THE FUTURE OF CALIFORNIA'S NATURAL RESOURCES

This forum on natural resources policy and management was held at the University of California, Davis, on June 22, 1995. The forum was hosted by Chancellor Larry N. Vanderhoef of UC Davis and Secretary Douglas P. Wheeler of the California Resources Agency and is one element of the partnership established in a Memorandum of Understanding between the two institutions.

The Future of California's Natural Resources

University of California, Davis

June 22, 1995

Chancellor Larry Vanderhoef: Good morning and welcome to this forum on the Future of California's Natural Resources. Today's workshop is jointly hosted by UC Davis and the California Resources Agency. Our overall goal is to develop information on how to plan for the effective stewardship of the State's resources in the future. But to do that, we must address the other goal of the workshop, that is to figure out how to put together a reasonable description of the current state of California's natural resources. The folks around this table, you all, are a diverse, talented, highly experienced group of people. This workshop is intended to emphasize, as best we're able, a kind of free flowing discussion of the issues I have just mentioned. The format is intended to allow expression of new ideas, perspectives on the future, perspectives on the kind of policies we should have but do not. One of the premises of the workshop relates to developing natural resources policies and figuring out how they have to relate to and integrate with all of the elements -- the cultural, political, and economic context. It is the current intention that the proceedings of this workshop will be used to publish a report, as well as to develop a public conference on California natural resources in the coming year. The project is one element of a Memorandum of Understanding between the California Resources Agency and the University of California, Davis. It has been in existence now for just a little over a year, and it constitutes a framework for more extensive partnerships between these two public institutions. Other elements include an exchange program for university faculty and Agency professionals. We are experimenting with that as well as I speak. We have a name for this, the Natural Resources Fellowship Program, and it began this year. It is just another way to support the primary intention of this partnership, and that is to improve communication, improve access. How many times have we said, "Gosh, we've got so much talent in the proximity. Why aren't we taking better advantage of it? " I think one way to make sure that happens is to give people an informal way of going back and forth. So there are other pieces that come out of this Memorandum of Understanding. We are very interested in developing this beyond just this campus. It was logical as a starting point because of our proximity, but I think no one will deny that we have the talent on the nine campuses of the University of California on almost any issue, especially on natural resources issues. We are a phenomenon that is probably unmatched in the world. This is the start. There are much greater things that must surely happen. I suppose the short way of describing all of this is that sometimes the tough times that we have all faced over the last several years can generate good things. Good things that might not have happened in another world. I don't say that this necessarily came out entirely of our saying to ourselves, "How are we going to do all of the things we want to do with this reduced budget?", but certainly that was a piece of the origin. Again, welcome to all of you. I strongly believe that the state needs and will benefit from the work of people like you and getting you all together again. I will introduce now Secretary Doug Wheeler.

Secretary Douglas Wheeler: Thank you Larry. Good morning. He has said virtually everything I wanted to say about this partnership which has emerged between the Resources Agency and the Davis campus. Jeanne Sedgwick asked me when she came in, "What is this all about?" And maybe in response to that question I can repeat a couple of the things that Larry has cited. Having to do with the need among policy makers, those of us who purport to have responsibility for the state's resources, just across the Yolo Causeway....for the kind of research and information that is developed on this campus and elsewhere in the UC system. We hope to meet the compatible requirement of the campus to interact more closely with those of us who make policy, to inform our decisions with resources that are available here, but not to those of us who labor in Sacramento or elsewhere in state government. That sort of mutuality of need resulted in a session not unlike this one in which distinguished members of the faculty here and representatives of the Resources Agency brainstormed a little more than a year ago about how we might effect that interaction. And the result of that discussion was a number of programs which have now been consummated in a Memorandum of Understanding that has as its purpose to improve communication. One of those is a Fellows Program that Larry has mentioned. The first group of these Fellows is about to be appointed. They will be moving from their day-to-day responsibilities at the Resources Agency and its departments to appropriate faculty sites here on this campus to interact with people who are doing relevant research and studies. We have as well begun to build a shared database on resources information that is part of our own CERES initiative. Needless to say, the university has a lot to contribute there. We are helping to identify, by identifying our needs, a research agenda for this campus such that it can be tailored to our requirements and can be put to our use. We have also begun to create an internship program, not on a permanent basis, but part-time students from Davis will come to work in the various state agencies. We are here today to focus specifically on another aspect of that Memorandum, which is the discussion which arose prior to the MOU about the need for an assessment of the state's resources base and about the way in which to shape future plans for the management, both economic and environmental, of those resources. It has been decided by the steering committee for this project overall that we will have a public meeting within the next year, sometime in 1996 most likely, at which that will be the principal topic: the state of California's resources, including a forward-looking approach to better management of those resources as we confront the issues that were identified in the materials distributed to you in preparation for this meeting. So out of that process we hope will come a publication, and one which will be repeated then on a bi-annual basis. We will establish some benchmarks and then revisit those benchmarks to determine whether or not we are making progress toward our agreed objectives. That's a meeting to be followed by a publication, to be followed every other year by the same sequence. The purpose of today's discussion is to set the groundwork for that public dialogue, to ask of you your help in identifying those issues that ought to be addressed in this process. And to ask also for your help in discussing the structure, how best to communicate our vision to the larger public, how to engage them in that public process, and what we might do to improve upon this general concept. All of you are in one way or another deeply engaged in these issues. You represent a diversity of perspectives, deliberately, and we are happy that all of you have taken the time to join us, knowing that it's difficult to find a day off in anyone's schedule.

I want to begin by asking you to introduce yourselves and tell us a bit about your affiliation which will help explain to the others why you are here, I suspect. I want to acknowledge particularly the surprise appearance of Dr. Robert Fri, who is president of Resources for the Future in Washington. It's a surprise to him that he's here, too, I can attest. Bob is in Sacramento for another purpose. We were talking over dinner last night about a number of things, including what I was hoping to accomplish here today. He voluntarily agreed to spend a small part of the morning with us. I'm going to call upon him after we hear from Dr. Starr, just to provide a bit of an oversight from his perspective in Washington as we grapple with these issues at the state level. Bob, welcome and we are delighted you are spending time with us this morning. Let me start by asking Tom Graff to provide an introduction.

Tom Graff: I am a long-time attorney with the Environmental Defense Fund, the west coast office out of Oakland, California. My main area of specialty over the years has been water resources. In the last three-four years I've also done a fair amount of ??.

Nick Bollman: I'm with the James Irvine Foundation. We're a large private foundation focused on the state of California. Over the last two years we have developed a new program in the sustainable development area focusing on urban-rural issues, and a wide-range of environmental and sustainable development projects.

Richard Morrison: I'm director of Bank of America's environmental policies program.

Bob Fri: I'm Bob Fri, Resources for the Future.

Andrea Lawrence: I'm Andrea Lawrence. I carry two hats, but they absolutely fit the same head. That's as president of the Sierra Nevada Alliance, which is a newly formed organization in the last couple of years. Secondly as the Mono County supervisor, just re-elected last year to my fourth term. I think probably we more or less have the voice from within the trenches, so to speak, because we are dealing with these issues at a fundamental level in this country, which is the grass roots level. Our organization, the Sierra Nevada Alliance, is committed to that, to build up our constituencies at the grassroots level. And I think I really have to exercise some discipline, Doug, because of the extent to which we've been dealing with this stuff. We just had a board meeting on Tuesday dealing with of all things, the county supremacy movement and home rule. I'm very pleased to say that we not only did not accept the home rule, we have leapfrogged way ahead to where we are now talking about putting -- and this is related to today's discussions -- emphasis in Mono County on the ecosystem planning, cooperative planning, involving the ecosystem principles out of, of all places, Beaverhead County, Montana. If anything we are talking about is going to work, it has to be engendered, it has to be generated, energized, at the local level. It takes an enormous amount of work to do, and ultimately it has to come down to that. That's what we're doing in the Alliance, pulling people together from all over the Sierra, north, south, east and west, to our table, the Alliance's table, and to send them back hopefully with the energy and interest and faith that they can do a better job.

Dennis Pendleton: I am director of the Public Service Research Program and Associate Dean for University Extension here at UC Davis. I'm one of the members of the steering committee for the MOU that was referred to earlier. I would like, on behalf of the entire committee, to thank you all for being here.

Charles McGlashan: I'm director of environmental services for Coopers and Lybrand. I focus on environmental strategy for large corporations. We also have a direct practice focused on supporting environmental solutions for small companies with environmental technologies or services, to help provide solutions to environmental problems.

Ken Domer: I'm Special Assistant to the Secretary of the California Environmental Protection Agency. I work on solid waste issues, permit assistance centers, and our regulatory reform task forces.

Patrick Wright: I'm the Senior Policy Advisor to the Regional Administrator, Felicia Marcus, at EPA Region IX, San Francisco.

Carol Whiteside: I'm the Director of Intergovernmental Affairs in the Governor's Office, which means that I work with local governments on everything from community design and development to land use conservation issues, and governance, which is a big future problem.

Monica Florian: I'm Senior Vice President of the Irvine Company, a large landowner in southern California, master planner and community developer. We are experimenting with large-scale private conservation efforts, and also are participating in the state's Natural Community Conservation Planning.

Gordon Rausser: I'm professor in Agricultural and Resource Economics at Berkeley first, and Dean of the College of Natural Resources second. I'd like to make it about tenth. I've also spent most of my active professional career looking at public policy, the public sector's involvement in natural resources, the environment, and agriculture. In addition to being on the faculty at Berkeley, I've spent some time in Washington, D.C., on the Council of Economic Advisors for two years, and learned much about the issues I presume we're going to be discussing today when I was Chief Economist there.

John Walton: I'm a professor of sociology here at UC Davis. I do historical work. A couple of years ago I wrote a book, Western Times and Water Wars, about the long struggle of Inyo County and Los Angeles over the eastern Sierra water supply. I suspect that's one of the reasons I've been asked to come here today. I'm also a member of the Big Sur Land Trust, which is related to issues here, but I don't think the organizers knew that.

John Helly: I'm from the San Diego Supercomputer Center. I'm a computer scientist and biologist responsible for environmental science activities and ecology at the center. One of the things that might be of interest to the group is a project we're doing in the San Diego Bay where we're interacting with San Diego Bay interagency water quality panel to host data at the center for about 30 different monitoring programs. We make the data publicly accessible as well as do some analyses focused on development of visual models of the Bay to assist policy makers in resource management decisions.

Kevin Starr: Kevin Starr, State Librarian of California.

Wheeler: I will provide a more adequate introduction in a moment, Kevin.

Steve Johnson: I am Director of Conservation Science for the California Nature Conservancy. I'm also currently the acting Director of the Conservancy's efforts in southern California in support of the Natural Community Conservation Program down there.

Steve Toben: I'm from the Hewlett Foundation in Menlo Park where I manage the Environment Program. We have a $3 million budget invested in environmental preservation in the western United States. About 20% of that budget has been invested this year in NCCP (Natural Communities Conservation Planning), down south. Steve Johnson is among the beneficiaries of our investment, and we have high hopes for that work.

Jeff Romm: I teach resource policy at the University of California at Berkeley. I've also been involved in forest policy issues at the state level for the past 10 years or so, as well as activities in Round Valley Indian Reservation and environmental conditions in the city of Richmond, an industrial city in the Bay Area. I must say that this meeting comes at a time when I am in somewhat of a quandary about the future of a lot of our efforts, because the areas I've been involved with are currently so violent and so chaotic that I think we are heading toward times of true reformation of the way we look at these whole issues. I hope we have the opportunity to get to this today.

Jud King: I'm Vice Provost for Research for the University of California system. Jeff's remarks about turbulence and whatnot would certainly apply to the University as well. I'm a chemical engineer by pedigree, and am here no doubt thanks to the fact that there are nine campuses and three national laboratories within the University of California that might be brought to bear on all of this.

Michael Mantell: I'm Michael Mantell with the Resources Agency, and along with Dennis Pendleton, co-chair of the Steering Committee, carrying forth the work of the MOU referred to earlier.

Wheeler: We should say that Michael and Dennis are largely responsible for the progress, Chancellor, that we have been able to make. While you and I are at the head of the table, they are doing the work. We're most appreciative.

Jeanne Sedgwick: I'm the Senior Program Officer for the David and Lucille Packard Foundation in Los Altos. We also have a $3 million environmental grant program that is right now focused on wetlands and fisheries. We have an increasing interest in the protection of marine resources.

(Dennis Machida, Executive Officer, Tahoe Conservancy; Alfred Montna, Chairman, Farmers' Rice Cooperative; and Michael Reid, Associate Dean, College of Agricultural and Environmental Sciences, UC Davis joined the discussion in progress.)

Wheeler: Thank you all. From those introductions I hope you can understand that we are happy to have you and believe that this is a diverse and representative group. I want to make just one aside. We deliberately and for selfish reasons have chosen to focus today on the resources side of the equation. Jeff's remarks and the presence of Ken Domer cause me to remind you that we are not limited to those considerations. We understand that there is no dividing line between our concern for resources and our concern for the environment. My colleague, Jim Strock, who was unable to be with us today and is represented by Ken, is advised by this process as well as I. We are looking for integration, obviously, at the government level as well as here today. Let me begin by calling on Kevin Starr. Kevin, as you have just heard, is the State Librarian. He advised me this morning that he has been here for just a year. His impact in that capacity has been enormous, bringing a great deal of excitement, of energy, of intellectual acuity to issues in which ordinarily one might not think an historian would make a good contribution. He has made not a good contribution, but an outstanding contribution in that short time. He comes very well prepared. He has been a professor of history at the University of Southern California. He has been a columnist and continues to be for the Los Angeles Times. Someone reminded us the other day that he reaches as many people on a given day as the Governor would like to reach when he writes his columns for that audience. He is now responsible for a very large and very significant enterprise at the heart of state government, and is increasingly making his presence and his influence felt. We've asked Kevin to provide a broad perspective on the importance of resources, California's sense of itself, its history, and its future. We're also pleased we have been joined this morning by Sheila Starr, who is his very able assistant.

Starr: Thank you very much, Secretary Wheeler. I was rather trepidacious when I read some of the materials sent to us, especially the statistical material, because my approach is somewhat different. I'd like to put a few snapshots out. Then I heard Professor Romm use the word reformation and I breathed a sigh of relief because I put a capital R on that Reformation. I think the whole question in California and in American culture in general, the whole question of looking at resources, the whole question of juxtaposing nature and development is one of the, as we all learned or half learned in American Studies 1A, three or four profound issues in the American psyche. It comes out again and again and again in our urban design, in our novels, in our paintings; and it's at the core of California's historical experience. As someone who has been writing the cultural history of California, I am more or less concerned with the symbolic and value oriented debates, as we all must be. I'd like to just offer a few snapshots to put this thing into context, this juxtaposition of nature and technology, to focus in on the natural landscape and the person-made landscape. The Golden Gate Bridge, where you have San Francisco with its high density and then you have juxtaposed to that the wild headlands of Marin preserved through the GGNRA (Golden Gate National Recreation Act) forever. And then you have joining that the Golden Gate Bridge, which is at once a great work of engineering and arguably the greatest public work since the Parthenon. And the wonderful composition of that says something very powerful about California. Californians have always been trying to juxtapose these two principles. They feel uneasy when they go one way or they go the other. This is right at the core of our state experience. I don't think of California as a sub-variation of American civilization; it is American civilization at its most intense or theatrical. And so everything one says about California, one can say with modification, in one way or another, about the rest of the nation in general. The great philosopher, George Santayana, talking to the Berkeley Philosophical Union in 1910, made an observation. He said, "You Californians have always taken wilderness as your symbol, as your primary symbol. You set aside Yosemite as early as 1860. At the same time, some 63% of you or so are living in urban/suburban circumstances around San Francisco Bay." This would be in 1910. Obviously now that has changed. Down south of the Tehachapi's is the same kind of clustering. So you have a relationship to nature. At the same time you are urban/suburban. It parallels the Australian experience, except in the Australian experience they have never been able to domesticate imaginatively or intellectually their Outback. The Australian myth is always of the bush ranger, the outlaw. The interior is still frightening to that kind of similar cluster of urban/suburban development. You take Australia in terms of its population and it mirrors California both in terms of shape and population distribution in a very dramatic way. Except we Californians, as Americans have always tried to hold things together. The Australians are still trying to find some way of putting it together. If you look at California painting, and I've searched and searched California art. I did a book called Oh California on landscape painting in California in the 19th century. Try and find paintings of cities. It's very hard. You might find a little depiction of a steamship on Clear Lake, but it's very hard to find a downtown view of say San Francisco. The closest we had was William Hahn's great painting which is at the De Young today of the Sacramento train station done in 1877 or so. The train is departing from Sacramento and there are about 44 people in the picture. In general, the 19th century California painters, actually into the 1930's, were very reluctant to show the man-made, person-made, human-made environment. They were constantly holding up the symbol of nature in its untouchedness.

It's interesting in the founding of the Sierra Club by John Muir, in the 1890's in San Francisco and Berkeley by the progressive, capital P, movement. People were intensely urban. They were doctors, lawyers, and accountants in San Francisco. They're not like the supervisor (Lawrence) living in the real..., well I can't call it the Mono wilderness, I was just up there and it was very civilized. But they're living in an urban/suburban environment. Ground zero really of the population of California of that period, yet deep within themselves is this deep major longing for the wilderness experience. What we have to remember about the Sierra Club, is that they reformed themselves in the 30's. In the early days of the Sierra Club when they went out into the wilderness, they brought beautiful tents, they brought oriental rugs, they brought great cases of wine, their chefs, and they performed plays. It was more like the Bohemian Grove than it was an outward bound experience. Then of course that began to change as John Muir and others brought a more aesthetic or athletic response to wilderness. But even in that it was a juxtaposition of urban/suburban life.

It's very moving to see Californians and southern Californians in the 1880's and 90's go down to the beach, entire families camping out for the entire month of August, setting up beautiful tents and the whole family going there. Young women swimming along the side the men in the ocean at a time when women didn't swim publicly that way, becoming very athletic, and the whole relationship to the beach as the wilderness or the park landscape in southern California in the 1880s and 90's.

Even earlier, the great power of Yosemite as the cumulative symbol of California identity. The serious movement to set Yosemite aside starts as early as 1860. It took a few more years to get it through. Yosemite is interpreted by Thomas Starr Kane, the great Unitarian minister in San Francisco, as the primary symbol of all that California promises by way of redemption in the wilderness, rebirth, all those very powerful themes that came out of our 19th century Protestant Christian or Judeo Christian, but intensely Protestant, imagination.

This reflects of course a larger American dichotomy. If you think of that moment in 1654 when William Bradford of Plymouth Plantation, the Pilgrim colony, was standing on the shores of Cape Cod. There's that great passage where he says we've left Leiden behind and we're now in the midst of a howling wilderness. Anybody who's been to Cape Cod knows that Cape Cod is not a howling wilderness. It can be, I suppose, on college weekends and spring break. But it was a wilderness within, a sense of loss of civilization. A very powerful passage. Within 20 years, Judge Samuel Sewall could be walking along Plum Island outside of Boston and find in the same sea coastal American landscape, not a howling wilderness but proof positive that God had ordained Americans to live here and that nature was giving some great message to the Puritan fathers and mothers about the special possibilities of this landscape. So in 20 years you have this massive shift, just to judge from literary text. The shifting attitude towards wilderness is very powerful. If you looked at one of the strains of the 18th century, it is a combination of John Locke's experimental psychology (Locke was a psychological realist and a very powerful philosopher behind our American constitution), i.e., that we perceive things through the concrete, the specifics. There is a major effort, and it finally succeeds in Jonathan Edwards, to read the American landscape as scripture, as a direct revelation of the mind of God. These are categories that we don't think in today universally, but certainly the founding generation did think that way. Jonathan Edwards was incidentally of Princeton. In his powerful images and shadows of divine things, nature is a direct revelation of the mind of God. This is asserted by Edwards philosophically, that nature is scripture and that the landscape of America is really part of a powerful religious covenant with the American people. So he was exploring this on the deepest level. Niagara Falls was this. To go to Niagara Falls in the 1820's, 30's, 40's, in upstate New York and stand beneath the falls, around the falls, was to make contact. It was like a pilgrimage. It was like going to Montserrat for the medievals. It was to make a pilgrimage, and in that Niagara Falls was seen as a symbol of all the power and promise of what American civilization would be. So you have the appropriation, as Santayana would later suggest, of natural symbolism to express a much more diverse continuum of activity to include the development of the landscape, the rise of an economy, the creation of a built environment. Niagara became the gloss on that. It's a real paradox, and I think it's something very powerful about the way we Americans think.

