Corruption Regular Zone
Published by Yazad Jal January 11th, 2005 in EnvironmentRavikiran has a superb demolition of the Government of India’s Coastal Regulation Zone (CRZ) law. It reminds me of a mini debate I had recently with friends on whether or not government should enforce or regulate zoning. My view is that the government should be out of it completely except (maybe) for enforcing property rights and contracts.
Anyone building in the first 500 metres of the coastline is taking a risk. Anyone living there is also taking a risk. In a free world people should be allowed to take the risks they want to. They would also develop mechanisms that reduce the risk, like buying insurance. Somehow the “intellectual-moral elite” who advocate these laws seem to think that they are the only ones who should evaluate these risks. I suggest we let those who will reap the rewards (beautiful view, easier access for fishing) also face the risks (storms, cylcones, tsunamis).
CRZ also has the intention of protecting the coastal environment (eg. mangroves in Mumbai). I think private initiatives protect the environment much better than government imposed laws. Surprising as it may sound, capitalists are better at environment protection that bureaucrats (not all capitalists of course, you have some who don’t). PERC has a good selection of articles and books on the topic. Here is an interesting piece on how community groups in Sri Lanka combated the destruction of mangroves — without resorting to methods like getting governments to pass laws like CRZ.
A point of clarification. You stated that
To fully ensure that the risks are onlyborne by the people who do these ill-advised constructions is to reduce the moral hazard caused by disaster relief. However, I do not know if it has been conclusively proven that relief can cause moral hazard - or that lack of relief can reduce risky behavior. Any ideas?
Hey man I agree with your view that ownership breeds the greatest interest to protect. People do not feel they own their environment and so do what the hell they like. But unfortunately the capitalism in relation to the environment is an unreversible process. The free market may work but if some imperfection take place and a failure occurs e.g the mass scale dumping of nuclear waste then we have catastrophic market failure and then we are truly screwed. So perhaps the market is not always the be all and end all of everything.
Quizman, theoretically, yes relief should cause moral hazard, but I suspect the effect is very small - like life insurance causing moral hazard by increasing the risk of suicide. Who will build a flimsy house thinking “What the hell, if it collapses, I’ll get some meagre and uncertain relief from the government”?
On the other hand, insurance may cause moral hazard in some cases - if its a lossmaking hotel and part of a hotel chain, then the management’s carelessness about the construction of the hotel might go up a notch because the hotel is insured. Which is why we need a well-functioning tort system so that they can be sued by those whose lives were put in danger by bad construction.
Ram, markets aren’t perfect, but they are better than the government.
Ram’s comment reminds me of an aphorism
Some people are dissatisfied with free enterprise if it doesn’t work perfectly and satisfied with government if it works at all
Ravi makes a similar point in another comment.
May sound naive with this question with the level of discussion happening.But couldnot resist from asking
But dont you need govt support when the people are in trouble (like this 2004 tsunami).Then why shouldnt the govt enforce laws to prevent it.
howzlifedude,
My guess is that a large number of government officials, including publicly elected ones, must’ve pocketed money to allow those illegal constructions remain in place.
You raised a good point. If the Indian judicial system did function properly, Indian taxpayers could have sued the local municipalities and other govt bodies for not enforcing their own laws. Going further, any punitive damages awarded in such a lawsuit, would be paid by the individuals, out of their own pocket. i.e. the govt bodies should not bear the cost.
Such a lawsuit will send a strong signal to (a) lawmakers, to not make spurious laws (b) law enforcers, to enforce whatever laws remain.