Blog Post

Considering John Krutilla and the Environmental Turn in Natural Resource Economics

Jul 1, 2016 | H. Spencer Banzhaf

John Krutilla, a pioneer in environmental economics, helped to shape the field as an expert at Resources for the Future (RFF) in the mid-twentieth century. Perhaps his greatest legacy is shifting the discussion from one of economics versus the environment to consider a new economics of the environment. In a new RFF discussion paper, I tell the story of these intellectual moves. Here’s that story in brief: 

From the nineteenth century, environmentalism in the United States historically has been divided into its "conservationist" and "preservationist" impulses. The conservation camp, represented by its champion Gifford Pinchot (1865–1946), advocated conservation of natural resources to be used for human purposes, using a progressive model of rational government planning. Extending Jeremy Bentham's utilitarian maxim, it would conserve resources to deliver "the greatest good to the greatest number for the longest time." The preservation camp, represented by John Muir (1838–1914), advocated protecting wilderness from humans, rooted in a spiritual love of “Nature” for its own sake. Eschewing rational planning, it would undergird such preservation through grassroots organizations such as Muir's Sierra Club.

In the first half of the twentieth century, natural resource economics was firmly on Pinchot’s side of that schism. Thus, an interdisciplinary scientist like Aldo Leopold, with economic training and a position in a university agricultural economics department, could view the growing environmental ethic in terms of a tension between economics and the environment. Economics appeared to be about material use of resources, whereas a new environmental ethic required a love of the environment for itself. Thus, on this reading, any defense of the environment on economic grounds appeared to be too narrow.

That position began to change as the postwar environmental movement gained momentum. More than anyone, John Krutilla pushed economics to the point where it could embrace Muir’s vision as well as Pinchot’s. 

In "Conservation Reconsidered" (1967), published 50 years ago next year, Krutilla argued that if humans preferred a preserved state to a developed one, then such preferences were legitimate and belonged in the economic calculus. The traditional focus on conserving resources for material production needed to be reconsidered, he said, in light of the growing scarcity of preserved natural landscapes.

Krutilla's move coincided with a growing environmental movement on one hand and, on the other, an evolution in economists' understanding of their own discipline. Environmentalism increasingly was defined around aesthetic consumerism rather than materialistic conservationism. Economics, too, previously defined as the study of material welfare, was being redefined as the study of opportunity costs.

Krutilla pointed out that developing a landscape came at the opportunity cost of preserving it; reciprocally, preserving a landscape came at the opportunity cost of developing it. Thus, the choice to develop was inherently an economic one. In this way, Krutilla helped reorganize earlier debates that put economics and the environment at odds to frame the discussion in terms of a new economics of the environment. Taking this theory to the real world, Krutilla testified to this effect during a controversy over developing Hells Canyon on the Snake River in Oregon—thus showing that economics could be on the side of preservation. Moreover, Krutilla argued that preserved landscapes could always be developed later, whereas development was irreversible. This consideration shifted the economic decision in favor of preservation, other things equal.