Thursday, April 14, 2011

Jobs vs. the Environment, Part II

In my last post, I suggested the jobs vs. the environment policy debate and legislative agenda was a false choice and cited a recent paper that demonstrated a positive relationship between economic well-being and environmental quality. Here is what that relationship could look like in Montana.

When we produce basic commodities like wheat, beef, or minerals, global markets set prices; commodity producers are price takers not price makers. Nationally, U.S. cattle producers slaughtered 2.96 million head totaling 2.29 billion pounds in 2010. Montana producers shipped 1,700 head or 1.5 million pounds. A consumer would be hard pressed to differentiate a steak from Chouteau from one raised in Texas because of the way beef is distributed and marketed. As a result, beef producers make far less money that they could. What if we branded our beef as being raised in an environmentally sensitive way and capitalized on Montana’s clean environment, water, and open ranges? The short answer is – producers could make more money on each cow.

There are many niche markets for beef – Lean, Organic, Natural, and Pasture-finished are just a few examples of efforts to brand meat raised and finished in a nontraditional manner. They all base their higher prices on issues of quality. In Montana, we have the advantage that quality is already inherent in our state. For many of our products, the Made in Montana label should be a proxy for “clean and healthy”. Efforts to undermine environmental protections are economically short-sighted and counterproductive to a state economy that could be less dependent on global markets. Our beef market is so relatively small (we are not in the list of the top ten beef producing states), the adjustment could be done in a few years.

This version of economic good tied to environmental quality demands that we need to rethink how we do business. If, as a rancher, your customer is a meat packer, your production will have to conform to industry standards for everything from breed selection to use of antibiotics to yield and quality grades. But, if your customer is an individual looking for lean beef raised and finished on a local family farm, or raised organically, you will be working with a very different production model. This requires new skills and ways of thinking about what and how we produce goods and services. It would require infrastructure and human investment.

The logic can apply to other areas. Montana could adopt a quality management assessment for public policy including not only food but also timber production (i.e. sustainable, low impact to watersheds), predator control (predator friendly wool), tourism (triple bottom line accounting), and manufacturing (energy and water efficient). None of this is revolutionary and examples can be found around the world. Montana’s competitive advantage is that we already have the environmental quality; all we need to do is design an economy that benefits from it.

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