The Hudson River school of painters had a powerful effect in California, and a number of them came out here and painted California. They were always juxtaposing nature and the wilderness. In fact, Thomas Cole's great historical series of paintings show the wild forest, the virgin forest initially, and then the last sequence of the paintings show civilization has come. The forest has not been vanquished, but it is juxtaposed with civilization. You can see the power of the forest played off against the power of human architecture.

Another snapshot: Frederic Jackson Turner gives his famous address at the University of Chicago convention of the American Historical Association in 1893, on the nature of the frontier where he uses the frontier, i.e., wilderness, as the prime symbol of American identity. I think that Richard Wade, who is still with us, his great book on the urban frontier is equally important. And this theory of development of America has been given a brilliant expression recently by Professor William Cronin of Yale, now University of Wisconsin, in his wonderful book Nature of Metropolis. He shows how the driving force of Chicago shaped the transformation of the environment. If you want to look at what happened to the buffalo herds, look at Chicago. If you want to look at what happened to the grass ranges, you look to Chicago. We developed in the United States not the steady patient agricultural development across the country, but we leapfrogged by cities. We have San Francisco out here, the tenth largest city in the United States by 1870. There's nothing in between. There's no Denver, there's no Omaha, there's nothing. You've got to go back to Chicago before you come across any urban settlement. These intense urban developments, both Wade and Cronin remind us, then determine the using up, or the improper using, of the resources. The frontier was urban driven.

Richard Henry Dana, in Two Years Before the Mast, came here to California in 1836. The book comes out in '40. He is ambivalent. On the one hand he is attracted to the Spanish Californians because they are living the life of leisure. They have time for five-day festivals and if somebody needs a horse he takes it and drops it off someplace else. The landscape is pristine. Herds of innumerable elk are seen across the rolling hills. On the other side of his nature, he sees that they're not really worthy of California. They're not really developed. We have to take this over because this has to be developed. You can see the juxtaposition there. In fact, during the Gold Rush, Bayard Taylor, a great poet who translated Goethe's Faust, who was our ambassador to the Austrian Hungarian empire, traveled through the Gold Rush country. He filled in the landscapes with cities. He actually predicts Palo Alto, Los Gatos. As he sees this landscape he's superimposing on it urban development, while at the same time rhapsodizing on how beautiful everything is.

Henry David Thoreau was a much more pure character. Hearing how Californians had cut down a sequoia, polished it and then thought it was such a big deal that they could have square dancing on top of that, saw that as just an absolute image of a primal sin against nature. He said of California, "I wouldn't go there. It's one step closer to hell." He saw in that a symbol of the almost demonic side of the American personality.

Our great philosopher Josiah Royce, was born and raised in Grass Valley and San Francisco, and taught for years at Harvard. His chronicle of California sees the juxtaposition of mining technology and wilderness as the cumulative identity of California as it emerges from the Gold Rush. On the one hand isn't it wonderful? We get money, we get cities, we're going to have civilizations. On the other hand, look at the landscape, what's happening to the landscape? Hydraulic mining is the most dramatic example of that. I was recently up in Trinity County and saw the leavings of the LaGrange Mine, a hydraulic mine that even a hundred years later you can still see the scarred hillsides and the dumped waste. Yet Judge Lorenzo Sawyer in his court order to stop that mining, is in many ways the beginning of modern environmental law, this decision in the 1880's. Based out of San Francisco, Sawyer was a 49er himself as a young man.

There's another side of California that is very important in the sense that there is a prophetic envisioning of this state through engineering. All the engineering projects we have, some of which take 40 or 50 years like the Central Water Plan, were envisioned in the 19th century. Colonel Taylor envisioned the California Water Plan. William Hammond Hall envisioned the whole distribution of water throughout the state, practically sketched out in his publications for the state in the 1880's, 1890's, the system of canals, aqueducts, that we have today.

It's a powerful debate, the metropolitanization of some of California through water. I think to this day, the Owens Valley controversy, among southern Californians at least, is a bellwether kind of event, the same as the loss of the Hetch Hetchy Valley to San Francisco. John Muir fought tragically and with a broken heart died when he lost that. What should California be? Should it be metro California, a metropolitan region, and if so what are the sacrifices -- the sacrifice of the Owens Valley and the sacrifice of the valley of the Hetch Hetchy. If you look at the documents, and the plans of what was sketched out, it is apparent that these people knew what they were doing. They understand what is being lost, much more in San Francisco than in southern California where it happened more haphazardly.

Another snapshot is the Central Valley Project in 1933. How at the depth or the height of the Depression, Californians voted through the most expensive irrigation project in the history of the human race. And that would set in motion constructions that still are not finished. And the debate that surrounded that about what we were as a culture.

Well, we're talking about a California that even through the '30's had only nine million people. Nine million people by '39, roughly. And then we went on Defense Department steroids for fifty years. We thought we were being astute business people. We thought we were being wonderful, creative entrepreneurs, but we were just mainlining defense dollars. Roger Lotchin, in his new book Fortress California, says of California that you don't have the military-industrial complex in California. You have the urban-industrial complex in California. Take a look at the map where the population is most dense. That's where dollars are being spent -- it becomes cyclical, of course -- in defense spending. By 1956, at the height of the Cold War, 40% of the electronic defense gadgetry, missiles, etc., etc., that were being manufactured and purchased by the Department of Defense were in Los Angeles County alone. And Lotchin's brilliant book shows you defense dollars and suburban sprawl and growth. If you do prior maps of military sites and relationships to military spending, you have a whole new way of looking at the steroids, that incidentally did not affect the north state. Those steroids were flushed out of the system up there, and you have a dramatically different environment, different populations, because of that.

The inevitability of growth that is part of California, like Australia again, is the suburban ideal. I'm not going to declare myself anti-suburban, but very suspicious of it. My personal hope is for re-urbanization. I think density is wonderful. Of course I'm a San Franciscan where we have one of the most dense environments. I don't think density is a bad thing. Even as dense as San Francisco is, the travel writer John Morris says we need another 250,000 people there, and I almost would agree.

Eric Monkkonen at UCLA, a marvelous urban historian, talks about the fact that American cities have always had a tendency to expand on the periphery, to push out. European cities tended to stay, at least until modern times, contained and were comfortable with the juxtaposition of wilderness and urbanism. Strauss could do "Tales from the Vienna Woods," because he could go out a couple of miles and be in the woods, and come back. To this day the same is true, if you look at the classic European cities. We Californians were always anxiety ridden about where the two cultures come together. Can you have a redwood tree? Can you have nature and civilization together? The Europeans until recently were able to do that in a more precise way. So I hope that when we deal with the urban wilderness economy that we realize there are no final answers. We are dealing on a psychological, symbolic, cultural level with the deepest possible American issues.

My own thinking has been guided in part by a controversial figure, Christopher Alexander and his group. Working with pattern language, for instance, he makes a marvelous point that agriculture and urbanism are not incompatible. We treat them in California as incompatible. Suppose those marvelous citrus orchards had still been allowed to run to the sea, but were interspersed with urban-suburban development. Of course with our land use patterns, we tore them all up, and I think we've lost a lot. You see this in Fresno today. That's not against Fresno. I have many friends in Fresno. I remember Fresno since the 1950's. One sees a whole massive square block with all the infrastructure to surround that, pavement, traffic lights, and millions of dollars to support that. And on that whole block is "El Pollo Loco" and "The Good Guys," and maybe a parking lot. You say, where are we going? At what point do we re-urbanize and juxtapose? Go back to that early symbol, San Francisco, density and wilderness, agriculture and human settlement. It's an old American question. It's an old California question. It is with us today, it will be with us tomorrow. We struggle with it constantly. Samuel Johnson in the 18th century said it is not necessary to be original, it is only necessary to be correct. I think we should not be embarrassed as we struggle with these issues to know that we are working at the deepest levels of symbolic and intellectual and moral assemblage of our culture. California, for better or for worse, has done this well in some cases and in other cases has done it terribly, and that is why we have conferences like this.

Wheeler: Thank you. Appropriately said, fittingly inspiring to our discussion today. I was thinking back on an occasion yesterday when around a table like this we had assembled the members of the Governor's cabinet. Kevin had been asked to explain his role. You can imagine the response from those of us who are preoccupied with the minutia of government day-to-day in Sacramento and paperwork, all sitting back and listening to that kind of philosophical overview. It is very, very important, I think, that we do that. And this is a very important starting point for our discussion today, because the juxtaposition of the developed world and the natural world is what creates most of the conflict in California today, over resource allocation. We need to think about how to effect that transition or to build that bridge, to use your metaphor. I prevail upon Bob Fri now to provide, unprepared, a perspective from Washington. Knowing Bob's long history, at Resources for the Future where he has been president for ten years, and before that in government and in academic settings, he is particularly well equipped to tell us a little about what is happening in Washington as it might pertain to this forum. Bob?

Fri: Thank you, Doug. I really appreciate being here. It seems this meeting has just the right balance. Eight hours on California, five minutes on Washington. I'll provide the five minutes on Washington. I think a good place to start is to pick up on Dr. Starr's comments. What happened in Washington, what about this new crowd in town that arrived after November 8th? I think what happened in Washington is that nobody listened to Professor Starr. Democrats in particular, and the Congressional Democrats in more particular, failed to realize that a lot of issues -- especially resource and environmental issues -- are best resolved where the feelings about them are the strongest and the values involved are the clearest. That's clearly not in Washington. And the Democrats were kind of in a position of trying to hold back that tide. On November 8 the tide broke over the Democrats, and that's what happened.

There were at least two issues that concerned people. One is the fact that the environmental and, by extension, the resource regulatory system at the national level have gotten to the point that everybody believed that it was inefficient and ineffective and that something had to be done to reform it. This was an issue of the last Congress. The last Congress, the House chiefly, voted to stop considering it. They didn't want to talk about it. The other issue had to do with what is called in the jargon "devolution" of power and authority to states regional and local agencies. This, of course, is where the concern about "undfunded mandates" comes from. So that's what happened.

Let me just say in passing, I don't think this necessarily means that the public bought the Republican agenda lock, stock, and barrel. It just looked like the Republicans were more willing to reform the government than the Democrats were. So I don't think these arguments are in any sense over, and that's why I would read the President's latest move on the budget as a mood that is quite major if it lasts. Of course in this administration, having things last is not one of their hallmarks. But that's clearly a movement in the direction of running as a "new" Democrat, rather than the old New Deal, liberal Democrat. And that I think aligns itself with the public mood.

People in Washington are expected to make predictions, so here are mine: on legislation affecting environment and resources, in the short-term, I don't think much will happen. My guess is there will be some action on regulatory reform. Whether it will pass depends on whether President Clinton remembers he's a New Democrat or not. If he vetoes it I don't know whether it can be overturned. The Drinking Water Act will probably pass, not because of any wisdom in Washington, but because states and localities are so upset that representatives in Washington are being told to fix it. Superfund maybe. My guess is nothing else in the environmental and resource area will pass unless it absolutely has to be reauthorized, and if it does, it will be reauthorized with minimum change. And that's because both the administration and the environmental advocacy organizations and the more environmentally-oriented members of Congress will not want to bring any major piece of legislation to the floor where it could be voted on and risk a significant number of amendments.

Longer term, however, what is happening in this Congress I think is interesting but not really important. Longer term, what I think is really important about the last six months, is the genie cannot be put back in the bottle. These issues of regulatory reform or delegation of increasing powers to states and localities are now on the table. Nobody can sweep them off the table. It is probably therefore one of the most important discussions that will take place over the next decade in our political system. The system, I must say, will probably be most successful in these kinds of meetings in states like California, because this is where the action increasingly is. For that reason I wish I could stay longer. Thank you for inviting me.

Wheeler: Thank you, Bob. Thank you for being here and for that contribution to the meeting. I wonder, are there any other questions for Bob or comments about what may be happening there, before we let him go in about 25 minutes?

Graff: One thing you said is that the pro-environment forces are not going to bring up legislation because they were unclear that something good would come of it. What about an anti-environmental force bringing forth legislation?

Fri: I think it will be tried. I don't think the politics are such that any environmental bills can move very far against well organized opposition. You've got to understand that a lot of the stuff that is going on that affects the environment, "takings" for example, have bypassed John Chaffee and the Senate Environment Committee entirely. Nothing has been referred to that committee. It's a little hard not to refer the Clean Water Act to the Senate Environment Committee. And so that's very important. Vetoes can't be sustained in this Congress.

Graff: And a de-funding strategy that seems to be emerging, at least among the House leadership, is going to cause people to come to the table and negotiate?

Fri: I don't think so.

Mantell: Let me ask you about these delegations of responsibility you talked about. Where do you see in the national environmental movements and the pro-environment members of Congress coming out on that issue? That has enormous implications for the work that we do.

Fri: I think this is an issue which main line environmental groups are clearly having to address. There is a lot of tension in the ones with state chapters -- the tension between the grass roots and the national approach. Some organizations seem very clearly to have taken the grass roots approach. There was a full-page ad in the Washington Post a few months ago signed by Carl Pope of the Sierra Club. If you took Carl's name off of it, it would have looked like a Republican tirade against Washington. They are feeling the same force to come to grip with issues at the local level. Of the ten major environmental groups, at least six are having major problems dealing with this. Compared to the others EDF (Environmental Defense Fund) has been having less difficulty.

Wright: If I could just add a few words as the sole federal representative here. I think, at least from our perspective, looking back at history, clearly in the early '70's you had Congress giving EPA and other regulatory agencies in particular a set of incredibly ambitious statutes that said clearly, in many cases, as with the Clean Water Act, do not use economic criteria at all. These were a very ambitious set of statutes, and increasingly prescriptive over time. Partly because we've had two decades of Democratic Congressional committees overseeing Republican administrations, there was an incredible amount of skepticism that those Republican administrations would be willing to enforce those ambitious goals that Congress gave us. And so over time what you have built up is a system of more and more restrictive, less and less flexible sets of requirements for the federal agencies. And so I think what we are finally seeing now is the big backlash against that. You've got Republican congressmen also examining those goals, but I think what we're seeing, at least in the last two months, is a real reaction from the public that they don't want to relax those goals. They want the goals to remain the same, but they are very receptive to the argument that the implementation of those goals is far too prescriptive. So you're seeing a whole new wave led by EDF and others in the last couple of years of new, more flexible, innovative approaches. And we've got a real window now, finally. I think the way administration is viewing this new sea change is let's not back off on the goals, but let's announce a whole new ambitious set of regulatory reform ideas that the State of California is also doing on the pollutant side that involves multi-media permitting, for example a whole series of initiatives to cut red tape. On the resources side you've got Secretary Babbitt initiating a whole series of reforms that are somewhat questionable in terms of what the Endangered Species Act requires, in terms of leaning towards more of the HCP (habitat conservation planning) and natural communities conservation program that the Resources Agency has pioneered to try to inject more flexibility. Our reading of the political climate is that the public will want to maintain the goals, but we've got to do more as the federal government to be a lot more flexible in terms of how we achieve those mandates.

Wheeler: Are you, on this question of devolution, are you assuming a greater role for the states?

Wright: Absolutely. I can't speak for Interior, but for EPA we've got ambitious new efforts to establish performance partnerships with the states, which is our buzzword for essentially block grants. Instead of having dozens of separate grants, under the Clean Water Act and Safe Drinking Water Act, to the states with strings attached to each one of them, to give them one chunk of money and sit down with them and say, "Okay, this year in California we're going to focus our efforts on vernal pools. And next year it's going to be the Bay-Delta." To try to do a lot more priority setting. Because right now the priority setting has largely been in reaction to a hostile Congress that wants more permits, more enforcement action. So literally for ten years, when you ask EPA to define success, we've actually published annually reports of how many inspections we have done. How many permits we have issued. How many enforcement actions we have taken. Finally this year we are starting an ambitious new program with the states to go towards environmental indicators. To actually look at stream miles protected. To actually look at the number of people protected in terms of air quality, etc. The one disconnect that Secretary Wheeler talked about at the beginning is largely on the public health side. EPA has established pretty good relationships with Cal-EPA, and other pollutant-oriented agencies throughout the state, but not on the resources side. As we move increasingly toward ecosystem based approaches, we're finding ourselves needing to be in closer partnerships with resource agencies and the Department of the Interior across the board. Just to give you one example, we've now got this new environmental indicators project fully underway with Cal-EPA and the other public health agencies in Region IX, which is Arizona, California, Hawaii and Nevada. We're coming out with a new series of indicators of the health of the ecosystems and pollutants in those states. But there's no resources chapter. And of course the public doesn't differentiate between pollutants and resources. One of the challenges is to build much better bridges between the pollutants side and the resources side. I think it's a real opportunity for this process. This collaboration could link ourselves better with the environmental goals of the indicators projects underway in EPA. I know Resources for the Future and other groups are leaning in that direction too. This could give us a better sense of how we're doing.

Wheeler: I think that's a very good point. Two challenges to us: One, to talk about the link between environmental protection and resource management, as they may be embodied together in ecosystems. Second, with respect to this specific project, what kind of resource indicators might be created or anticipated as parallel to those which are being developed on the pollutant side. I wanted to ask Jeff (Romm), you sort of anticipated the theme about reform and revolt and turmoil. Could you tell us something about your thoughts as you confront the changes we've heard described here?

Romm: My comments may come more out of passion than out of analysis. I am really struck by the contrasts between the California myth we have just heard, which was a significant formative influence on my own life, the political myth flowing forth from Washington these days, and the realities of life for most of the people of California. A California myth has been the possession of a rather small group of people, a group that is becoming ever smaller as a proportion of the population, yet the myth continues to be the legitimating basis upon which our structures of resource regulation and management, and a good deal more, are built. The myth is no longer meaningful as a source of identity to a vast population that now needs an identity very badly and cannot find it in the things that matter to us. Unless we start to deal with this reality, we will face not simply the rebellion against Washington, which is the easy target, but an anti-governmental, perhaps anti-civic, sentiment permeating right through the state and local levels, which may be more apt targets. The loss of legitimation, of our capacity to act as civil people, is pervasive because we continue to cling to the privileged old structures and to their justification myths as if these were real.

The history of California, when told in other voices, becomes different histories than the one we hold and use. I grew up to be a forester in California immersed in the history that Kevin has told so well. Real history began with gold and settlement and resource development and nature preservation. Critical issues of life turned on the Muir vs Pinchot debates. Hetch Hetchy and Owens Valley were the classic dramas, although Mantenar was not mentioned, and Southern California was just one big thirst. That the whole working force of our agriculture lived in Punjabi or Tagalog or Spanish was a peripheral point, and previous residents were known through museum displays as if their peoples no longer lived. We were absolutely certain that California was the world's greatest melting pot, with liberty, justice and equality for all. Conservation vs Development was the way we saw things because other kinds of troubles were thought to not be in our place.

So I was and continue to be surprised to learn about the other histories. Sharecropping developed in the South at the same time that homesteading and its abuses built California agriculture. Jim Crow segregation flowered in the South at the very time that the Conservation Movement grew strong. Sierra towns and reservation towns were segregated into the '50's and have not lost the undertones to this day. Large corporations played crucial roles in the preservation of our national parks and wilderness areas while building the West with its resources. But the histories of these synchronous events are written as if they were entirely independent of one another, as if they did not share common cause, as if they occurred in separate nations. This moves us toward the problems of today. Our particular separate nation has become too comfortable - our debates offer no surprises - and definitely too small. And it has always been an expression of privilege.

We are in the midst of major transformations in our demography, economy, and settlement patterns, transformations we have yet to seriously acknowledge or even begin to accommodate in our myths and structures. Our primary-sector industries and defense industries are collapsing, and we have yet to imagine what will fill the voids. Our politics have been weakened by their increased allocation to the defense of position. The whole `middle class' has split so badly that the concept itself has become a myth. White collar people may move ahead through education, if they can find it, but blue collar and small trades people can no longer can identify with the aspirations of a bright future. We are moving rapidly toward a two-class society in which the young, who are preponderantly of `minorities,' recognize the likelihood of their permanent locale in the other class. Our cities are growing straight up the Central Valley to Redding, and into the foothills, but we continue to respond as if to a pest infestation in the predominant agriculture. We continue to rely on our myths despite the decay of the structures of governance it supports.

We face fundamental issues. Our people are losing a sense of dignity in their lives because they have no value in the structures of the past and as yet no compelling new vision of what the future may bring. They have little reason to treat the environment with regard, even if valuing it greatly, when they are given little reason to hold regard for themselves. From outside, they see civil processes that have lost all pretense of civility, all pretense of purchase in democratic ideals, all pretense of reflecting dignity upon people, all pretense of giving a damn about them. The civil concern, from which natural resources draw value, has been debased. Until myth and civil process reform to engage the people of California, the future of the state's natural resources will be a warm topic for those such as us at this table, the contemporary campfire, but will otherwise merely expose the blinders of past privilege.

