Mining the Boundary Waters; Rising Externalities

This spring, Congress and President Trump passed a resolution to open the areas around the Boundary Waters for mining. Environmentalists are concerned for the health of the ecosystem, as mining is known to create problems in surrounding areas, and Industrialists are happy that this huge supply of copper is available for the market.

Our discussion of Coase had me thinking about this issue from a liability perspective. It seems like for a long while, the "right" to clean land and water was held by the Environmentalists in the sense that no mining was allowed. Suddenly, the right was taken away and handed to Industrialists. 

Likely, there was, and is, opportunity for bargaining. When Environmentalists had the Right, mining companies coveted it, and probably would have been willing to pay for the right to mine above and beyond traditional production costs. The government deemed this transaction too dangerous to occur and raised the bargaining costs to an impossible level. All this time, solar and other battery needs have increasingly boosted demand for the precious materials in the Boundary Waters so that the amount Industrialists were willing to pay increased, as did the externality that Environmentalists were putting on mining companies. The opportunity cost for the government was also rising, as tax dollars were being left uncollected from copper sales. This demonstrates the reciprocal nature of an externality, and one that eventually became too large to bear.

This Right shifted, and suddenly Environmentalists are in the position of having to bargain to prevent the mining companies from polluting the water, as the mining companies own the right to mine. One can see how this might be a issue, as environmental causes often suffer from a Free Rider problem and thus cannot raise money to bargain to the socially optimal quantity. This is an interesting case on property rights being moved around, and them NOT ending up in the same place as Coase's theorem part II would have, as the government, and Free Rider problems, make transactions impossible.