Salmon on the Columbia River

This week, I read The Organic Machine by Richard White. White traces the history of human activity on the Columbia River—from societies and space structured around fishing for salmon to the political and social impact of dams and hydroelectricity. These dams imposed a negative production externality on salmon fishermen (groups of commercial fishers, sportsmen, and Native Americans) by changing currents and water temperature and disrupting the fish’s patterns. With well-defined property rights along the river, the Coase Theorem predicts negotiations that internalize this externality.

However, White argues that the salmon were not just of monetary value, but were of great cultural value. He writes that the fishermen catch salmon because it “defines who they are and the lives they wish to lead” (White 91). However, this is nearly impossible to quantify, so the damage to salmon fishermen would be undervalued in a negotiation.  Gruber calls this the “assignment problem,” one real-life obstacle to a Coasian outcome. He writes that the fishing society was in an “economic contest it could never win” (White 93). The assignment problem prevents an allocatively efficient solution to the externality.