Lawrence: I would like to talk about the links between the local, state and federal levels with the best example that I can think of. The Mono Lake decision has every element in it and is absolutely superb. You cannot fault the Mono Lake decision, saving that lake, on any level. I like to use it, because part of what we have to feel is that there is something very good about the process. If all these structures around us are basically falling apart, with all the sense of dislocation that comes with that, no matter what sector you're dealing with, what the size of that sector, you can bring it back together. That's what's so important. There is another thing from the point of view of resources, and conservation of environment. I love to do this all the time. I want to be accused of being a NIMBY ("not in my back yard") with regard to our meadow out there in Snow Creek. They want to stand up and say, "Oh my god, you're a NIMBY." I stand up and say, "Yes, I'm a card-carrying member of the NIMBY." Because it is in my back yard. It's my responsibility to take care of that back yard and that's what I'm going to do. Because if there is anything that will give passion to people, it's when you get too much into my territory. That's where this issue stops. I'm going to stand up and be counted. With all the intelligence that is in this room that is going to bring out the issues, there has to be an essential linkage between that, and our level. I mean, pick us out wherever you find us and let us take the message at that level. Because I clearly believe that people do care about their environment. They do care about our resources. Nobody wants to lose groundwater or breathe bad air. So we're in, if you pardon the expression, sort of aberrant times. You can't get narrowed down focusing on that without thinking of the bigger picture. When you're coming out of the local political arena, your adrenaline keeps rushing. Literally just two days ago they made this decision in Mono County to go for an ecosystem planning process. And that's our answer to home rule and county supremacy. That's a real plus to getting a lot of people involved in that issue to sit down and talk to their supervisors and turn up at public hearings. It's important to share some of these things that happen on a local level. And I'm enormously fortunate to be a county supervisor in Mono County. It's very special up there. We're high desert, but there is some wilderness there. The best thing about the decision is when they re-watered Rush Creek in Lee Vining, in the Mono Lake decision, they revitalized it. You can't imagine that. People who fought the Mono Lake movement for years, and grumble, grumble, grumble. But by God, you'd think they'd done it by themselves. That's a wonderful thing about the back hills of humanity, the quality and sense of responsibility in your citizenship within your community. And building your sense of competency as a citizen. Those are the things that we have to build. That's the only way, ultimately, this process is going to be built is from the bottom up. The human phenomenon that we stand for has to be built from the bottom up. We have to give people the opportunity to build this trust and sense of competency themselves within their community. It's a huge undertaking but it can be done. We just have to focus on a whole lot of individual communities.

Wheeler: It's an approach that is radically different from our recent history of how we deal with these issues, that is from the top down.

Lawrence: Yes. Absolutely. It now has to come down to its smallest unit. It's smallest units are communities.

Wheeler: Jeff (Romm), could we ask you to elaborate on these trends? I'd like to think of the trends of which we should be aware and the indicators of those trends that we might start to measure for purposes of establishing this baseline that we talked about earlier. You mentioned a couple of those. I'm struck as we all are by the impact of the population and growth in the state, particularly in those areas which until now have been dependent on agriculture for example. What does that mean for the future of agriculture in California?

Romm: I cannot answer your question quantitatively. Our conceptual models for projection of trends have been of two types. One type is population- and growth-driven. Such models project distributions of economic activity and intensity and of population over the state, then assign assumed impacts of such changes on resource pressures and conditions. The second type is resource-driven, projecting the dynamics of e.g. forest growth or habitat change or water flows. I think it is fair to say that we have not managed to link these types of models in ways that project the consequences of interactions between ecological and social dynamics.

But such models have built into them certain categories, such as jurisdiction or ownership type or forest type, that consolidate the very problems we are trying to solve. As Andrea (Lawrence) has described, much of the innovation in this state has occurred through actions to weaken barriers to effective human resolutions that stiff interpretations of such categories create. The watershed councils and Cooperative Resource Management Plans, the biodiversity councils and organizations among county governments, regional approaches around Tahoe and Yosemite, the gnatcatcher habitat plan, and the Sierrawide studies emerging from Sierra Summit, are all examples of the mobilization of human commitment around new concepts of nature-society interactions. Thus far, however, there is little formal capacity for modelling these relations and projecting trends that may be expected to arise from different circumstantial and managerial changes.

We need to move to even another stage, however, in which the larger demographic and economic dynamics of the state can be related to the larger landscape dynamics of resource systems, and in which the distribution of power over resource systems becomes a variable rather than the conventional block type e.g., Industry, Ownership, Environment, Government, etc. Conventional categories have gotten in the way of understanding actual relations of people and resources and why these relations are changing. Distinctions like urban-rural-wild have lost meaning in California, which has become more like New England than like the usual maps of California political economy. The diversity-complexity-variability characteristics within and among places have become more fundamental than the grand sectoral blocks of Agriculture, Forestry, City, Public and Private, yet we continue to project as if these fundamental shifts have not occurred. The effect is to disempower interested people and their capacities to form realistic choices with one another.

The North Coast timber industry offers an example of how conventional categories prevent effective resolutions. Industrial employment dropped by 40% in a decade due to capital-intensive technological innovations in mills, but Industry blamed Environment and its bundle of forest regulations. Environment argued for more regulation on behalf of long-term employment opportunities, and blamed Industry for failing to make the needed investments. Workers and communities, although central to the argument, had by convention no Capital-Letter category, and continue to be a merely derivative consequence of the Models and structures through which debates about futures are pursued. A more human construction of the problem would diversify the projections of trends and the visions of potential opportunity for resolution, and would mobilize the popular constituency needed to achieve these resolutions. Instead, we have a history of two decades of meetings of the same small groups in the same small rooms, structurally locked into models and projections we all know. This may help to explain why the vague anger outside the room is so great, and why our models, trends and indicators don't explain it. We need to look elsewhere.

Mantell: David Lyons, who wanted to be here today but couldn't, heads the new Public Policy Institute of California. He has been looking at the state to figure out what that institution should be doing. One of the things that he has remarked on is that California fits in population to an area on the East Coast from about South Carolina to New York. And it's almost the same geographically as well. There is a population of about 50 million people on that East Coast area, and that is what California is going to be somewhere around the year 2040 or so. So what should California be doing in the next 40-50 years to take account of what has happened in roughly that same geographic area to maintain its richness? It's an interesting comparison when you think about it, California with 50 million people versus the East Coast.

Whiteside: I think that Supervisor Lawrence's comments in context with what Jeff (Romm) has said and some other things have really put us at the heart of what I think has to be discussed, which is where is the appropriate scale for certain kinds of questions. Some of you who know me know that I used to be the mayor of Modesto. I remember one of my earliest experiences was going to a seminar at the DeYoung (Museum) in San Francisco and talking about what we were going to do to preserve the valley's farmland. As the new mayor of this growing urban center in the valley, I was very resentful of the dilettantes in the Bay Area who were talking about me like I was a specimen on a slide in a microscope, and never giving anyone from the valley the opportunity to speak and participate. That has traditionally been the way that we have managed. Especially the state level where we have one-person, one-vote, and we can't represent the rural areas or in the senate or do that sort of thing. We tend to ask what does the majority want and then we apply it to the small population that can't possibly represent itself. Now you're talking about changing that. Maybe it's a juxtaposition where you have a small amount of people who control the power. And larger numbers of people who are totally disassociated from the system, who don't work for the system, don't understand the system, for whom the system is increasingly irrelevant. And the question is, how do we deal with the power of that population, those populations, because they are not unified, and their ability to make decisions that are relevant and meaningful to their own life without destroying the larger picture. Everybody understands that this is often not seen when you're looking at only a small piece of the pie. I think that scale and how we deal with constituencies and scale is really a fundamental issue of this discussion.

Morrison: One of the things you have to consider in all of this is the ethnic changes that are taking place in this state. And if you look around this room, it isn't great ethnic representation. Particularly Hispanics and Asians, political powers that are growing, don't think they have the same stake in resource preservation that maybe some of us around the table do. If you don't get those people engaged in understanding why this should be important to them, I think you are going to lose, because I don't think the white minority is going to be able to carry the day on this.

Starr: The snapshots that I gave basically all relate to 18th and 19th and early 20th century Anglo-American or Anglo-American-oriented people. I've never seen writing on what the psychological, cultural basis of environmentalism would be, for instance, coming out of an Asian or Hispanic. I've seen some things on Asian attitudes towards the land, etc., but the whole thing I sketched is history, the fact that Anglo-American civilization predominated. You could almost make the case that at the last part of the 19th century, Anglo-American civilization and energies went into the environment, because church life was becoming more privatized in the country. A lot of these religious energies went into the environmental movement. This parallels a whole generation of ministers' sons and some daughters becoming great astronomers at the turn of the century. They didn't study theology. They started looking through telescopes to study the actual heavens themselves. So this is a very powerful thing. The early language of the environmental movement is just soaked through with a lot of religious metaphor. It comes from a cultural base.

Lawrence: It's a spiritual base. There are two billion people in the world who think of the mountains as sacred. I mean, our connection to our land and our sense of place is incredibly important.

McGlashan: There's a framework, an economic framework that might be useful. Many students in business school are taught a framework of market failure. The idea, simply put, is that industry, one of three key sectors in the economy, will by its very nature, fail to value certain public goods. That constitutes a market failure. Hence government exists to take care of those problems where those public goods don't get valued by business, interacting and trading. To the extent that government can't fulfill that role, non-profits emerged to try to fill the public failures that government doesn't solve. However, what I see more and more rising out of this sort of cultural base is an increasing desire to rely on the private sector to solve these types of problems. It has been pretty compelling, because over the last hundred years we have seen small businesses and a small private sector balloon into massive international scale, providing wealth and power, and solutions to some problems that we couldn't deal with 50-75 years ago in the private sector. One of the syndromes that I see in our government in our public debate about policy is the desire to throw it back to the private sector, forgetting the fact that the private sector is not capable of valuing certain public goods like clean air and water. It just doesn't fit into the equation of what managers day-to-day get measured on. As we go through the cycle of industry, trying to solve problems, doing its thing, there's market failure. The models we are trying to superimpose on those market failures don't work for a huge and growing part of the population. They aren't even involved. So they can't find jobs because they don't have education. The education doesn't match the type of communications that they need to get pulled into the framework. Then you have this increasing cycle of disenfranchisement and dislocation that we then try to bring back and increasingly privatize again. I think we are headed for a very dangerous cycle of increasing downscaling of some of these issues and continuing failure to bring in this mass of population, which could result in violence.

I was working with a client of mine in Brazil. Brazil has had the elimination of the middle class in the last 50 years. I was talking to my client, saying, "You know, if the United States slowly loses its position of wealth and power, preeminent in the world. We sort of slow down a bit and end up like some of the lesser developed European countries in a hundred years (Paul Kennedy at Yale had a theorem about this), maybe that wouldn't be so bad." And his comment to me was, "That absolutely won't happen in America, because there will be war. There will be internal violence and war because of the way people have been promised the good life, and the fact that increasing numbers of them will never get it."

Another thing I would like to toss into the ring as a potential model that might be useful to look at. There is a tension we're dealing with. How do you deal with big problems, environmental problems, that span a large scale, and then how do you solve problems locally? A lot of companies deal with this all the time. Trans-national companies especially have an inherent tension between corporate identity and corporate policy and decision making and goal setting at the center, and autonomy for separate facilities, in different countries sometimes, that need to incorporate both conditions to be successful. A classic business school case is differentiating products in Europe, maintaining a corporate identity when you have eleven different countries in which to market it. That could be a really useful paradigm. I suspect the answer would be a very careful analysis of what problems are huge in scale, like global warming, or acid rain, or a national resource strategy, or even a statewide resource strategy, and then separating from those local problems that really need the fire and energy and spirit of local solutions. To the extent that public agencies and the public debate could better segment those problems and figure out which problems are better dealt with nationally or by the state, and which problems are better local, you would essentially be going through the same process companies deal with all the time. How do we manage in the core, and yet how do we build initiative and autonomy for all of our separate operating units.

Wheeler: There are two or three important thoughts there I would like to peruse for a moment. The one relevant to the role of the private sector: We have all of us accepted as the conventional wisdom that the private sector will play a larger role in the resolution of these issues. Your being here because you are a stakeholder in deciding issues that have heretofore been strictly in the public realm. Are you saying that the private sector isn't interested, isn't capable, or a combination of the two? Are we wrong to assume an increased role as government seems to downsize?

McGlashan: Yes and no. Unfortunately it's not an easy answer. Later I'll give some additional remarks about the role of the private sector. The private sector is increasingly taking on a larger and larger role. And it is very interested in doing so to the extent that it can measure and manage profitability that way. As long as there is a direct feedback, like biofeedback, that companies understand, which is return on investment, profit and as long as that is systematic, though sometimes long-term. Some companies take a longer term investment view. But they are not able to move out of that paradigm. That's the way the system works. To the extent that we continue to rely on these existing systems like the private sector that is absolutely measured by returns on investment, or a federal government or state government that can only reach so far into local issues and deal with folks who aren't in the debate, we will fail to deal with that massive problem. So the private sector is taking on more of a role in dealing with a diverse set of stakeholders, but there is a limit. And the caution that I want to offer to this group is that market failure exists, and it will always exist. We need to be very careful about downsizing federal and state institutions and assuming that the problems will get solved in the private sector. They will not. We need to be very judicious about that.

Wheeler: But isn't there tool of resource economics which would assign values to those private goods, and enable the market to account for them?

Rausser: I think it's more a question of incentives. One of the reasons that the private sector is more responsive today than they were 30 years ago is because of the environmental regulations. It's a default option. And it creates incentives for various parties in the private sector to come together and try to design self-compliance sort of mechanisms that work in some instances. I think the key, more generally, is to think about what sort of indicators or what baseline you need. It has to be motivated by what your objectives are, how that information is going to be used. I would think the key to how it is going to be used is you want to create more cooperation than currently exists. You want to align incentives. You want incentives to be compatible across various stakeholders within the state of California or within society.

I'll give you an illustration I think is sort of dramatic. Each year the World Bank does a major study about what is the state of the world. About three years ago they decided to do one on the environment, and there were a number of people working on this study, teams of about a hundred people and a number of consultants trying to prepare this report. One of the chief economists, Larry Sommers, who is now in the Treasury Department, wrote a piece that was supposed to be confidential, but was leaked to the press. The piece went something like "Why don't we use comparative advantage. Let's take all the dirty goods in the world and allocate them to low-income countries. Why? Because low income people don't care much about environmental quality. In addition, the quality of their life is much lower. Their life expectancy is much lower. Hence, that's where the dirty goods ought to be produced and the clean and productive goods ought to be produced in countries of higher income." It was surprising. The "Economist" magazine came out and said, "Gee this is a great idea." But then the London Financial Times attacked them, saying. "Wait a minute. Can an economist value life?" And the answer was, "No, they can't." So what is he talking about?

But more importantly, they brought a group of us in to review that work. Our argument was that his statement was largely focusing on environmental and natural resource goods as consumption items. And the way we ought to think about them is as not only consumption in terms of the short run, but long run investment. Just like we invest in research for the future, we should be investing in ecosystem resiliency. And that's a problem that ought to benefit all groups, all stakeholders, including the minorities that you were talking about earlier, because that's what is going to enhance our competitiveness in the future.

Do you remember the Big Green argument? The industrial groups, the private sector, mounted a huge campaign against that. What was their basic argument? Economic growth in the state of California is going to decline dramatically, and we're going to be far worse off, because our environmental regulations are going to be much higher than the rest of the U.S. or the rest of the world. Hence, we're going to lose whatever comparative advantage we have. That I would argue is the wrong public debate. The counter should be that if we invest in our sustainability and resilience of our ecosystems, we are going to be in a position in the future to take advantage of some opportunities that other countries or other states won't be able to take advantage of. If we build our information and the collection of data and our baselines and indicators in such a way that we talk about resiliency and ecosystem sustainability in the "stock." It's terribly simple, but quite frequently the debate turns to talking about flows. If I can exploit this resource and I can get a short run gain, that's sort of a flow argument. They don't stop to think about the long run implications of those kinds of exploitations, of degradation of the environment, and what effect that's going to have on your position and opportunities and options that you have in the future. We should be focusing the debate on the latter dimension, not the former dimension. And I would hope that the collection of data and information corresponds to how you want this to be used and how you hope to align incentives to get more support.

Helly: A couple of things come to mind in listening to these discussions, in particular with regard to multi-species and conservation programs, especially in southern California. I think the policy that you refer to is going to apply to Mexico? San Diego is a particularly sensitive town in this regard. Also, in regard to Mono Lake, I have an interesting observation to point out. The habitat programs, if you want to take a cynical view, were a timely piece of legislation put in place, I think, to break a logjam. This had obviously developed quite substantially between developers and environmentalists. The Achille's heel of it may be that you can't really negotiate the natural systems in the same way that you negotiate public policy. I think it remains to be seen if this is an effective approach. Even though it seems to be quite effective in air pollution where you can trade credits off. It's not clear that you can actually do this with species, substituting composites of species for any individual. The Mono Lake story is also interesting, especially when you consider it in light of an observation by a fellow in Santa Cruz. He's done a study of drought cycles in the western United States and discovered that there are trees at the bottom of Mono Lake with ages of 600-900 years, implying that Mono Lake has been substantially lower, about 30 feet lower, than it was even at its lowest during the drainage in the Mono Lake controversy. So the importance of information is critical to making intelligent policy decisions, despite our wishful thinking about how we can come up with innovative solutions. Notwithstanding the fact that innovative solutions are absolutely necessary. Another interesting question regarding information comes to mind. I've just come back from the Czech Republic where I had the chance to tour the country with the National Science Foundation, looking at ecological research sites there. It's a particularly striking example of westernization in the face of about 500 years of managed landscape. There are very well developed forests which have been sustained for long periods of time in the central Europe region. You can go into these forests and see four or five series of tree stumps next to growing, very tall trees. Obviously very successful forestry management. They also have about 400 lakes in the country, only four of them are natural. The rest are fish ponds that are used to maintain and harvest carp. But there is also an area called the Black Triangle in the northern part of the country, which is a forested area dying because of acid rain blown in from eastern Europe and countries adjacent. So there's an interesting mix of highly successful stories of management, and an appalling failure of regulatory policy, both in terms of the forestry effects and the pollution in the streams and rivers. Freshwater supplies, drinking water supplies, are substantially threatened both by the acid rain problems and by the overuse of pesticides. They are only beginning to come to grips with some of these problems.

So the point is that the availability of information is crucial to establishing intelligent policies. If you expect the policies to be successful, you need the information about the systems for which you are making decisions, and it has to be developed on scales of measurement that matter -- both in human time as well as the natural system time. The grassroots issue seems a little bit contradictory. If we've got a large disenfranchised population, how can we have a grassroots activity? Are the people disenfranchised because they don't understand, or are they disenfranchised because they don't care, or both? I think if either or both of those are true, then the issue of information dissemination, getting information out to the people so they have something to participate in, is critical to successful public policy.

Pendleton: I agree with your point about information. I think a lot of us assume that the power of the Center (San Diego Supercomputer Center) that you are a part of will help us provide that more effectively. I want to go back to the point that Gordon (Rausser) was making. First, I'm very pleased to hear that a panel of resource economists stated things in terms of environmental resiliency, ecosystem resiliency. Because I think at least part of the issue is the question of how we make decisions, economic decisions. In most cases I think we use a short term focus. I think the question is how to begin to reframe decision making in terms of longer term values. How can we include that in the process of making economic decisions? I think in most cases we currently don't. This is at least one of the things at the heart of this issue.

Rausser: A quick aside. A citation. In a "Science" magazine article two issues ago, there were ten people who came together, some of whom were economists, including Ken Arrow. And he gave his blessing to that perspective. So I guess economists will now be looking at that much more seriously.

Johnson: I think when people refer to the private sector there are two aspects to it. There's the for-profit private sector for which some of the comments were very appropriate, and there's the non-profit private sector. I think the participation of the non-profit private sector is going to be tough to predict in future years. Part of it depends upon what the federal government and the state government does with what it currently has on its plate with homeless, education, medicine, research. If they essentially withdraw from those fields, the burden of managing those will fall to a large extent on the non-profit sector. This will make what I consider basically a saturated non-profit economy even more saturated. So I don't hold out a lot of hope, because I see the trends that are going on in the state and federal government in terms of homeless, education, medicine, research. I don't hold out a lot of hope that there will be anything other than a dumping, if you will, of current governmental responsibilities on the non-profit sector. That in a very short period of time there's going to be an expectation for that to absorb it. And I don't think it has the capability to absorb it. I don't think charitable giving, which is the lifeblood, if you will, of the non-profit sector will increase to meet the demand.

