand watershed restoration as an activity with no product. It is not that watershed restoration has no product; healthy watersheds produce clear streams, healthy aquatic and terrestrial wildlife, and thriving forests. Rather, no market exists for the products that watershed restoration produces. This forces collective action -- usually in the form of government intervention -- to provide for the societal demands of healthy watersheds.

For example, government intervenes in the provision of fire protection and street lighting, both of which are public goods. Fire protection provides important services to communities, as people value the actual extinguishment of fires and the availability of that service. However, individuals do not provide fire protection on their own; no market for it exists -- thus a market failure. Because of this, people come together, usually through government, in order to form fire protection services, and most people do not mind paying taxes in order to support these services.

Government also intervenes in the provision of street lighting. Individuals left to their self-interest do not provide street lighting in public areas. If someone did, he could not exclude others from utilizing the light emitted from the lamp, as the services of the lamp benefit all. A market failure exists. Private business does not provide for the optimal societal levels of street lighting, because there is no profit motive. The same holds true for watershed restoration. Private enterprise does not provide for healthy watersheds, despite the societal demand for the benefits accruing from them. This necessitates collective action, often in the form of government intervention. However, the public does not always recognize the importance of the ecosystem goods and services provided for by healthy watersheds. Without this recognition, collective action and government mobilization become much more difficult.