Romm: The economic argument can be made on the short- as well as the long-term basis. We call a regulation `environmental' although it has as strong an impact on the distribution of economic assets among people and activities as it would if `economic' by intent. Its distributive impact affects current income as well as longer-term productivity. Similarly, `economic' policies have strong `environmental' effects through their redistribution of activities and intensities over space and among people. Our categories get in the way of seeing and explaining what actually happens when one or another action is taken.

For example, the price of private timber rose when spotted owl restrictions stopped federal harvests. We don't know what effect this `environmental' policy had on the spotted owl population, but we can estimate how much money private timberland owners earned as a consequence, and how much money mills lost that had depended upon federal stumpage. The transfer of earnings is reducing the number of federally-dependent mills, with significant immediate effects on the communities in which the mills were located, while increasing the profits that are available for investment in the productivity of private forests, where the spotted owl may face greater risk now than before the federal restrictions to protect it. Meanwhile, specifically `economic' policies, such as direct subsidy, have not had the same potential effect on private forestry investment, but they have stimulated the growth of `environmental' stewardship among nonindustrial forest owners and farmers.

Our categories have injured our capacities to understand and use the flip-side character of instruments that are consigned to one or another box. State efforts to re-bound aggregations of people, as in the watershed and biodiversity councils, have been more effective in this regard than have efforts to change specific activities directly. The new arenas create opportunities for negotiation and exchange that are much more likely to comprehend the full real values of choices than when the definitions of value, e.g. economic or environmental, are specified by convention. The gnatcatcher habitat strategy in San Diego County is a wonderful example of what can happen when we break loose of the urge to dichotomize complex interests.

Wheeler: I'd like to welcome Al Montna, who is in addition to being a rice grower in the northern Sacramento Valley and a member of the Governor's Board of Agriculture, is an advisor to UCD's College of Agricultural and Environmental Sciences. Welcome.

Al Montna: Thank you Mr. Secretary. I apologize for being late.

Wheeler: We'll turn to you for comments about the role of agriculture in California's resource future in a minute, after you have had a chance to catch your breath.

Walton: I wanted to make two comments. One is to go back briefly to Kevin Starr's opening remarks. He is certainly, we know intuitively, correct about the juxtaposition of nature, urbanism, and the works of civilization as a fundamental theme in American culture. A theme, of course, that was developed by the immigrants to this continent from Europe. But it's not the only conception of the role of nature and the role in society in respect to nature, although it has come to dominate. There are alternatives. It's interesting that you mentioned Cronin's book, because Cronin's earlier book was called Changes on the Land, about Native American versions of relationships between society and the environment. I don't bring that up for antiquarian reasons, but because what we have been experiencing in the last 20 years which I think will continue is a reemergence of the different conception of the relationship between nature and society, that being more of an environmental consciousness. It's too bad Gary Snyder didn't come to give us a version of exactly what that is.

It's quite right on the one hand to say that these fundamental societal philosophical conceptions of nature infused thinking about industrialization, urbanization, planning. It's another to say that those conceptions are inflexible or fixed in this Anglo American heritage. In fact it changes and new versions are being constructed all the time. Some of those indeed harken back to ones that existed prior to the population of the continent by Anglo Americans. That's a bit of an aside, but where we can look for alternative inspirations.

The other point I want to make is our discussion may tend to fall occasionally into kinds of clichés, the kinds of false dichotomies that muddle the issue. One of those is public and private. It's true, after all, that economy in this country is publicly guaranteed, publicly supported. The government's role is not to say that this is the private sector's realm and this is the government's realm. These are separate spheres of activity. The direction can be moving toward a lesser and lesser role of government. In fact, the role of government is continuing to ensure the operation of the private economy. If they do this in changing ways, they are nevertheless inextricably bound all through this.

Another dichotomy that is related to this is the one between state and local, or federal, state and local. In fact, all politics as someone said are local. And what that means is not simply a cliché, not simply a metaphor. It's to say that politics ultimately happen to people in places. They happen in Mono County or Owens Valley or Monterey Bay. And what that means is that indeed these battles are fought over a whole series of local issues. Some, of course, are state or national issues, but what is constituted essentially by these environmental policies is a whole string of local issues. Finally, what I'm trying to get at is the observation made by Professor Romm earlier that indeed it is probably the case that in environmental policy if this question of delegitimation is fundamentally a threat to the whole governability of the society. The authority of government at many levels is crumbling or is at least being challenged. I'm not sure that this will continue to unravel in the way that you can project current developments of the last few months. But certainly as the issue becomes increasing salient it will also have impact at these local levels. I guess the important way to counter it, the important way to deal with environmental policy as part of that whole struggle of delegitimation or legitimation of government is to go back to these local issues that have been addressed in different ways and sometimes quite successfully. Mono Lake is certainly a case in point. The Owens Valley agreement is another. These are all instances in which people and governments together have engaged environmental issues and struggled with other authorities at other levels. Small struggles that in ways set big precedents. To relegitimate, to examine once again some of the good things that are done from the public side of this public-private dialogue, we need to go to these local level cases and make the news more widely available of what's been accomplished.

Lawrence: Our sense of place. It's very important to always reinforce that we need that sense of place. And that's what you can get at the local level. From that you can develop what is needed.

King: There is another dimension on this that comes to my mind. That is that we should note that the structure by which we accomplish things is very much on legal grounds. That is, the United States deals with these issues through legal endeavors, in ways that can be complex, consumptive of time, consumptive of money, and not get to where you are trying to go very fast. By contrast, I had the experience about three years ago of doing a tour of about 10 days in Japan as part of a team looking at technology, including accommodation of technology to the environment. We looked at their biggest paper mill. It was located right on the coast. It was a very clean paper mill when you looked at various measures of what the emissions are. And so we asked who regulates them. And we got strange answers. The answers really bespoke in all respects a dialogue between the government and the locality and the industry so that it was worked out by negotiation. There was not a standard on how many ppm of sulfites could be emitted into the ocean. There was not a standard on what level of particulates could go into the atmosphere. Probably we are looking at the difference between the Japanese culture and the U.S. culture. But, the contrast to me was very striking. And I think if we can get elements of that into this, we can proceed in a way that will be less consumptive of time and expense and draw people together better rather than pushing them apart.

Wheeler: I want to ask Monica (Florian) in a minute if the private sector is indeed enamored of those solutions. Al (Montna), would you describe one that you've been involved in, the riceland wetlands venture, as a way around some of the regulatory constraints that have threatened agriculture in your part of the world?

Montna: Certainly. California rice industry has been for many years under attack for many of its practices. People enjoy smoke-free valley air and water quality and all of those things for many years that we have, and justifiably so, been criticized for adversely affecting. The industry decided some time ago to undertake a different tack, and decided that we didn't have an inalienable right to pollute because our grandfathers came here a hundred years ago. And we couldn't conduct business like we used to, obviously. We felt we quite frankly would be out of business in the state if we did. We had a period of time where we probably had three or four articles a day criticizing our industry for many things, mostly smoke or water related.

So we decided we would go by way of working with others. Getting with our detractors and trying to figure out where our problems were and how we would correct them. We cleaned up our water quality, got an award. The Secretary recommended us for an award, and we got the Chevron award for water quality. We were the only commodity group in the United States to do so. We cleaned up our pollutants in the Sacramento River, initiated the Smoke Reduction Act with Assemblyman Connelly which will phase out burning over 10 years to zero burning. It's questionable right now because we're not finding the alternatives we had wanted to dispose of the straw. We have another way of disposing of it, and we decided we had a real responsibility to waterfowl.

We are a mainstay for waterfowl in the Pacific Flyway. We're an industry of 600,000 acres, and the industry provides the majority of the food for migrating waterfowl that come through this valley. We entered into the Riceland Habitat Committee partnership with people that were highly critical of us. One of them was the Nature Conservancy. A gentleman named Mark Reisner, whom many of you know wrote Cadillac Desert, highly criticized our water uses. We turned Mark around on that. We proved that in no instance was rice one of the top three water users in California. And many times not in the top five. And Mark retracted all of his statements, but he did more than that. He worked with us to design a program where we are now flooding in the wintertime to stop from burning our straw; we flood it, and it will decompose, and the water fowl will become our partners in doing that.

You know, I think at one time in this valley there were four million acres of wetlands. We're down to less than 400,000 today. We're an industry of 600,000 acres, of which about 500,000 acres is planted. We have the facilities, the diversion from the rivers, we have the ability to put the water back in the rivers in the wintertime without hurting fish or other endangered species. We embarked on the program about four years ago. Now we are putting this pasture, over 100,000 acres that was flooded from say October to March to provide winter habitat to waterfowl. That's on top of all the Duck Club activity, all the refuge activity that takes place in the state. It has been extremely successful. And the thing that has been really successful about it... instead of people saying, "Why do we need a rice industry in the state?" they are saying, "You should keep the rice industry." Mark Reisner will say this. If you know him, you can ask him yourself. He'll say you have to keep the rice industry in the state because it is the only commodity group that can do anything for waterfowl and 26 some odd other endangered or threatened species. And when Mark Reisner says that, it's very credible. When I say that I'm another farmer crying in my milk. And so it puts it in a totally different level. We've enlisted Mark with many others, Audubon and others, and found they are our friends.

When the original redneck farmer thinks about an environmentalist, he sees a person with horns and a beard, pitchfork and all these things. But that's not true. We found these people are very reasonable. We've found we have a lot of common ground, and we have the responsibility to put these things back. Not a duty but a vast responsibility to really manage our resources. Resources aren't just the land and our crops and the inputs into them in raising a crop. They are all the things that complement that. And the waterfowl have become a tremendous friend of ours.

We have just put our United States rice industry into one organization, all the segments of it like the cotton industry. And we have now formed a national waterfowl program working closely with (U.S.) Fish and Wildlife and others, to take this program nationally. We have three million acres of rice in this country, sitting in the midst of a flyway, mainly in Mississippi, Texas, Arkansas, Louisiana and Missouri. We are taking the program nationally. The Delta already has a small program. The California program is one of the major models and it has been very successful. That's what people from the different commodity groups are going to have to do. Agriculture is not a major concern of most of the population of the United States. We have to have a reason for existence. And working with natural resources and helping maintain those, will give people a much different view of our industry.

Wheeler: Thank you for that very succinct and powerful statement of the case. I don't want to overstate this, but before you came, another representative of the private sector, Mr. McGlashan, made the point that industry in the private sector generally could not be held responsible for detection of or accountability for the externalities. It is too much to expect that the private sector would value those things, factor those thinks into its bottom line. So that's a market failure for which governmental and the non-profit sector should compensate. How does what you just described affect the bottom line? Does the industry or do individual growers feel accountability for the public good which is represented by those waterfowl or those wetlands?

Montna: Absolutely, for a lot of reasons, many of them political. Our political base is strengthened. Unless we have the average citizen stand up and justify our existence, we're probably going to be a decreasing breed in this state. And agriculture has to justify to its friends why we need this industry, even though it's still the number one industry, or certainly in the top three in the state, and the number one industry in the United States. People don't realize that. They are looking for other things for agriculture to step forward and prove to them. But I think we have a tremendous responsibility to look at those things other than just raising a commodity. You have to look at the things that enhance your industry and be responsible to the public.

Wheeler: Is that justifiable on economic terms?

Montna: Absolutely, because you have to look at the cost of regulation. What we have found now, Mr. Secretary, is that your own agency and others are looking at other industries. Because we have become a model. We're policing ourselves. So it is affecting our economic bottom line by not having to need to be continually responding to regulations and doing whatever we have to do in our industry to fund those. And that takes people, it takes a change of operation, its many times very expensive. And we're finding much more good coming back from these efforts than we are finding what we're spending. For instance, we supply all the rice to Kellogg's for Rice Krispies. It's part of the total quality concept. We're not only doing it for the quality of our product. We're doing it for everything we do. And they know that. And they look at not only our production efforts, but our responsibility to society. It's very important to a company of that size, and they prefer to do business with people like that. They're that way themselves. So it does translate to your pocketbook.

Wheeler: Monica (Florian) has been in another industry, also involved in a private sector resolving these critical resources issues, a leader in support of the NCCP (Natural Communities Conservation Planning) process, maybe one of its initiators. And she's got the scars to show for it. How about a negotiated approach to resource management?

Florian: The jury is out. I'm waiting for my wounds to heal. About the negotiated approach, I don't know any other way to do it and have something sustained over the long term. Because the comments made earlier about grassroots and delegations to the local level, flexibility, to me reinforce the idea that within some standards there has to be flexibility to work out solutions that meet as many needs as possible. In my experience, in and out of environmental issues, trying to bring the interests to the table and working out some mutual benefit is about the only way to get something that lasts over the long term. Maybe you can get a better deal from your point of view today, but if it isn't really a fix for a variety of interests, it really doesn't work. In southern California, in the NCCP effort, we're still experimenting with the program. It isn't done yet. How well it is going to work to balance all the issues and come up with something that is workable from the regulatory and economic and environmental and local government, and private citizen points of view... I think we will come to see it. I'm encouraged by what I see so far.

One thing that is starting to get my attention is not so much the negotiations on the conservation plans, because I think they are going well. I think it is a growing realization that the whole environment, not just the natural environment, but the entire environment in which we are doing this is very much changed. It is dramatically changed. Not just the politics in Washington, but wholesale. I had originally raised my hand for follow-up on a comment that Steve (Johnson) made asking if the non-profit sector can deal with this. Well, it kind of depends on what else is dumped on them. I think all of us, development sector, private sector, are looking at the same thing. In the '80's, you didn't worry about not having enough to do everything. Everything came along, and if it looked like it was something valuable, and necessary, you did it. You expanded and you did all these things. The government did it, the private sector did it, and so on. For whatever reason, and they are multiple, we find ourselves now in a situation where you cannot do everything. There's a lot of stuff that we are trying to do now that can't be done. All the people in this room must think that natural resources are important, but this is a real small group and there are a whole lot of people in the rest of the world that maybe don't because they are worried about their jobs, they are worried about healthcare, they're worried about all these things. Steve (Johnson) gave a great litany in his examples on this country.

What I see as the biggest challenge for resources protection in the '90's is establishing it as a priority among other competing issues, or at least an equal priority. Secondly, within this area of resource protection, prioritizing what it is that needs to be done now. I think a lot of the things that have been said here already relate to that. One of them is in public education. There are people out there that really don't care. Interestingly, I have a proposal for a conservation program that is going to set aside maybe 200,000 acres of land in a reserve. It's an ecosystem approach. And I'm not worrying about people saying that it is a bad environmental plan. I'm worried about people saying "Why in the hell do you want to take 200,000 acres out of productivity, out of paying taxes, to save some birds, when we need jobs and we need this and we need that?" This is a whole new world for many of us. So the public needs to understand, and the officials need to know this is important. I think we have a responsibility to prioritize which of these resources is most important. We're not going to do them all at the same time.

Another factor in what you talked about is bad information. And credible information. I think there has been such an abuse, maybe in every field, but certainly in the environmental field, of data and what is true and all this parade of rhetoricals. The sky is falling. Some of it may be true and some isn't, but the end result is that people have a real distrust of what is the real problem here. If we can't overcome that distrust, we're not going to get the priorities that many of us believe these resources deserve. And finally, efficiency. We have to be able to do things more efficiently in saving resources, and the NCCP approach was designed to be more efficient. I've been doing this for five years now and I'm starting to wonder if it is really more efficient. Hopefully it will be. That's something, another factor when you look at how do we deal with these resource issues. It's not the number one thing to most people, for a whole lot of different reasons. It just isn't. If it ever was, it isn't anymore.

Wheeler: You made several important points. We keep coming back to this notion that as we are talking amongst ourselves, we are assuming the importance of resource retention and resource management, and yet this is an issue not relevant to increasing numbers of Californians. Is it truly not relevant to their lives, or is it that we have not made them understand how important it is? You talked philosophically, Kevin (Starr), about the relationship and this mythology which at one time was that glue which bound this very diverse society. Increasingly, apparently, it doesn't serve that purpose, so it functions or does not function in that arena. It is also in the Dean's (Gordon Rausser) terms, important to the future economic situation of the state. In terms of these resilient ecosystems. So it's relevant there. But we haven't conveyed that. So it is important to ask if this is a priority among the competing public priorities, and if so, how do we engage more people in the dialogue about the protection and effective management of these resources?

Johnson: I'd just like to raise a question regarding that, particularly directed to Jeff (Romm) and Kevin (Starr). Is this situation fundamentally different now? I mean when I grew up in the '50's and '60's, most people didn't care about the environment either. The policy makers ran the show, they did what they did and everybody sort of muddled along. Somehow the situation doesn't seem to me fundamentally different. The disaffected, there are tons of them. There have been. There will be. And yet we have muddled forward. I'm just at a loss to understand how today is different.

Rausser: Well, it is different in the sense of carrying capacity of the ecosystems. Given the demands that are placed on it. The carrying capacity is different today than it was in the 1950's.

Starr: Upper middle class Progressives, gathered around tables like this and looking very much like this, traditionally made those decisions. They could implement them. California was assembled in a spurt of these kind of decisions, say between 1900 through the arc of development through Warren (Earl) and Brown (Edmund). It's just ended in the '80's. I use Progressives with a Capital P, not small P. I think that's just something radically different now, that upper middle class progressives can't sit around and build Hoover Dam and sit around and get the vote through for the Los Angeles Aqueduct, and get the vote through for the Hetch Hetchy and get the vote through for the California Water Plan.

Graff: They can sit around and implement water marketing, and that's the new set of policies. It takes time to shift from the old construction paradigm to some alternative ways that try to integrate environmental values as opposed to what was done in that era.

Johnson: They get the airport. The transportation coordinators in Orange County.

Graff: Even there, we're moving away from just pouring concrete, whether it would be for rails or highways. We're figuring out new ways to move people, to have mobility but not to tear up cities in the process or whole countrysides. It seems to me that the idea that you enfranchise everybody and get them to the table is unlikely under any circumstances.

Romm: The dichotomy between development and environment is a false one. People possess mixes of concerns, and their priorities and configurations among them shift with circumstances. A large majority of Californians still is `for' environmental protection, but the fit of this interest among others has changed. This does not mean that people are less interested in the environment in the abstract. Rather, the active expression of this interest depends upon different mixes of linked interests than it once did, and these mixes are less likely to be described by the crystallized conventional `environment.' The old definitions, I believe, currently are inhibiting the formation of new political coalitions.

Whiteside: We have moved from regulating industries and water companies to regulating individuals and their actions in their every day lives. It is easy to support clean-up of smoke-stack industries, and tolerable to put anti-pollution technology on the automobile, but the constituency gets queasy when government tries to regulate the use of barbecues, lawnmowers and fireplaces. The public supports regulation against the extinction of the bald eagle or the gray whale. But a government which restricts fire clearing, and puts private property at risk for the benefit of a rat is neither understandable nor supportable by most people. My sense is that people want to do something productive, something that makes the world better, but we have created a structure which is a barrier to all but the most hardy and persistent.

We can't expect people to comment on EIRs that are 1500 pages long and full of jargon. We can't blame people who get impatient with government process that goes on for years and is controlled by attorneys.

In many ways, the goals of government action are desirable, but in the implementation, we have allowed institutions to create barriers to meaningful participation, and in the process, we have disenfranchised the very people who ought to have a stake in the outcome. When government limits people's private actions - even those which are altruistic, when you tell people they can't volunteer to paint their school room because the employee unions say it's their work, you have disenfranchised people and created a certain level of frustration. We repeat that in a hundred different kinds of bureaucratic regulations and rules that have forced people out of the process that affects their life the very most. Not just the scientists.

Helly: I'd like to respond to your point, though, about what is changing. A couple of important things have changed, not just in respect to the time period you cited. There's tremendous population growth, but there has also been, more importantly, a big growth in our understanding of what is going on. It was only in the '60's that we first started being able to collect images from space of the earth. So the ability to understand the impacts of the changes that are made and the haphazard nature, or perhaps not haphazard, but ad hoc nature of the decision making process is not the same anymore. It will never be the same as far as information is concerned as well.

Sedgwick: I would also offer that there is a much more profound disconnection between the average American and the natural world and the natural resource base than was ever the case. Of course, I have no information to back this up. Jeff (Romm) was talking about the exit polls, talking about people saying that they are environmentalists and that they care about the environment. I read an article recently in the Wall Street Journal that talked about the recycling phenomenon. And really, I think people when they say they are environmentalists, they are talking about what they are doing with solid waste. I really think that's what it comes down to. I think, going to Carol's (Whiteside) point, people want to have a sense that they are taking control over some portion of their lives. And I would offer the politically incorrect view that recycling is an example of a tremendous diversion of human energy toward an end that, while worthwhile, is way down there on the list of environmental concerns we should be dealing with.

Mantell: Just in terms of exit polls, Doug (Wheeler) and I were both surprised and frustrated during the gubernatorial election last year with the polling that was showing in California less than 5%, continually throughout the fall, ranked the environment in the top five concerns. So at the same time they were claiming to be environmentalists. Those are not mutually exclusive.

Graff: Those fundamental changes happened over a period of time. It ebbs and flows. There have been election cycles where environment was one of the prime issues, one of two or three. So it might well come back. You have a hot summer in New York and suddenly all the networks will publish that global warming is happening and it will be back as a big issue.

King: I think it relates inversely to the health of the economy.

Lawrence: I think that what your comment leads to is that there in an enormous need for education. It goes to a question that I have which is a lot of what we have all talked about, a lot of the things that we are doing are basically the result of some very linear thinking, that gets enormously blocked. So we tend to separate this issue out and get very articulate about it, and then we move on to the next issue and get intense about that one. In the meantime, we are splintering this whole, instead of having an ecosystem concept, as I understood it. I don't know whether this is the time necessarily, but there is time for a need for integration of the environment.

Some part of me wants to say it's tacit. I mean, how can you question good environmental, long-term thinking, helping the economy helping ecosystems. And I don't know where we integrate this, but our thinking should be more holistic. We should be able to pull the economics into it. As a decision maker in a rural county, I would love to have a good set of economics about this piece of property or that viewscape can come up through (Highway) 395. I characterize (Highway) 395 as one of the crown jewels in the state of California. But somebody wants to put a batch plant on the side of it. His short-term economics will carry him the day, rather than my long-term thinking, which is let's wait and let it be used over the next umpteen years. Somewhere there has to be a point where we start integrating this, where we assume that these are givens. They are no longer splinter operations.

John (Helly), you made an interesting comment about Mono Lake and about Scott Crew's information about climate. Mono Lake used to be Lake Russell in the Pleistocene years, and it was huge. It was enormous compared to what it is now. It flowed into Nevada and came down God knows where, so you can drive out of Lee Vining and see the mark of the lake when it was way up. Now based on what you are saying, here are trees down here that indicate drought periods, which leads me to the question that I have asked myself over a period of time. The world globe as we have known it, with its resources and its environment, has undergone enormous changes that are perfectly natural changes. So where do we move in as responsible people who now are more aware of the impact of our environment which we created? It's how we then act as responsible citizens, given that we can now see our impacts.

Helly: That's a difficult question because the biggest scientific question in environmental and ecological science right now is what are the natural processes, what is their timeline, what are their schedules, and what are the man-made effects? Where's the difference? How can you tell one from the other? There's not a simple answer to that, and that's why these ecosystem concepts may or may not work. It's not clear that we can tell the difference.

Starr: It's very interesting that every 10,000 years or so the Colorado (River) shifts and they certainly found that out with the creation of the Salton Sea in 1907. When there is no way in the world that they just happened to have engineered something on the edge of one of these massive events which could not be resisted. So you are talking about the fact that in all environmental planning, it would be arrogant not to see also that there may be other cycles.

Helly: In light of what you just said in particular, there's an interesting pattern going on now where there apparently is a true ocean warming that is being seen in a variety of ways. A fellow at Scripps recently measured the decline of the zoo plankton, which are a major fish food. That's a case where there may be a naturally occurring impact, perhaps partially man influenced. Contrast that with the North Atlantic cod fishery which has collapsed to the point of destroying an industry that has been generational in its presence. There is virtually no hope of restoring that fishery. It is something that has been seen, predicted, warned against. People have been saying for decades that this is what is going to happen to the fishery. It was ignored and the fishery is gone. So there is a clear case, despite the fact that it is difficult to tell the difference, there are cases when you can tell the difference.

Sedgwick: There is a group, a coalition of foundations, which just funded a very large national polling effort with voters. The goal is to find out what the average man thinks about biological diversity. You can imagine how this went.

Lawrence: Was it a yes or no answer?

Sedgwick: A deterministic view of how nature functions is a very big part of the thinking of members of the American public. They believe nature will take care of itself and its own. One of the few positive things that came out of this very expensive undertaking was to show that to the extent you can point out to people what the man-made effects are, it's at that point that people say we should intervene. Most people think that nature is so much bigger than we are that they have a deterministic attitude. I think that's a point of entry for public education.

Toben: I'm struck by how much of our conversation seems to turn on the disproportionate role that rural environments, rural communities, seem to play in setting the terms of debate. How much of the rhetoric defined in polarized terms emanates from these rural settings. I have had some involvement with groups that provide outside agents for local communities to utilize and build moderate views that can counteract some of the extreme rhetoric. The national conference of state legislators just recently published some interesting research which suggests that state legislatures can be more effective in reforming water policies by acting primarily as conveners of outside stakeholders than they can by passing legislation or enacting new regulations. The stimulus of the shadow government blessing a dialogue among non-governmental actors, in fact yields better results on the ground.

In my own experience as a funder, we have found that providing that outside agent to come into local communities with sensitivity, with diplomacy, and to provide that function, to offer that kind of service, gives very important validity to state government in an entirely different role. An example of that would be the Coalition for Utah's Future, a group which we have been involved with. It's focus has been the enormously difficult and divisive wilderness designation debate in Utah. Eighty percent plus of Utah land is in public ownership. And the state has been under a mandate for 20 years to develop a wilderness designation, to define land as wilderness. Of course this essentially removes those lands from all historic public usages, grazing, mining and so forth. Our group, our Coalition for Utah's Future, went into the sites where there is most of the difficulty: Emory County, Utah, deeply conservative, highly suspicious of federal governmental motivations. For six months they worked a process that yielded two products. First it yielded a shared statement of values within the community that sounds very much like an environmental document but is really a product of people who largely resonate with the idea of county home supremacy, home rule in custom and usage. The second document that it yielded was a recommendation for specific land designations in Emory County, which includes some of the most magnificent natural landscape features. That gets to your idea of what is the place and what is its meaning to us, its sacred value. But the designation was not wilderness and non-wilderness. The designation was six different kinds of wildlands protection. A much more nuanced statement of how we can live compatibly with the various features of our environment than was the defining terms of the debate in congress.

Unfortunately, the events of the last nine months have overtaken this process to a large extent. The new congressional delegation includes Representative Hansen from Utah, a Republican, who is now the chair of the House Subcommittee which deals with wilderness. They accelerated the introduction of a wilderness designation bill introduced June 1 by agreement of all the Utah delegation. It essentially runs roughshod over this more nuanced approach to wildlands designation, and describes a number, 1.8 million acres of Utah land that would become wilderness designated. But what is significant in that bill is that three times the proportionate amount of acreage ascribed for wilderness is being voluntarily enrolled by Emory County. Emory County through this process involving this outside agency is prepared to live with vastly more wilderness than any of its surrounding counties, which did not participate in this kind of state-stimulated process. So I offer that as an illustration that there is a role for government to play, and it can work.

Wheeler: I would affirm that. Those of us who have been through the Bay-Delta process, which was in fact stakeholder-driven but was state-sponsored and federally-sponsored, can attest that the role of government, state and federal, was considerably different than anything in our experience. Because we convened the stakeholders and asked for their definition of a solution, which surprisingly, despite years of dispute, they managed to resolve. And which we are now in the process of implementing, in the public interest. So that's something to think about. I agree with you that it is quite a profound change. I've identified a number of such changes in the way we do things. We still haven't resolved to my satisfaction why we are doing them or whether we can engage the larger public in that exercise.

Rausser: I don't think you can separate the two, because part of the reason people are willing to access these kinds of coalitions and various stakeholders enter is because of the threat or the default option of legislation. They work hand in hand. The description of the rice industry, if you look at the key elements of success there, it was in fact the leadership of a commodity group that led to cooperation, but there was a default option. There was concern that there may be legislation down the road that would change their way of life and their economic well-being. We can't say that one type of process dominates the other. It's a matter of what the default options are.

Wright: I would be interested in Tom Graff's comments on this. If you have to list, say, the five greatest natural resource accomplishments in California in the last two years, I think at the top of the list you would have Bay-Delta, Mono Lake, the gnatcatcher, CVPIA, and the California Desert Bill. Perhaps even the rice venture. Which of those are unraveling right now? The two that were enacted by Congress, the Desert Bill and the CVPIA. Those that were stakeholder driven, Bay-Delta, Mono Lake and the gnatcatcher, were all locally driven.

Rausser: There's no doubt about it that they reached a cooperative solution. But in each case there was still the default option out there that provided motivation for them to cooperate.

Graff: My only point was to ask the academics here to provide feedback, not necessarily in this context, but more formally, what works and what doesn't work. There are plenty of consensus-oriented processes that have come to nothing, more than have been successful. So what defines the good ones from the bad?

Lawrence: Well, I think Steve (Toben) had a good example. There's another in Flathead Valley. Mono Lake is another one. It is that energy that gets engaged in a concern for a local issue. And they all have a certain custom quality to them. You can't take the formula of any of these, Mono Lake or any of them, and just lay it over all of these issues. It just isn't going to happen that way. That's why this thing is so important.

Wheeler: But there's a paradox here. We're talking about disenfranchisement and disaffection on the parts of large numbers, at the very moment we're talking about the need to engage people more intensively in resolving these issues at the local level.

(Lunch Break)

Wheeler: This afternoon, we'll hear first from Charles McGlashan a bit more on the issue of the role of the private sector. We will discuss that and its implications for the role of government. We talked a little bit before lunch about the roles question generally. I think that's increasingly relevant. Then following that discussion we want to begin to focus. We'd like for you to reconvene in your mind's eye as the advisory committee to those of us who have responsibility to putting together a conference on the topics we have been discussing this morning. So what major themes have emerged, what should we begin to think about for a program content? How should we elaborate on those issues, leading ultimately to a state of the resources report and some indicators that could give us feedback on what is occurring in California and that could be revisited from time to time. I think it is true as Jeanne Sedgwick suggests that those of you in the academic community can be particularly helpful with regard to the indicators, and we should borrow a leaf from the books of Cal-EPA and US EPA which are developing indicators on the environmental side of the equation. But they are still deficient or lacking on the resources side, particularly with this concept of indicators of successful ecosystems, sustainable ecosystems. Again, harking back to the question of ecosystem, both economic and environmental, benefits. But right now a little more on the private sector from

Charles McGlashan.

McGlashan: Thank you. I want to first of all indicate my gratitude for being able to join you today. It is a pleasure to offer a perspective from my consulting experiences and Coopers and Lybrand's interest in the environmental issues in general, and then personally. I'm a "Green," and really value this discussion because I think development in economic and environmental issues are inextricably intertwined.

To the extent of environmental and resource issues and public goods are translated into economic forces, business is increasingly responsive. There are some very encouraging trends. We are in the midst of a tremendous increase in intellectual capital invested in developing techniques to measure and respond to a whole range of environmental issues that were never before quantifiable, even three years ago, and that is encouraging. So with the caveat that policy makers need to choose very carefully and identify which goals can be monetized by business, which relates to my point earlier. As long as policy is monetized into a language or a feedback loop that business understands, there are a lot of good examples of active engagement by the private sector in engaging in a quest for sustainable development. And there are some encouraging trends which I will talk about. And there are some good results.

Traditionally business of course, as we all know, has been reactive. And that is even moniker that a consortium of companies called the Global Environmental Management Initiative, GEMI, uses to measure corporate performance around environmental issues. Traditionally reactive, meaning that companies have had to respond, reactively, in most cases to a changing regulatory or customer-driven environment -- using systems that are personnel-dependent, informal, ad hoc. That is radically changing. Companies are becoming now increasingly proactive. Many of us are in deeply invested in an effort to quantify and measure through new types of accounting systems the cost of environmental management. And that is brand new science.

A dramatic case in point was illustrated down in Stanford on Friday. A company with a major oil processing facility back East estimated that its environmental cost was 3% of revenue. It went through a cost accounting analysis and found out that its environmental costs were 24% of revenue. And in order to drop a dollar to a bottom line and manage it more profitably, that company could cut a dollar or figure out a more efficient way to spend its money on these environmental requirements. Or it could multiply its revenue ten times to get that same dollar at the bottom line. This would mean a fifty fold increase in exploration costs and a ten year horizon for realizing that return on investment. So corporations are right now engaged in an exciting effort to quantify, identify and truly understand what they spend on environmental issues. Rather than just fighting with it and resisting it, to creatively manage it in a very new and exciting way.

One of the interesting discussions in international management of environmental issues is something like the following. You never see a profit department in a company. Profit is something that every manager throughout the organization, every employee, is taught to manage every day. And over the last 15 years, quality has been seen as something we all need to manage every single day. And more and more people are saying the same thing about environment. The companies who can effectively manage quality and environmental issues strategically and carefully and cleverly will yield a lot more profits. That new paradigm is becoming very compelling.

Over the last several years, especially since the Exxon Valdez incident, many companies have proactively developed corporate policy statements. In the late 80's and early 90's a whole variety of commandments, if you will, were promulgated on the international realm and in individual corporations, stepping forward and holding themselves accountable to a set of standards, principles, or policies. More recently, those efforts to perhaps informally address that corporate policy or informally address regulatory requirements has become systematized. That has really been driven out of the European Community in large part. There is a great familiarity and confidence in the effort to develop management systems around environmental and resource utilization, and to bring that inside companies. To develop permanent methods that won't go away as people retire or change jobs, to be sure that environmental issues are incorporated into day-to-day business management. And this is an exciting sea change in attitude.

There are a whole variety of international standards emerging. The British Standard, 7750, for those of you who have heard of it, an ecomanagement and audit scheme for companies that can go through a rigorous review, put labels declaring environmental checks and balances in their processes. Probably the most influential nowadays is the ISO, the International Standard Organization, development of ISO 14000, which is a quality management standard, essentially applied to environmental issues. That standard basically says we are not going to tell you what levels of effluent or what you can do. What we want to see and what we expect to verify is you have permanent management systems that bring environmental considerations into all aspects of your day-to-day business management. So in other words, companies are expected to include environmental factors into their R&D decisions. Companies are expected to consider product substitution in their manufacturing based on a systematic and formal approach of accessing good information and bringing that into their corporate strategy.

These types of initiative translate not so much from the regulatory sphere into corporate policy, but from customer-driven behavior. It is really a marketing strategy issue, and that is the way people talk about it. There was an article in the Wall Street Journal about a year ago that indicated companies that could get the Blue Angel label in Germany, for example, could experience a 30% increase in market share. So where green labelling, and ecolabelling has not been terribly effective in this country, companies that have sales overseas absolutely have to pay serious attention to these international standards. For the last couple of years most of that initiative has been driven out of European buying patterns.

What is happening that is pretty exciting too, from the policy sphere, is that these various international pressures that are becoming effectively translated into monetized response in corporations, is generating a whole bunch of new creative partnerships. You heard about one earlier in the rice industry. A couple of others are very exciting. I'm working on a defense conversion action team down in the Bay Area which is an ad hoc partnership between industry, the regulatory community, private industry, small start-up companies, and all aspects of the defense community. We are building a strategy for base conversion that employs people and at the same time promotes a whole new technology incubation program for new environmental technologies, in addition to multimedia technologies and the like, on the bases that are being closed. It is revolutionary and it is something that wouldn't have happened fifty or sixty years ago where the sectors were a lot more separated than they are today. So it is an encouraging example of going through a systematic, slightly slower, process with a much better return for the three sectors working together.

Another example is a non-profit group called Sustainable Conservation in which Frank Boren, whom some of you know quite well, is developing for-profit public/private partnerships in situations of land development and re-use. And negotiating creative solutions around wetlands maintenance and development, and perhaps considering property re-use or clustering techniques to try to bring that forward. It's another encouraging example of a painful but useful process of building these partnerships.

There are some exciting incubators emerging. The Alameda Center for Environmental Technology, the Joint Venture Silicon Valley Environmental Partnership, are examples of government, non-profit and industry partnerships to build environments that are conducive to new technology creation and efforts to build an industry that can solve environmental problems. One of the key roadblocks traditionally talked about in the environmental solutions industry, if you will, has been the bottleneck of regulation. The difficulty of getting new technologies into situations where they can be applied and approved through regulation and allowed to begin the process of, say remediating contaminated property. That too is dramatically changing. There are some very exciting initiatives. There is an effort to consolidate permitting for new technology at the Office of Environmental Technology in the state of California. There are efforts to bring natural resource decisions into corporate strategies through public-private partnerships. And one that I am very excited about is the joint effort between state environmental programs and the federal Environmental Protection Agency, called in the vernacular, Beyond Compliance, also called XL at the federal level. And this is an effort to allow greater flexibility in companies to achieve global permits for their facilities, rather than having to certify or permit each individual technology piece. And to guarantee to the public, to the agency regulating them, that the company will go beyond all aspects of regulatory standards in exchange for that covenant for this global permit. The company would then be free to choose whatever technology or whatever management standards it wants to achieve this type of compliance record. And it would be audited by outside parties to verify that the numbers are right and the systems are tracking the numbers correctly. So that's a very exciting effort, as I mentioned earlier, to correctly choose which kinds of policies can be traded down the chain, so to speak, from federal regulations to state regulations to the private sector, perhaps. And through public trust and public verification systems, to allow much quicker flexibility. So that's a very exciting pilot program that is underway.

Some of the key issues at stake as we go forward: I would greatly reinforce the need to carefully choose the devolution strategy that is being considered in the environmental movement. That is, to carefully choose which environmental issues are transglobal, transnational, transstate, or that can truly be managed right at the local level, and then be aggressive about monitoring and building these public-private partnerships to monitor performance at the local level to the extent that that is feasible and possible. And some of these pilot programs that are underway now are very encouraging and very exciting.

Wheeler: Charles, we had a couple of apparently conflicting concepts this morning, one of which was yours about the role of the private sector vis-a-vis government. But I see some blurring on the edges. Someone also said that these are not distinct roles, and what we ought to be talking about are the kinds of collaborations that you have just described. Is it necessary, or even possible, to define clearly a role for government in regulation, no matter what level, and to define that part of the agenda that could effectively be undertaken by the private sector? Or is the requirement for collaboration so evident that we need not worry about overlap?

McGlashan: I think partnerships absolutely help, because they can improve the data set, if you will, to make those decisions about who can do what and how can groups be trusted to uphold their part, so to speak. It is also critical that policies that are handed to the private sector have to be monetized, which was my point earlier today. It is not possible or fair to expect business to operate outside its realm of feedback. And its realm of feedback absolutely is the bottom line. Long-term sustained improvement in environmental performance will not happen because it gets pushed out. The companies that do that at the expense of the bottom line in the long run lose. So I don't believe that there is a proper role for altruism in the long term in environmental or business strategy. This sounds harsh, so let me make sure I am perfectly clear. To the extent that environmental issues are turned into monetary issues for a corporation, it is incredibly responsive and there are great examples where coalitions can be formed and effective strategies pursued to mitigate environmental degradation. But it only happens when those issues are monetized. If they aren't monetized, sustained improvement of environmental performance doesn't happen.

Wheeler: And you rely on the public sector to provide the impetus for that sustained improvement or for those standards?

McGlashan: Good point. That's where the partnerships come to play. It's also a mistake to just leave the decision to the public sector. That's some of the wisdom that is coming through Congress now. The good news there is that that decision shouldn't just be left to a legal atmosphere. Someone pointed out earlier it is an intensively legal atmosphere that doesn't necessarily promote economic decision making. So I think the existence of these partnerships is a great point to try to make those decisions and you can work out collaborative deals that say these people ought to audit performance, these people ought to be free to choose how they perform, and these people ought to provide policy standards at a high level to deal with issues that flow across private property lines and borders and the like.

Graff: The thing about monetizing environmental costs within corporations brings to mind the New York Times article a couple of weeks ago that caused a big stir in EDF (Environmental Defense Fund). Maybe you saw it. Basically the theme of the article was the cost of compliance with acid rain provisions of the 1990 Clean Air Act have been substantially less, very substantially less, than was predicted at the time of the passage of the act. We had pitched very hard along with others, emission trading as a cheaper way to meet a given environmental goal because it would encourage technological and policy innovations among utilities in this case. The upshot of the article was basically that environmentalists shot too low, set the pollution requirements too low, because look at how cheap it has been to comply with the environmental standards that were set. Monetizing those results turned out to be a whole lot cheaper than industry or we ourselves predicted at the time. We're sort of in the awkward position of saying we didn't know, but we probably should have shot for more. It creates a kind of difficult tradeoff between what the environmental goals are going to be and how much can industry really afford to meet those goals.

Wheeler: And can we expect industry to be candid in confessing error? Would they have told you at the outset that they could do more and be held accountable for more? That didn't happen obviously. They were resisting every step of the way.

Graff: Ultimately they came around. The reason that part of the bill passed was that at least some elements in industry took the view that they would rather have it be regulated with a flexible emission trading scheme than what was otherwise on the table, which would have been "you have got to build scrubbers" and would have been very expensive and probably less effective.

Helly: That raises an issue that I mentioned to someone earlier. At the one end of the spectrum it's clear the government has a responsibility for the human health risk at the end of the spectrum. There's got to be some insurance at a social community level that people's health is not allowed to be compromised, provided consciously by the government, if not by other mechanisms. But at the other end of the spectrum there is no bound. It's aesthetic value that determines where you stop. And what you value in there has no metric. There's no measurement short of monetization. Monetization, as we have heard, is not sufficient to capture all aspects. So the question for the government, and it's probably painfully apparent to you, is how do you pick that boundary. There is no way to pick it. Because we can't set it scientifically, except in a few cases which are notable by exception. The question is in between there, where is the limit? How do you determine that limit and how do you get that information to determine that limit and justify it? It's the justification that is the hard part right now. I don't have anything to offer other than to point out to you something that you already knew probably.

Wheeler: It is increasingly difficult because of the competing demands upon society's attention and resources. Someone said earlier this morning that in a prosperous economy our ability to respond to environmental sensitivity is higher than in one in which we are all strapped and people are more preoccupied with jobs and economic development than they are with maintaining that balance. So it is a moving goal.

Helly: One criterion that is possible to think about is this concept of "commons." If there is a resource that is commonly held in the public trust in some sense, then the government has a responsibility to at least allow a public decision process to determine the judicious use of that common resource. I think that is where the government can constructively do something to put a mechanism in place as well as allow the citizens to decide how to value that and whether to give it up for development or not.

Montna: I think Charles (McGlashan) raises a concept many of us have never thought about. That's the cost of environmental responsibilities and profits. And I think that is one place that industry and government can work together. The famous, much overused, "balance" between environmental regulations with the Endangered Species Act and others has left the balance out of many of those things. Focusing together on what works for both, when you monetize it, may be one way to see things evolving, like CVPIA, voluntary activity and other things. The balance aspect is the reason people have gotten very active on one side or the other. In much of these programs and legislation, many have left out that aspect. And balance is a cost for both government and the private sector. Once you get that scale balanced, it's very difficult to argue that you would have an unsuccessful program.

Wheeler: That comes back to the question of outputs. And maybe that's where we should be, which is by implication where indicators would lead you. Rather than to establish a pre-ordained methodology or a complex of rules and policies. You can't measure success by number of rules and policies. We look at what it is we are trying to achieve and then rely upon these partnerships to get us there in ways that are efficient and effective and respectful of one another's economies. How do you define those? I guess that is the question. What is an optimal balance in California as we confront increased population growth and development pressure? I think once we answer that question, we might turn to the means question. We don't even know what are objectives are.

Whiteside: We might want to talk about who has a long-term stake in California. Because it is a different list than I think we have always assumed. The utilities, for instance, have become very active because their infrastructure is here and they are not going anywhere and they live and die with California. The property owners, both public and private, have need to have a long-term stake in California. Manufacturing doesn't, populations are fickle. Institutions of all kinds, even agriculture I think, increasingly becomes a commodity or an industry or an economic sector that can pick up and go to Costa Rica or farm in Mexico. And I think when we talk about how people feel affected or connected, that we have to start thinking about who actually cares about what happens to this state and for what period of time.

Montna: Include government, Carol (Whiteside), because they're going to stay.

Whiteside: Probably. Although there are days I want it to go.

Romm: It is always encouraging to hear success stories. One can also come up with stories of complete resistance and failure. What are the proportions in this case? How much can we expect from these forms of partnership? In what conditions are they likely to work or not? What are the conditions in which we really have to look for other kinds of solutions?

McGlashan: That's a very good question. There is a growing consciousness in business about the companies who participate in the partnerships, who adopt these new modes of management systems to ensure environmental compliance and beyond compliance strategies. The growing consciousness is that those will be the winners in the long run. But we are still in the early-adopter phase of that change in thinking so there are many more examples and many more corporations that choose other strategies to deal with that issue. They increasingly are being identified as more expensive and less effective to resist or to comply in a reactive manner that is expensive. Luckily, in farming, the opportunity to increase profits by reducing environmental expenditures by partnering, by improving technology solutions and the like, is suddenly bursting onto the scene in the last three years as an opportunity to greatly enhance corporate performance. Again, we are at the very early stage of that consciousness. People are coming out of the business schools are just beginning to be taught that environmental management is an issue. Stanford Business School didn't have a single class in 1991 on environmental economics or management. Now they have three. So in a four-year span, new managers are being taught these issues for the first time.

Romm: Would you expect the same kind of curve here if regulatory pressure were lightened?

McGlashan: It's possible. What is interesting is the international competitive environment is replacing a lot of regulatory pressure. In my personal opinion, I wouldn't like to see it relaxed. What I would like to see in terms of regulatory pressure is better use of the complexity and energy that is spent on 1500-page EIR's. If I could write the EPA's mandate today, I would say set standards for nationwide pollution levels and every year you lower the allowance. That's it. Let industry get there by whatever means is possible. If you just set the standard, and it may be normative and many of us may hate it, but you just set the bar and raise the bar a little bit every year so we are all in the consciousness. We're going to figure out how to get there. We're going to use our creativity and our technological and our financing mechanisms to get us there.

One interesting historical perspective is when the EPA was created in the `70's, there was a very loud response in business that we cannot meet standards. There is no technology, no capability. We don't have the methods to meet standards. So please regulate us by telling us technologies we can use. Tell us to buy a scrubber and we'll buy the scrubber. If you will allow us to do that and consider us in compliance, that's okay. And now business is essentially living with the legacy of that reaction. Now we are regulated on manufacturing process lines, technology choice, a lot of inefficient decisions. If we could overnight in a fantasy world undo all of that and set standards that would equally environmentally protect, that would be nirvana. Now there is an industry available to come up with solutions. And you could slowly raise the bar if you do it carefully. Slowly raise the bar for performance, then technology solutions and management system solutions would follow that really well. I think then you could devote the energy in the public sector on what are the critical issues and get the right stakeholders involved. Focus on here are the goals and we as a society don't want acid rain. Then the debate through good science is, how much is going to meet that standard. Then two years later we may have to raise the bar because we may be wrong today but we can tighten SO2 another couple million pounds. Industry, you figure out how to get there. Regulate that way. It simplifies things.

Morrison: Charles, I agree with you a hundred percent on the industrial side as far as setting standards and letting them meet them. Is there a counterpart way of doing that in habitat preservation or land use? It kind of breaks down for me on that side. Unless you go to something like NCCP (natural communities conservation planning) which is a struggle. Any ideas on that?

McGlashan: I don't have any clever ones. I think the process of decision making could be very similar, though. You decide as a national strategy for resource management how many acres of virgin forest we want nationally. Where are they? And you choose from a national standpoint, politically, what you value. If that gets pushed down to the state level, then the states would decide to choose or don't choose to have virgin forest tracts, this level of extraction from our soils, and so on. And regulate the standard. There will be 5% virgin forest in the United States and that's a national policy, and then let industry-government partnerships figure out how to maintain that. Because industry is pretty flexible. The Nature Conservancy is a master at this. It's a great example of brokering deals to get certain kinds of natural resources in one area in exchange for others. So you actually can create a marketplace for natural resources by setting firm standards. So again, in fantasyland where if I could rebuild it from scratch today, it's the national good balance sheet strategy. We talked about this a lot at the Earth Summit. That there ought to be a balance sheet for nations, e.g., having a 5% reserve of untapped forest tracts. If that was valuable to the national resource strategy, then you allow the market to figure out how to distribute it. If it doesn't work, you don't ever violate the barrier but you redistribute, perhaps. Maybe it all needs to be in one big chunk, or maybe it needs to be distributed to states so that people don't suffer too much. That's the only analogy I can come up with.

Johnson: I think the complicating factor is that natural land preservation, endangered species protection, is more like art collecting than it is pollution control. It's not good enough to have a picture of a woman; you have to have the Mona Lisa. There's not a lot of interchangeability here. And the same thing works out in terms of natural lands. There are some places that are intrinsically highly valuable for biological diversity protection, and those places simply cannot be traded against "like habitat" in Nevada or Utah. It doesn't exist. It really adds a complicating wrinkle to that.

McGlashan: That's true. There are problems with these kinds of decisions, but I would still promote the idea of bringing that level of decision making into the public sector, rather than the complicated reams of data and EIR's and the complex regulation that exists now. It would be great if we could get down to brass tacks in public policy making and say, "I value Yosemite because of the biological diversity it offers as opposed to this tract." Then you get into the meaty issues. What is happening now is too much of our governmental and public resources are spent on intensely complicated issues that the market could handle a lot better. The question is, how do you judiciously devolve federal down to state, down to local, down to private, down to non-profit, the division of labor to maintain that efficient market. Right now we have a legacy of twenty years of environmental regulation where the regulatory process is broken. But the goals and the intentions are still very valid.

Helly: The reason they don't work is the same reason democracy doesn't work. People aren't informed enough to actually run the government. So how do you do that? I agree that decision needs to be brought forward, that part that can't be captured by any other mechanisms, that has to be brought forward because none of those people have the right to make that decision. So by default you have left this piece that only the public can address, so how do you do that? The only way that comes to mind is to compose some sort of committee... unfortunately. Some elected group, if you will, of experts or something, to try and represent the common interest and have the same standing as the commercial and others in the decision making process.

Bollman: It may be that the devolution model is exactly the opposite of what is required. The notion of operating from a land base and a specific resource base, grassroots groups and others. Companies that are attached to the land; who see value in the land or around a particular biological value. Through stakeholder groups setting standards and monitoring the outcomes of those standards strikes me as the right way to go. And then you aggregate. In Oakland you have a complex national picture that cannot possibly be imagined from the top down. What strikes me is we are trying to connect pollution and resource strategies. We may find that rather than using a similar model in both instances we have to reverse the model and have them meet in the middle. And the middle is really where you reach some general consensus and economic rules of behavior that will sustain the protection.

McGlashan: One could almost imagine a situation like the following. If you did away with media-based environmental focus, air, water. Did away with that thinking. And if you, say, had the Mono Lake situation. If it was left to Los Angeles to decide what would happen to Mono Lake, the outcome would have been very different. If you left it to the local community, the outcome would have been the opposite. And maybe there is a procedure where environmental impact is felt somewhere, and then there is some process by which people engage. They hook up to that debate through some kind of central mechanism so the Mono Lake folks would hook up to the debate, LA would jump in, the state of California would jump in and say we have a vested interest in negotiating water issues and the like. Maybe you are right. Maybe it rolls up to the point where the level of interest stops the rollup. For example, it's not a transnational issue so it doesn't go up to a higher level or cross borders.

Wheeler: John Amodio, who has joined us along with Andy McLeod and Rebecca Bendick, all from the Resources agency.

Amodio: I was struck by how several people used the term balance. That suggests we might spend a lot of time trying to negotiate what the balance point is. And when we talked about environmental health and the realm of pollution, I thought someone put it very well that what we have to start with is protection of public health. That's what should drive the standards. Our science and technology informs us of what needs to be done. When it comes to that other dimension, habitat, or for land systems, I think what we are moving toward, as the NCCP (natural communities conservation planning) and others, is using the health of the natural system. Where we don't understand these systems and their complexity, but we are getting better informed, more knowledgeable of the main functions that need to be sustained. Frankly I think endangered species protection is moving from single species to ecosystems. Lastly, I was struck by what Nick (Bollman) said, that is, that in type of approach, we start to get the focus on the health of the natural systems. Then perhaps it's really a bottom up, supported by and assisted by a top down. Relying on science for the health of the system, the output should be in terms of a healthy system, but then you are leaving it to the landowners and local community to devise the best way to achieve that health. Perhaps our focus needs to be on what kinds of incentives, what types of flexibility can we structure into the process to encourage them to be creative and figure out the most cost effective way to get there. In a way that gives them some certainty in outcome and a lower cost.

Helly: On the ecosystem health thing, I'm a little bit cynical about it because of phrases of the health of the Bay and things like that. They don't have any meaning really. Nobody knows how to measure it. But it does occur to me that it is at least tractable to think about in the future measuring the vitality of an ecosystem by what is going on -- its trophic structure, its relationships of energy flow through the trophic systems. That's a very reasonable thing to consider, although we are not anywhere near being able to do that.

Wheeler: Do you mean literally that we cannot measure the health of the ecosystems?

Helly: Yeah. We don't know what that means. We don't know what the health of an ecosystem means.

Wheeler: Would it be possible to define it?

Helly: That's what I am trying to suggest. It occurred to me in recent discussions. I was travelling with some scientists through Europe, as I mentioned earlier. There's a fellow who has a method that can measure an isotope of nitrogen and tell what level of complexity the trophic system, which is the food chain, the food web, exists where that sample came from. This is just for the sake of discussion, an example of how things might be done. Not to burden you with the technical detail. So you could, at least in principle, make measurements across an ecosystem and say what its condition is and learn over time if it is changing or how it is behaving. It is possible in principle to develop these kinds of measurements. But we can't do that now; it's not a well understood thing. So there needs to be some mechanism, if that is an end goal, which I think is a reasonable one. Use the human health risk analog as a nice paradigm for a starting place. What is in between then and now is arbitrary. The question is, what kind of consensual arrangement is there going to be to choose the limits now.

Wheeler: What do you say to someone like Steve Johnson who thinks he is working to protect the ecosystem now?

Johnson: I don't think the question needs to be that esoteric. Again, this is a very anthropomorphic term "Are you healthy?" Well, if we did an analysis of your cholesterol, we may have a different opinion. Basically if it has its parts and its processes are functioning, then it's healthy. It may completely blow apart and become something else. But I don't think a very esoteric analysis needs to be done to determine whether or not an ecosystem is healthy. An ecosystem is always, in some sense or another, functioning. And we have some idea for many ecosystems what kind of natural processes occur and if it has its parts, it's like you. If you have your parts and you are functioning, I guess you are healthy.

Helly: The interesting thing is, a human being is finite. It's hard to determine what are the limits of an ecosystem.

Johnson: I would argue that most ecosystems are finite as well.

Bollman: Isn't this experimental, though? If you can't have absolute and permanent standards, isn't it worth having experimental standards that are reached through fairly simple processes of negotiation around what we do know?

Helly: It's especially useful because it helps you get more quantitative information and when it gets to the point that you have measurement, you can do something about it.

Bollman: If it is experimental, then it goes to the question of indicators, which may be specific rather than general to the particular ecosystem you are talking about.

Walton: One problem has to do with the time period you are concerned with. You observe an ecosystem at this point in time and we don't know whether what we are observing is degradation or cyclic. We'll know that if we wait 20-30 years. I'm thinking specifically of fisheries, since you mentioned that example earlier. An important history right here in California, is the Monterey Bay and the sardine industry, where throughout the '30's and early '40's the yield of sardines being taken out of Monterey Bay, with larger boats and better technology, was tremendous. This was the third largest fishing or canning port in the world by tonnage. And they noticed a downturn in the cycle and the state Department of Fish and Game was very attentive to this, studied it carefully, and was continually issuing warnings about depletion. All the other interests, the canners, the fishermen themselves, were saying this was temporary. Indeed, during the second world war when the cycle went down again, they said it was because of the war. This is because the army is dropping bombs in the ocean. It will turn again like it always has in the past. In the end of course, what happened was the combination of the cycles and the overfishing killed that fishery and killed that industry. We now know that for sure. The scientific evidence is solid now and there was a point where it could have been saved when it wasn't quite so solid. So this is the choice. When do you have to make a decision and you have to rely on imperfect science and make political choices? It's the same issue here with the monetization. If the cigarette companies had to pay the real costs of their product, we might expect different decisions to be made. You can't do the cost-benefit as long as the terms of who pays the cost aren't specified. Coming back to the fisheries, we in practical terms had a very good sense of what was going on. To get a precise sense is to wait until it is all over. Somewhere in there before that happens, the political action has to be taken without full knowledge.

Bendick: One very simple idea for understanding ecosystems comes from Ken Arrow and others at the Santa Fe Institute. The idea of "emergent properties." This concept says that when you get a complicated system that links together a large number of subunits who themselves are not extremely complicated, there are some properties inherent to the system that cannot be determined simply from the properties of the subunits. So when you put something together that is very complicated, it takes on a set of properties as a system that are not based on properties of the units. In thinking about things on different scales, I think it is really important to keep in mind that there are emergent properties related to these systems. If we simply devolve these problems down to their most simple sub-topic, we lose the interaction, the complexity which makes them function. On the other hand, if you look at things on too big of a scale, you lose an ability to address the subtleties.

Romm: I want to return to the link between indicators and objectives, your plea for simplicity, and the virtue of simplicity in public policy. Perhaps I have been involved with the wrong industry. I agree that there is virtue in simplicity and clarity in policy, but to achieve these one requires agreement on intent. Companies will consistently avoid such agreement not because they disagree with the intent but because of the discretion they may lose in their operations over time. As a consequence, we end up with a spaghetti of regulations that is designed to contain activity rather than an agreement on intent toward which people will direct themselves as best they might. I am suggesting that there is something, at least within a certain range of industries, that discourages agreement on intent and fosters a regulatory mess. Within these industries, companies will complain about the mess ad nauseum, but the mess is a result of their reluctance, and perhaps their incapacity, to commit to a shared vision.

There is a related issue here that has to do with movements of capital and companies' abilities to respond to incentive changes that originate in national and international markets. How do we know when changes in financial context become such that corporations, however beneficent, need the discretion to beat an agreed intent to death for the sake of the bottom line? I raise this issue because I have found in my field that simplicity has been fought most by those you would think it will most benefit.

McGlashan: You are absolutely right. My example early on of creation of the EPA and regulating environmental performance became technology-based because there was the reaction against setting standards, which would be far simpler. Now 20 years later we are choking our own environmental industry to death vis-a-vis the Japanese and Germans from an international competitive strategy standpoint. We can't spawn an industry as well as they can because we are stuck in the legacy of resisting simple standard-setting. You are absolutely right. That happens all the time. It is true that if you have to set normative standards and set normative policy at a national level or even a local level, it's hard because you have to say stuff to each other that is hard to hear and hard to say. Because you have to put value on. Again, just to use forests as an example, somebody somewhere has to say these things are valuable. Then somebody else says, "But my job is at stake." That's a hard thing to work out in a political spectrum. It all boils down to people. What do they value? In the end, because we are in a democracy, that is the best we are ever going to get.

We have lived through about 25 years of this environmental legacy; it is pretty young science. As we live through that, more and more business is coming around to the idea that they can solve the problems through either technology or good management practices. "I can save a lot of money. I can harvest a better return. Maybe I don't need to fight so hard. In fact, if I get with the program and become creative about tradable rights on air emissions, as an environmental officer in my company I can contribute to the Treasury Department some tax savings." This is a strategic issue. So there are new policy paradigms coming into corporate management minds for the first time, and it is three to five years old. It is brand new stuff. So I am hopeful that if we start to shift the policy debate toward absolute standards, at the same time management education enforces the concept that creativity and ingenuity can meet the standards. You don't have to spend so much of your money and time and legal fees on fighting. Get with the program and solve it. And more and more companies are adopting that as their core culture. 3M is a great example of jumping in and using environmental positioning absolutely to its advantage. They are saving millions of dollars. They are early adopters of the XL pilot program. They estimate $3-5 million per plant per year. They have 180 manufacturing sites in the United States.

Helly: Is that because they aren't paying fines, or because they are being more efficient?

McGlashan: Both. They are going to eliminate fines. They are going to get a more flexible covenant in terms of how they are regulated. Hopefully, if things go well and if it is adopted and the pilot program succeeds. The idea is through greater flexibility they will solve the problems more cost effectively because they will have more variety in technology solutions. Twenty years ago, though, other companies argued vehemently against that approach.

Helly: The paper by Steve Meyers that was sent out made kind of a counter-argument. It was stunning to me to see that paper because I hadn't heard anything about it. It would be remarkable if it was really solid and true. But it kind of flies in the face of this notion that seems untrue, at least in my experience, that if the regulatory environment is taken away, companies would comply so eagerly.

McGlashan: Let me make absolutely clear that nobody is talking about taking away the regulatory environment. There is a huge environmental advocacy movement that would never let that happen. Nobody at the federal or state level is talking about taking it away. And I would argue because of the theorem of market failure, you can't. Because again, if you don't monetize public goods, there is not a response in the private sector that can deal with that issue. It has to be monetized. It has to be forced into a spectrum that managers will think about it. But given that as the goal, there is an unbelievable new variety of tools that you can use to monetize that policy. And that is new science. What I am saying is there is a lot more flexibility than people have thought there was heretofore because of the traditional view that the companies will fight, they won't agree, you will have to regulate what they do and prescribe technologies for them to use. I would say you can back up a step, set a standard, and let the marketplace figure out how to meet it. So it's kind of a compromise.

Wright: To be clear, we are talking about setting performance standards and giving them flexibility to meet them any way they can. On the pollutant side, pollutants and resources, those companies by signing up know ahead of time that through their processes they can meet that target. The problem is, for example with zero emissions with cars, the government tries to set the performance standards and the industry is saying "we can't do it." They're not going to ever agree to the standard unless they are convinced ahead of time that they have the tools to make it, which is why they are now resisting the zero emission requirements for automobiles. We have the same thing in the Bay-Delta where we came up with a nice indicator of the percentage of salmon that make it through the system. We said, "Let's just set that as the standard and then leave it to the water projects to figure out how to manipulate the system to get there." The water users said, "No, we don't want a performance standard. Let's build a barrier, let's do this and let's do that. We know that will help. Let's try it." Because we were comfortable with that as a best management practice approach that says nature is too uncertain for us to agree to any kind of a target. And I think that is the big problem in terms of translating this from pollution where the goals, public health goals, are pretty much agreed upon. It's only a matter of who is going to bear the burden and how long is it going to take? To the resource side, where there is no agreement on the goals and there is much less information on what it is going to take to get there, because the natural system is not so clear cut that you can do the kind of trading that you can with pollutants. So the real challenge of what we are trying to work toward in our ecosystem based projects, is to try to get the group or community to work collectively to decide what vision they have and then work jointly toward that. But that's a difficult challenge.

McGlashan: Even on the pollution side, getting the Clean Air Act through five years ago or seven years ago was brand new, totally radical. So without sounding trite, I would argue that we can use better methods of pollution management as a model for resource management if we are aggressive about our capability to solve the problems. I think you are right that since it is a much newer science, a much newer policy problem we face on the resource side, it will demand stakeholder groups like this one to get together, and include more of the voices that aren't here, to get active about what is it we value. If I could set the stage in my fantasy world, I would prefer a focus on forcing us to think about standards. Not in the best available technology, because I think that is a copout. In the long run, 20 years from now when the science catches up and the business management catches up, we're going to be living in a legacy of barriers and dams and things we don't want any more but regulations have forced us to do things that aren't market efficient. Rather to face it hard on and have the difficult task of sitting around the table and saying here are the standards that we need in our community or our state or whatever. It's a harder job and it can be frustrating because you are moving a behemoth slowly through it. Twenty years from now you get a much better return on investment. There are many examples of that in business.

Montna: Mr. Secretary, you asked us about objectives. I want to ask Charles if he thinks every corporation in this country has an environmental toxicology item on its agenda or on its chief financial officer's report including environmental action as it relates to profits. Have we gotten there when we have done that, through the business schools and coming bottom up as part of the ethics side in our learning institutions in this country? You talk about global standards. We faced that when we shipped two years ago 500,000 tons of rice to Japan in an emergency situation in Japan when they ran out. We never have been tested so much in our life on food safety. And maybe that is the ultimate goal out here is public safety. Do you think we have gotten there? Do you see that addressed as part of the corporate culture?

McGlashan: No. It's just beginning. I think that it's similar to the quality movement. Twenty years ago corporations had a quality control department at the end of the manufacturing cycle. That department in large part is gone today, and that started fifteen or twenty years ago. There are still very active EHS (environmental health and safety) departments in most major corporations. And actually even that isn't ubiquitous. There are still companies struggling just to set up the environmental health and safety group to monitor environmental compliance. Then the cutting edge group is starting to dismantle this group and turning it into an advisory group for their core manufacturing or resource management people. We are just at the beginning of management theory that addresses how to manage environmental issues. Because until the late '80's or early '90's it wasn't monetized. It really didn't get monetized until all of a sudden people started saying, "Wow, regulation is incredibly expensive. I can't afford not to comply because my stakeholders, i.e., my customers nail me if I don't." So we're just at the very early adoption phase. When I talk to CFO's, most of them have no clue what they are spending. Most of them haven't gotten on board the environmental thing.

Montna: Tom Graff will give you a totally different perspective on the other side of the costs from EDF's (Environmental Defense Fund) perspective. I'm not speaking for Tom, but there's a cost of the environment impacts that corporations pay. And somewhere in there is an area where we can get together in coalitions. That's how we (in the rice industry) have achieved what we have achieved. We have worked with TNC (The Nature Conservancy) and others. We have even worked with Tom on occasion, and we were a hundred miles a part years ago. A lot of people have a lot to bring to the table if we just listen to each other. I think that philosophy is what we are talking about. I mean it's getting people of very opposite views to agree.

Wheeler: I want to return to the forestry question because of something Jeff (Romm) said on this. It is, in lots of ways, the closest analogy we have of a regulatory environment in the resources area. We are without definition of an objective, we are mired in regulations. We have an industry that has both environmental and economic values to the state, but we have no agreement on the balance between those objectives and this has profound effects in the long term on the state's economy. All of this has to do in large part with our failure to establish the standard. What is it that we want out of the state's parks? Everybody will say, Jeff, that sustained yield forestry is the objective. But the industry is not prepared to accept that as the objective, or at least not to implement it on its own terms. So the effort of establishing an output standard or performance standard has failed. And what they have said to us, if not directly than certainly by implication, is regulate. And then they will complain about the effects of regulation. The consequences have been disastrous for the industry and for the communities that are dependent upon the industry. And four or five years into a serious effort of attempting to resolve that, we have made virtually no progress. If I had one resource issue that might be central to our discussion of all of these issues, I would have to pick that one as an unsolved problem that is essential in its importance, both economic and environmental. What do you say to that?

Mantell: So has anyone even tried sustainable harvest?

Wheeler: Do we have an agreement on sustained yield forestry?

Romm: No. We have an agreement that sustained yield is a good thing. But what it is is whatever the owner wishes it to be. That is how the law is now interpreted. The essential point is that `sustained yield' is a relative, not an absolute, concept. It is relative to stocking level. It is relative to the character of the forest that is sought. It is relative to the area and to the time horizon within which balances between growth and harvest are assessed. If there is no fix on these variables, then there is no capacity to measure sustained yield on some standard basis. If these variables are entirely discretionary, there can be no public standard.

Wheeler: If we cannot agree to that as an output and balance the environmental and the economic components, how are we to deal with any of these resource issues?

Romm: That's why there is a fairly big fight over this.

Wheeler: It makes water quality and air quality sound simple. Because as Patrick (Wright) said, there are precise measurements of individual pollutants and we can modify those depending on the cause and effect relationships. This one is at its base is quite simple, the notion that we should be able to find that level at which a forest will sustain itself and provide us both with economic and environmental attributes.

Helly: That's typical of all ecosystems. Ecosystems change over time. They don't remain static. Some of them die, some of them are born, some of them remain in place for as long as we can measure time. The arbitrary question is if we are going to pick a criterion and say pick your favorite time, and that is it. That's a snapshot of the baseline that you are going to refer to and maintain. That's as arbitrary as you get, but I don't know how you pick a better criterion other than saying something that is observable. Otherwise you are going to make it up. If you observe it, you are better off at least in an ecosystem sense because it is at least viable in nature. The question is, if you maintain it is that natural? That's a whole other question. But it is probably irrelevant in maintaining a state's resources. In Europe there are entire countries that have been managed for centuries. And managed successfully. They are viable, they are intact, largely because they were a small amount of property compared to what we are faced with, and under the control of a small group of people who had a scarce resource and they wanted to maintain it successfully. That's kind of the key criterion someone said earlier, "Who are the stakeholders, the people who have a long-term interest?" Those are the people, at least in this case of the sustained forest, the people who are in it hundreds of years, families maintaining the same forest. It is a different situation when you have corporations managing a forest.

Johnson: It is also a different situation in terms of who are the stakeholders. In the case of California's forests, natural biological diversity is a stakeholder. Far more so than in the managed forests of Europe where the biodiversity that was sensitive to that management practice.

Helly: Yes this was before there was a concept of biodiversity.

Johnson: So it's gone. So it's a very much more delicate set of balances that have to be achieved because one of the stakeholders is a little bird.

Helly: The problem is, you don't know if that bird would be gone in ten years anyway. That's the problem, a serious scientific problem.

Lawrence: To paraphrase, when you talk about a forest, you are talking about a fiber product. Then on a different issue when you are talking about fiber products you can go to this wonderful example at the end of the table here and turn it over to an industry. You can plant fiber trees like bean rows and you could generate all the crop you need to provide a substantial amount of your fiber product. When you are talking about forests, you are talking about a whole different realm.

Romm: One of the real issues is that the scales of systems in which we operate are always multiple. Any private forest in California is carrying debt that is controlled by forces beyond the state. We can look at the structure of the forest as the imprint of that debt, not as the consequence of rational decisions about ecosystems. Even localized management must deal with that reality. We have sought means to buffer the forests from such pressures, but were unsuccessful. Until we can deal with this problem, most companies are not in position to commit themselves to a particular standard with which they may not be able to live. I think there are more pernicious issues, but this is a fundamental one.

Wheeler: How is that any different than the question of the land development company that has mortgaged its assets? They are looking for a balance, notwithstanding that issue which is essential to them and essential to the economic viability of the project. They haven't said, "Well, we won't agree to a solution that doesn't resolve our debt problem." Whether that is present or not, it seems it would be possible in forestry as in land development to find an appropriate balance. To find a carrying capacity at a sustainable level of development that enables them to operate profitably. But at the same time that protect those values that distinguish a forest from a fiber farm.

McGlashan: It's a little tricky, that analogy. The development company is selling an integrated lifestyle. As an example, development within a natural tract, open space. In most cases where you have a debt-levered fiber processing company, that is the problem. That the expanded definition of a forest does not apply. It is board feet, and it is cut and dry.

Wheeler: We fail to monetize these other values?

McGlashan: Right. And so that's the case where I would argue that the private sector cannot provide the creative solution to that issue unless it decides to monetize the value of its employees having long-term access to that forest in a sustained livelihood. But if that goes away because of debt considerations, you lose it. And of course we've seen examples of that right here in California with leveraged buy-outs causing that change in behavior radically. That's a case where I would argue the state as a whole has to step in through access to a broader group of stakeholders and say there is an inherent value to keeping this untapped.

Wheeler: We've said that in a very complicated regulatory scheme which is not yielding the desired results.

Mantell: For the environment or for the economy.

Graff: There is one issue that nobody has brought up but is really dominating the debate in Washington right now. Assuming there is public value, whether it is a little bird or a spotted owl or whatever it might be, is the appropriate way to assure the public values are adequately protected to regulate and pass the cost of protecting that public value on to the private entities involved? Or is there an obligation for the public to buy the protection? You would get protection if you paid Pacific Lumber enough to value spotted owls more than you value board feet, and start counting them.

Helly: The problem is that's open ended at the other end of the spectrum. The companies can claim, I have this privilege...

Graff: I'm not trying to come down on one side of it. I'm saying it's not obvious that the only way to do it is to be a policeman, because as Michael (Mantell) just said it often doesn't work well.

Lawrence: How many decisions are made in corporate board rooms where the local economy isn't jumping up and down at the impact on their communities, because of what is going on in the local timber industries? Some of those decisions are being made in the corporate board room that have nothing to do with that local community. How creative are the questions as far as altering the industries in the forest? Whether it is a fuel reduction program, which is a big issue in itself, or whether it is small industries making furniture out of forests, or the biomass of the forest. It's just not a matter of whether you cut trees and save a job or not cut trees and lose a job. None of these issues are that simple. The forestry industry is an example of something that is not a simple issue. Are we asking all the questions that need to be asked and do we have all the information to know what it is we need?

Whiteside: I think we are all skirting this issue which is the hardest for us, nationally, in terms of caring about resources, and that is that we are all in conflict between what we now know is a community interest in the management of resources, and what we increasingly see as a private-sector, market-driven, personal-property-rights, I-can-do-whatever-the-heck-I-want-to-because-it's-mine kind of conflict. I wish Kevin (Starr) were still here. I don't think that historically any country ever has assumed that ownership carried with it inviolate private rights. And yet that is the debate that we are trying to frame right now in this country, which is contrary to any kind of organized society ever. There has always been some obligation to the community, even though we have allowed some degree of ownership and some degree of private rights. I think it is sort of the big unspoken question that we are all wrestling with.

Lawrence: That goes with the commons, the public trust,... our community. When you sit down at the table and you are talking about your own unilateral involvement, that's a different tone of debate. If you are talking about what's good for your community, you are talking about something that is beyond yourself. That's why we have to get back to this community-based conservation. That brings in the larger values. We've got too much of this in-your-face age we are living in. I can do as I damn please and to hell with everybody else. We've got to break down some of these attitudes before we can get down to an intelligent and informed debate. Some of that debate is being fueled for a lot of other purposes. That is another whole issue.

Whiteside: That's part of the public attitude that has created the lack of constituency that is a cause for what we know as the change in environmental values as a society in a very short period of time.

Wheeler: It will widen the gap between the public and the private.

Bollman: I am in favor of community-based negotiations. But isn't it the case that one of the disconnects that we are struggling with here is that the community itself in the forest doesn't have the power to monetize the environmental values that they are seeking? How do you get the other stakeholders to the table? Not just government, but other stakeholders into the community dialogue who have the power to monetize. People who invest, for instance in the long term. Venture capitalists. People who have alternative industry interests that are compatible with sustainability. They are not at the table yet, they are in the future, people thinking about it. But there isn't a way to get them at the community table.

Johnson: I think that is a very good point. Going back to the timber industry, if you look at the ability of the local community to address simple issues such as workplace safety, and pollution caused by mills right in the vicinity, by and large they haven't been very successful in dealing with those issues on their own. It has required the involvement of a broader community. I believe in community involvement and I think this includes the community of not only people who live there, but people who are interested and involved and consider themselves stakeholders even though they may not even live there.

Lawrence: A current example is the Quincy Library (consensus) group. The jury is out on a lot of what they are doing, but they have the potential for addressing that. Putting a dollar value on it is something we all need to get a handle on. I think that is incredibly important.

McGlashan: Again, just to allude back to an earlier point, the best global companies struggle with this issue. They have to monetize corporate strategy so it translates into bottom line language they understand internally so they can make decisions. The ones that are really good at it integrate local stakeholders with a transnational viewpoint. Because local forest management doesn't necessarily meet national objectives for a healthy national balance sheet, for example. There are good analogies in internal corporate management strategies that might be useful to us. To generalize, I think it really boils down to which decisions go local, which decisions go intermediate, at the division level, so to speak, and which ones are high up. It really is kind of a question of value. It ultimately boils down to people arguing in conference rooms, making decisions under total uncertainty. Businesses are making these decisions all the time, with lousy science, imperfect science. They don't have good information. They do the best they can, and then they have to guess and go. Then it becomes the question of, "we are going in this direction and we are going to rely on implementation to make this right." A good entrepreneur will make a market for his product even when the research says nobody wants it.

Whiteside: I thought government was the only one doing that.

Florian: No, government never makes a decision.

Wheeler: It will be "guess and go" from now on, Monica.

Graff: Since we were talking about rural things, I want to go back to the comment Kevin Starr made in his original presentation of the desirability of increased urban density and trying to apply the community decision making model to that. I live and work in the Rockridge District of north Oakland which is now being held out, due to College Avenue commercial striplets, as sort of an ideal urban location. From many points of view, the right future for that community from a regional perspective, both subregional and big regional, is to increase density. There is a BART (Bay Area Regional Transit) stop right there. But the local community, the homeowners association in the neighborhood, doesn't want increased density around the BART stop. So which community is the right community to decide that issue? It just doesn't impact us, it impacts Modesto or even beyond. If you can't increase the density there, you are going to spread the sprawl.

Florian: Early on in this discussion, several people talked about this whole concept of sustainable development, which in paraphrase always turns out to be higher density, concentrated and all that. Which makes an awful lot of planning sense. The problem is it isn't acceptable to the community where the density is supposed to be. But beyond that, it isn't acceptable to the people, as the developer, the people who you would like to provide a house for. In the past the government, has frequently done this in a regulatory way by preventing building here and forcing densities there. It may be, more than any other example we have talked about, about how you have to change public opinion. Because if the market demands high density housing, that's what will be built in the state without any laws to make it happen. You have to get a whole lot of laws changed to allow it to happen. You have to change those laws that prevent it. I think you are saying a lot of the environmental movement believes we have to concentrate these things, but the people here don't want to be concentrated. So how do we get that? How do we deal with that mismatch?

Bollman: Monetize it.

Florian: That would be true if there were a political will to charge people what it really costs to spread out things and drive their cars and do all of that, then it would. That's in your fantasy world, maybe.

McGlashan: Another good example to take a peek at, highly successful in a few limited cases, is natural resource damages assessment (NRDAs). Essentially that is valuing natural resources. Accounting firms and economists have been struggling with this since the advent of RCRA. And there are for the first time some agreements being made about value. I'm sure it will be debated for quite a long time, but that might be an example of a situation where some hard decisions were made about monetizing the value of natural resources. Picking a state, agreeing to raise the bar as needed in the future and changing it in the future as needed, but getting something and moving forward. And now settlements are being made on NRDA's that are being done.

Whiteside: Are you talking about unextracted resources, or resources as potential investments for future extractions?

McGlashan: It would be great to extrapolate it to that. Right now the examples of NRDA situations are where natural resources have been damaged in some way. The question is what was the value and what should compensation be made by the responsible party. That has been held up for twenty years.

Johnson: Compensation to...?

McGlashan: To the public, essentially, for regulatory enforcement actions, usually at the state level. I think Michigan and Massachusetts are two early adopters of some, imperfect but let's move it forward, types of agreements for getting this process underway.

Helly: That implies that there is some system for how to measure damage, implying you picked the point at which something was defined to be pristine or a baseline reference.

McGlashan: That's the thing the private sector tends to be more comfortable with. The acknowledgment that the parameters used in our decision are woefully imperfect. We have to use them anyway, so let's get on with it. One of the things that's difficult in the public sector is we wait for good science to get it all figured out. Meanwhile the fishery dies. So there may be some leverage from the private sector to say we have to get agreement. That's the hard part. You have to get right down to the basic issue, which is perhaps a property rights issue. Basically agreeing that here's what we have now and we're going to raise the bar in the future. Use the indicators, the best we can do.

Helly: Often it is the case also, to be fair to science, that things are not listened to. The case of the cod industry. The science was there 25 years ago. It hasn't changed and it has always been true. People had to wait until it happened.

Lawrence: There was no political will to address it.

Whiteside: There is no political leadership without followership. I must say that a thousand times. Without a constituency, we will never get political leadership. Everyone wants some political leader to go off and do the right things. In reality, you have got to give them a political underpinning to make that mandate viable.

Wheeler: Spoken like a former mayor. Al (Montna), we haven't talked to one very important resource. I know it's not as relevant immediately to the northern Sacramento Valley as it is to the Central Valley, but this question of ag land loss has for us in the state profound implications -- economic and environmental implications. It's another of these questions where a local decision might be different from a regional decision or a statewide decision. We all value the public good that is represented by that industry and that resource. The decisions are inherently individual decisions. Whether to sell for development or not. But as we look at the trend of development in the Central Valley, and the threat that it represents to agriculture, is there something that we as a state, public and private, should be doing?

Montna: One inherent problem, Mr. Secretary, is that they always say if you scratch a farmer you will find a developer every time. That's probably true because the monetary benefit is so great. Looking at it from the agricultural side, there's no leadership. There's no set policy for land use in this state. There is no set policy within communities. You find people all over the map. It becomes personal. Families split over the issue and so forth. We don't approach the use of that great resource with any clear direction anywhere in California. You see large developments like Irvine have a master plan that is a whole state in itself almost. But generally there is very little leadership on the direction we should go on land use for agriculture or for the community. And that's greatly needed. I think we are missing a tremendous bet. I think agriculture and the urban community work very well together. But there are communities in the Central Valley where they are continually fighting. They are at odds, and that doesn't bring good land use. And what drives the use is the money. You see great swings. A community starts to die and they bring in industry. They bring in homes. They get healthy and they want to go back to this pristine open space. But when they start dying again, it's time to develop. And there is no sustained plan to keep the community healthy but still keep its land.

And who pays the price of that land use? I continually find people willing to keep the land in a pristine condition at my expense for their benefit. And that's very nice, thank you, but that's expensive. And so there's a discussion of selling development rights. That hasn't worked. They have a habitat conservation plan right here in Natomas Basin where developers will have to keep land in some kind of wetlands, according to the plan today. Before you develop one acre you have to buy this right from someone. And that's another way to do it. But it's not going very well right now. It's expensive. So there is no clear pattern. There's not a cookie cutter approach anywhere in the state of California. Everyone has their own idea and it drastically needs leadership, probably coming out of the governor's office, on how we approach this land use. We have some of the greatest minds in this university and in other places, just in business, who could certainly help forward this effort. But it's not there now.

Wheeler: Is it an issue where the benefits can be or are being monetized. That is to say, agriculture might make its decisions based on its perception of the bottom line. And if we allowed for the market to make those decisions for us, as we have in the past, what results could we expect?

Montna: There was an attempt in Sutter County. Maybe you saw it. A 22,000 acre plan for a city that was developed by the supervisors of Sutter County. They called it Sutter Bay. And the grand plan was they were going to develop this city just north of the Sacramento County line, in the Natomas Basin. Some people would develop and some would sell their development rights. It was clear to those that were going to be selling their development rights, that they weren't going to be making as much money as the person who would be developing. So that in itself blew up. And there were farmers sitting there saying, "I want to farm forever and that's just fine with me." Then they put a pencil to it where the guy that was going to develop was going to get $5 per square foot, and they were going to be getting maybe 50 cents a square foot and they were going to be locked into farming for their families forever. That didn't work. I don't know what the answer is, but there has to be, through the planning process, a way the ag community and the urban community can work together to develop long-term sustainability for both interest groups. That idea seemed great at first, and it just didn't fly. And that was the most innovative I've seen in a long time. That was a master plan for 22,000 acres, integrating agriculture in an urban community.

Wheeler: Is there an awareness of the kind that you just expressed within the ag community that this resource is at risk?

Montna: Very much so. When you see land continually disappearing. I think the greatest tool so far has been the Williamson Act. It allows you to enjoy land taxes at ag rates even though you may have a major subdivision. And you are locked into it for ten years. It would be nice to have a policy statewide where we could target these areas. Look at Los Banos. Look at some of the small ag communities now where people are commuting to San Francisco and the Silicon Valley, living there because of the price of housing. Those small communities like Yuba City have just exploded. Woodland. Even Davis. Davis has resisted this better than anyone, through strong controls. But there is no uniform policy. It has had tremendous impact. When you increase densities, you increase costs. People will go where it is cheaper: Modesto, Los Banos.... But we need some leadership in this area, because it is not working. And land is disappearing very quickly. Sometimes some of the best land. The community I live in, because the sewer was there, they developed all the class I soils. Because they could plug in the sewer. So you use marginal lands to farm and you build the houses on the class I properties. That doesn't seem like a solution. You never recover that. You never get that back.

Wheeler: Someone mentioned earlier, maybe it was Carol (Whiteside), that this land resource is a fungible resource. Maybe agriculture will pick up and leave California. Is there a future long-term for agriculture in California, or will we grow crops in Mexico?

Montna: I think there is a tremendous future here. We have the resources and California makes a good farmground. We virtually control the quality of the environment. We have this outdoor laboratory. My friends farm in Arkansas, Mississippi, and Louisiana, and they have to deal with all kinds of weather problems that we never touch. I think it has a very long-term future, but it won't happen without real strategic planning. Keep us working with the urban as a friend and not an enemy. There are communities in this state right now where people are literally towing water wagons behind their implements to keep the dust from going into communities. And spraying the ground so there is no dust. Those kinds of things are happening and we all need to be better at this integration.

Wheeler: Let's take a short break. And then when we return, to force the focus a bit, I think we'll conclude by going around and asking each of you for one central theme that emerges from this discussion that we ought to carry forward for our planned public discussion of these issues. We'll see if we can from those responses get some sort of consensus about top priorities.

BREAK

Wheeler: We are going to impose a little regulatory leadership here. To ensure that we get at least a couple of succinct ideas, let me restate what I said at the beginning about what UC Davis and the Resources Agency expect of this process. We will edit and publish a proceedings of today's discussion, which we will forward to you for your comments and to others who may be interested. Then we intend to use this discussion as the springboard for the development of a conference which is intended both to provide some better understanding of the state of California's natural resources and the trends of resource protection and utilization toward some yet to be identified goal. Taken at face value, that would be difficult based on this morning's discussion, but nonetheless to show whether we are making progress or not on a periodic basis. We could establish a benchmark and then determine whether it is, in fact, correct and adapt management measures as required. So that the next phase is going to be the public discussion of these issues, very much influenced by what has been said here this morning and this afternoon. Then a publication which embodies that meeting and the establishment of these indicators or something like them which would enable us to reconvene from time to time to see if that is happening. There is a whole lot here that may or may not materialize, but I think we are off to a good start. What I would like is just to have one thought from each of you on what you took away from our discussion that would be the most useful in shaping that agenda for a state of the resources conference sometime in 1996.

Bollman: I take away from this discussion the notion that it is worth exploring, in a lot of different resource-based fields of interest, that what we need to build the political will for setting and monitoring standards is community-based negotiation involving all the stakeholders from the community, plus the regional, state and perhaps national stakeholders who bring to the table the power to monetize, and therefore support, the results of that stakeholder process.

Morrison: I was struck by what Charles (McGlashan) had to say about the best of class multinational firm where they really have figured out how to be local yet still maintain a consistency throughout their organization. I think that kind of a model could be built upon. The other thing that really struck me was the story that Steve Toben told about Utah, where they brought in an outside facilitator which presumably raises awareness at the local level about some of the issues they really should be thinking about. I think that was a great story.

Reid: I was taken by Al Montna's call for leadership in deciding how to deal with agricultural land. I'm struck by the problem of doing that without commercial costs, and the question of how such leadership might be developed is an interesting question.

Lawrence: I think Al's example was absolutely wonderful, as well as the example of the group in Utah. And there are other examples. I think these are models that we need to build on. Because I think these are examples of how we are going to get this solved in a good number of ways. Particularly I like John's (Helly) comments about getting back to a discussion of "the commons" and the public trust. I think somehow to get to these larger values and build this sense of community is most important. I find myself consistently using the same terms I use locally, because that's how I get a lot of my message out. In building our communities, bring them around the table. To put it on the need side: If I could plumb Charles's (McGlashan) brain and put it inside of mine, the poor county supervisor, I'd feel enormously good about myself. It is exactly the kind of information that I think we need to have, the specifics. Because people today can relate to something this concrete, because that is mostly how they have related their life. I think you need to take those arguments and be able to move it out to the larger picture. We have to be able to keep pushing this out. It's part of living in the changing times we are living in. We have to move this stuff forward. And I thank Doug and the Resources Agency for doing this. It is an outstanding opportunity for me as a county supervisor, as well as the president of the (Sierra) Alliance, to hear this kind of discussion. It helps me an awful lot and I want to thank you for that. I do particularly like the sense of commons and the public trust. Somehow we have to be able to relate our issues to the larger community involvement.

Pendleton: I really concur with the emphasis on local process. To elaborate on that, based on my own involvement in several local consensus processes, I think a lot of the success of them depends on how people can come together and mutually agree on the data and on the scientific basis for what is being undertaken. I agree that it is much more difficult in an ecosystem context than it is in terms of pollutants. One promising model for this is some variation on the work of Paul Sabatier on this campus. His advocacy coalition model, in which you bring scientists together on an issue, but scientists who have different perspectives and represent organizations with different political and environmental perspectives. I was recently on a committee convened by the Board of Forestry to offer some suggestions for standard setting for protection of wildlife habitat. The essence of our committee recommendations was that a standard setting process ought to be pursued with something like our diverse committee (which represented the university, Berkeley, Davis and Riverside campuses, and also Resources Agency departments, federal agencies, the environmental community, and the timber companies, including Bob Taylor from California Forestry Association). The committee came together with consensus recommendations. One of those was to pursue the same sort of process on the local, regional level. We emphasized that you have to begin somewhere with establishment of indicators to have some standards to go forward.

It was interesting to me to note in the EDF paper just passed out, criticizing the eco-optimism in Gregg Easterbrook's new book (A Moment on the Earth), that Lowell Diller from Simpson Timber and Gordon Gould from the Fish and Game department are presented on opposite sides of a particular environmental issue. But they were both part of the committee I refer to, and they worked together in drafting the consensus report and recommendations.

One additional comment is that I was struck by Charles McGlashan's comment about the enormous energy focused in industry now on collecting data and on assessment processes. I think there is an analogue in the resources agencies now. It strikes me that one action that could come out of a meeting like this would be a more systematic and explicit partnership in those assessment processes. In CERES, the state's evaluation system, for example. It is being done to some extent, but I think it is piecemeal. I think industry that has an interest in doing these same sorts of things, joining together with agencies and universities in developing assessment and data management systems would be very helpful.

McGlashan: I found today's discussion fascinating, and I am encouraged by the sense of willingness in this group and in others that I have worked in to promote the idea of working in partnership. It seems to be an increasing phenomenon that is seen as valuable in the private sector, in companies who want to perform at best-in-class level, more and more willingness to participate in partnerships. Even though it feels agonizing and slow moving for a while, in the end you reap better benefits.

The other concept that I am intrigued with is the idea of property rights. Carol (Whiteside) alluded to that briefly. I suspect political scientists will look back on this age fifty years hence as an incredibly interesting time in our nation's history. With Kevin's (Starr) introduction this morning, talking about some of these dilemmas, monetizing externalities in some cases, and monetizing public good. I think ultimately it is going to boil down to who owns it. Is it my property if I am sitting in it, or is it the public's property to keep it pristine? And I think that will directly affect how the rollup of stakeholders happens. Who does the water in Mono Lake belong to? It's a fascinating issue and we have been steadily increasing a sense of public ownership for the last several years and through many congresses, and suddenly we are shifting gears at the national level, due to justifiable frustrations with some of the regulatory processes we have used. But I think this is going to elicit a fascinating debate about how do you monetize. A lot of that depends on who owns the property to begin with. And does somebody have to pay somebody else for utilizing it. That will be a fascinating issue to live through for the next decade or so.

Domer: A couple of things if there is going to be an agenda built from this. The stress point on the multimedia approach is kind of an underlying theme. Everyone working together but looking across, as we call it at the EPA, media. You know, an EPA problem is sometimes a water board problem or a waste board problem. So looking at all the pieces put together instead of one single piece. Then a point that Charles (McGlashan) brought up as well as Patrick (Wright) is setting the standards but being flexible in your approach. It allows us the ability to come up with a solution to a problem in different ways that fit different parts of the state, but we're all at the same standards. I think these are two good points. I think we mentioned the resource management area and the quality area, and those two pieces fit both and can be tied together sometimes.

Wright: I would encourage further discussion of the respective roles of the state, federal, and local governments. Clearly it is something that we are asking ourselves every day now. Congress is focusing on, as we move further away from strictly relying on command and control and work more toward these other approaches, what is our role? Is it just to provide money? Is it to provide hammers in terms of regulations? Is it to provide technical support? It's still an open question.

Whiteside: I have a thematic speech that I have been giving lately called "Smaller Government, Stronger Communities." And I think that as we talk about taking down the regulatory environment, there has to be a simultaneous buildup at the community level. So I think part of the underlying discussion today is the fact that there is a real mismatch between a single-focus, hierarchical, vertical structure in the regulatory agencies and a horizontal, integrated different kind of structure for decision making at the local level. Somehow we have to find a way to bring these two into greater convergence so that people feel that they can respond. Because we all understand where the mismatch is and we have to figure out how to collapse them together into some sort of common action for some sort of successful result which I think is the concern that everybody has.

Florian: I like to think that there would be benefit in trying to pursue more how resource protection issues in general can compete with other social and economic goals in this era that we are in. There are very limited resources, not just financial but political and human energies and everything else. And within that, since I have Tom Graff's proxy, I would say where does the money come from? And who pays? Carol Whiteside was talking about the horizontal structure and then the integrated local government. I thought you were going to say that maybe this is another mismatch, that you have a horizontal regulatory structure and an integrated environment.

Whiteside: Right. Vertical regulatory.

Florian: Vertical regulatory but the environment as well as the local government is vertical and that's a real mismatch as well.

Montna: I've learned a lot today, Mr. Secretary, I want to thank you. I've acquired a lot about conflict today, and there is no real resolution for some of this conflict. Timber, some of these places, and monetizing, quantifying what this cost is. I think this will be very important as you move through, both from the government and private sector sides, monetizing these costs to all of us. Environmental responsibility or resource responsibility. And that there is no clear plan for the use of resources. We talk about land planning, ag lands, urban lands, as an overall theme. Hopefully the Agency can be the leader in that. I know it's an item the governor committed to a long time ago. But I think it is best addressed through coalitions, of odd bedfellows.

There are a lot of success stories just around this table. The Irvine Ranch, what they have done there, and the Foundation with their resources. And many others. Those success stories have a lot of great ideas. Even in timber, some of the people you were talking about, the families that owned them before were models of environmental responsibility in the redwood forests. That has changed as debt has come into it, but there was a success story back there somewhere. And some of the current firms are very successful at it today. So there is a wealth of leadership, with government being a facilitator in this.

It's very rewarding when Doug Wheeler says, "Look at the rice industry's example. Go talk to them about how they were successful." When the Secretary sends people, encourages them to come to you, we respond and say, "What do you need?" We're helping cotton; sending our people all over the place at our expense. You want to show off that you are doing good things. You are very proud, coming from an industry of paranoia into one addressing the issues. I was telling someone, "We have a battle plan for everything now. We just pull them up." Somebody says these little shrimp are a problem, we pull up the battle plan for shrimp. We've got A, B, C, D of the approaches. Overkill. That's what happens when industry is rewarded or acknowledged. I think as industries in California get the help from, for instance, Resources, to do this, to work in partnership, I think there is a great future here. With all these resources that you have in people. The university here and others, and the private sector willing to come forward and spend their time to help solve it. I really am thankful, because I heard things today that are very useful... and I thought we were pretty progressive in all of this. Bringing all these people together has been very beneficial.

Helly: I was trying to comply with the state regulations and to come up with one thing, but I have three.

Johnson: If I paid you five bucks, would you cut back to one?

Whiteside: Integrate them and we won't know the difference.

Helly: But they are short. A point I would like to see brought up is who should determine the conditions to be sustained? What people should make that decision? What information should be considered in that decision making? And we should not forget that that is just a snapshot in time and everything changes. How should those criteria, the definition of the conditions to be maintained, be updated over time as more information is learned? Because eventually we will know more through science and that will improve the definitions of those conditions.

Johnson: I'd like to reinforce Al's (Montna) call for leadership on agricultural land preservation. And take it one step beyond that to the issue of private rangeland. Private rangeland in California is probably the hotbed of the preservation of biological diversity, certainly outside of the public lands. There seems to be a clear, unaddressed problem with the private rangelands in California, and that is the plight of the aging large landowner. When we see development occur on these large ranches, it's generally because there is a family decision that needs to be made. And that creates a whole chain of events that often results in minimalls. That's an unaddressed problem in California. The Williamson Act touches on it but doesn't really hit it center on. And I think addressing that could give us a lot of gain.

Toben: To my mind we have spent much of today trying to develop the argument for common solutions applicable to pollution management, and natural resources management. And in the end I have concluded that the argument doesn't sell for me. So what I have been doing in the last fifteen minutes is sorting out what I understand to be the differences, with my mind still open about whether we can find some common framework for problem solving as Charles (McGlashan) would advocate. I think in the end this comes down to two very different phenomena. We have on the one side the input resource extraction component to economic activity, feeding into the machinery of development. And on the other side we have the output or the waste phenomenon, the waste problem. We have on the one hand a situation that is primarily bounded, to my way of thinking, by the rural community setting. On the other side of the coin we have as our primary unit of analysis the modern corporation, as opposed to the rural community. On the former side we have place-based considerations that do not obtain so vividly in the context of the waste management aspect. We have that as non-territorial in its essence. On the former side we have Steve Johnson, and on the other side we have Charles McGlashan. By that I mean we have the biologist who understands the primacy of complexity, to the extent that solutions have to imitate natural processes themselves. Nature craves complexity. The modern corporation craves simplicity. We have the possibility to take Nick's (Bollman) very astute analysis, aggregating individualized solutions on the land as the way to build toward the resolution, as opposed to simple clear-headed standard setting on the other side when it comes to the pollution output piece. We have the Resources Agency on the resource management side, and we have EPA on the pollution management side. I'm still hopeful that we can find ways to work from a common framework, but I am not yet convinced on the basis of this conversation today that we aren't indeed talking about two very different constructs that require very different ways of examining solutions.

Romm: We must start to deal directly with the real skews that are developing in our society, and with our incapacity to build a whole that is supportive of environmental activities of any kind. I would propose that we view a conference in terms of its capacity to generate the kinds of adaptation and learning that contribute to those ends. The conference might be called `Sustainable California.' Three topics emerge from our discussion. These can be treated in specific or general ways, but I think that we should avoid philosophical and academic discussion in favor of things with real meat to them, topics that reveal real tensions as well as opportunities to resolve them.

The first topic is `indicators,' recognizing that we are really talking about objectives, about intent. If intent were discussed directly, the discussion would fail. But if indicators are discussed instead, a proxy for intent, progress might be made toward the shared visions that can facilitate common attainments without necessarily requiring state controls and incentives.

The second topic is `monitoring,' the tangible evaluation of indicators. The purpose would not be to discuss techniques of monitoring, although these may be useful means to avoid deeper issues, but to build processes of public learning, how experience actually gets into public processes in effective ways.

The third topic is `means,' specifically means for public use of knowledge that develops through the monitoring of changes in indicators over time. This topic includes the vast array of partnerships, councils, and the many other innovations we have discussed during the course of the day.

Mantell: In thinking back on the day, we developed in our own minds a list of questions that we wanted to address without putting them out, because we didn't want to limit discussion. But in reality, for the most part, they have been addressed. What are the key issues facing California's resources over the next period of years? We really touched on a lot. One that didn't come out expressly is the whole notion of quality of life, which I think underlies a lot of concerns that endangered species or timber or whatever are used as surrogates for. But we really did touch on the issues.

We wanted to know what people thought were the obstacles and constraints. We spent a lot of time on that, the disenfranchisement, rigidity in terms of top down government, and so forth. We wanted to know what people thought about local empowerment and local capabilities, and we learned a lot about that. Economic values of our resource goods; how do we start putting monetary values on beneficial conservation actions? And while we didn't come up with any magic ways to do it, it is clearly something that is on the top of a lot of people's minds. And then how do we build a constituency for this. I don't think we addressed it specifically, but I think clearly it is something that everyone identified as a key need. So I feel really good, and that we gained a lot of new material. I don't know how we are all going to filter it into a meaningful process from here on out. I wanted to let you know at the outset that we are going to be calling on you in the next several months to refine this. I don't know if at some point we will reassemble this group to take us to the next step.

I guess there was one issue that was raised that we didn't develop. Dennis Machida asked me to give his comments on this. I think Rich Morrison raised the issue of increasing ethnic diversity in California, and how this is not reflected in this meeting. This is somewhat a factor of who could come and who couldn't, because we did try to do that. But Dennis (Machida) said, "You know, we will never reach the growing ethnic communities in this state on these issues until we convince them that we care about their issues. Once they see us caring about their issues, they'll be more of a player in our issues." I'm just passing on Dennis's thought. I really appreciate your contributions. We have a lot to go forward with.

Sedgwick: I bet you are all envying me being the last person. What a lucky gal. Early in the day I was struck by what Monica said, emphasizing a theme that several of you brought up, about needing the tools to quantify the values of setting aside 200,000 acres in a preserve. I think we are all in agreement that that needs to be done. We talked a lot today about monetizing, and I know that is absolutely essential and we have to create better natural resource accounting systems. I support that totally and I know we have to do it, we have to do a much better job of it. I also, just at an intuitive level, feel that if we just focus on monetizing these resources then there is a trap there for us. Somehow we need to make the link to public policy about the other pieces of why these resources need to be managed intelligently, and sometimes managed for qualities and values that we can't really articulate. And I don't know if that means institutionalizing a precautionary principle at a policy level. I just know in my gut that there is a trap to putting all our eggs in a monetizing basket, although we need to pretend we are doing that right now so we get to a new level of expertise.

The other comment I have is really about something we didn't talk about, that is driving a lot of what we all perceive to be a major crisis that makes this period different from other periods, and that is population. I think if the state of California doesn't somehow develop an integrated policy that addresses population growth and human settlement in the state, patterns of human settlement,... I don't know that we can do it, but not to engage some kind of discussion about population growth in this context is just madness. I don't know how to do it, but it has to be done.

Wheeler: Thank you Jeanne. Thank you all. Tom Graff left in addition to his vote a response from EDF to the Gregg Easterbrook book (A Moment on the Earth), which I think has been given to each of you. He took umbrage at our having put material related to the book unanswered into your folders.

Mantell: He appreciated that we put a critical piece in as well.

Wheeler: We did put a critical piece in, but he adds to that an evaluation of Easterbrook's book in a paper for each of you to take back with you.

We will distribute summaries of today's discussion as soon as they have been prepared, and then call upon you again to help with the elaboration of these ideas into plans for a conference. I thank you all, on behalf of the Resources Agency and UC Davis, for your time today.