Agriculture, the Environment, and Private Property Rights

Elizabeth Brubaker
May 4, 2006

Alberta Agricultural Economics Association Annual Conference
Red Deer, Alberta

When Danny Le Roy asked me to give an after-dinner talk, my first response was one of dread. “You don’t want me to be funny, do you?,” I asked. “No, no,” he assured me, “I want you to make people slightly uncomfortable.”

Of course, I accepted his invitation immediately. Making people uncomfortable is one of my specialties! You can’t be an environmentalist in Canada, and promote private property rights, without making a lot of people uncomfortable.

I’m actually assuming that economists – in Alberta, to boot – are going to feel far more comfortable with property rights than do many of my audiences. Still, I’ll do my best to be outrageous. So please, I invite you to sit back, and, well, get uncomfortable!

As you all know, agricultural operations are often extremely controversial these days. This reflects a number of factors. It reflects changes in land use. Residential developments now commonly encroach on what used to be farm land. It reflects the growing size of agricultural operations. Farms are housing more animals, and those animals are producing more manure. And it reflects some well-publicized environmental harms. Odours can spread for miles, and manure can seep into groundwater or spill into rivers. Both actual and potential environmental harms have whipped communities into frenzies of opposition.

This isn’t just true in Canada – it’s true all over the world. Last summer I read about a dispute between Lithuania and Belarus. Lithuania had announced plans to build a nuclear waste dump near its border with Belarus. You know how Belarus retaliated? It vowed to build two colossal pig farms on its side of the border. Lithuania’s Prime Minister was appalled. He said that the construction of a pig complex “would be a barbarous act.” The press, of course, had a field day with this story. One headline screamed, “Belarus to attack Lithuania with thousands of pigs.”

Pigs aren’t exactly weapons of mass destruction. But they and other livestock do provoke a lot of concern among neighbours. And this concern is having profound impacts on farmers and on would-be farmers. People concerned about livestock operations, and their potential impacts on the environment, are pushing for stricter regulation. And they’re getting it.

Here in Alberta, you’ve got provisions for public hearings and minimum distance separations. You’ve got regulations governing the location and construction of manure storage facilities, regulations on surface water control, fly and dust control, manure application, and record keeping. And yet, despite the mounting regulatory burden, the controversy never seems to go away.

I think there’s a better way to approach this whole area. It’s not new – in fact, it’s about 800 years old. It’s simple and flexible. It’s geared to individual situations rather than generalities. It focuses on ends rather than means. It relies not on governments regulating farms, but on individuals exercising their property rights.

Of course, property rights mean different things to different people. Some of you may know Danielle Smith. She’s heading up a new Alberta Property Rights Initiative. She’s also the host of a new radio program called Standing Ground, which gave a very nice plug for this conference last week. Danielle has a very simple explanation of property rights: “If you own something, you should be allowed to keep it. And if it is taken from you by government or by some … private interest, or [if] it’s devalued in some way, then you’re entitled to fair compensation for it.”

I like that – it’s simple and straightforward, and it makes common sense. If you own something, you should be allowed to keep it. But traditionally, there is more to property than the right to keep it. Under the common law, you have a right to both use and enjoy your property. But there’s an important limit to this right. In using your property, you have a responsibility not to interfere with your neighbours’ rights to use and enjoy their property.

It’s very easy to sum up traditional common-law property rights. In fact, I can do it in one sentence: “Use your own property so as not to harm another’s.” If I were using PowerPoint this evening, I’d have that phrase up on the screen during my entire talk. It is the most important thing to remember about common-law property rights.

The notion that you must use your own property so as not to harm another’s has always infused the common law, both in England and in Canada. The principle dates back at least as far as the 13^th century, and is still cited by courts today.

What matters to us tonight is that, for hundreds of years, this was the principle that governed the resolution of disputes about agriculture. In 1611, an English court relied on the principle in a decision about the erection of a pigsty that corrupted the air. In 1703, another English court noted that a man must not lay his dung so high as to damage his neighbour.

One of my favourite statements of the principle comes from an 1885 case. In fact, there’s an Alberta connection here. In 1928, the statement was cited by Canada’s Supreme Court in a decision concerning Edmonton:

Prima facie no man has a right to use his own land in such a way as to be a nuisance to his neighbour … and whether the nuisance is effected by sending filth on to his neighbour’s land, or by putting poisonous matter on his own land and allowing it to escape on his neighbour’s land, or whether the nuisance is effected by poisoning the air which his neighbour breathes, or the water which he drinks, appears to me wholly immaterial. If a man chooses to put filth on his own land he must take care not to let it escape on to his neighbour’s land.

What this principle does is create a kind of virtual fence around a farmer’s property. An English court used that analogy back in 1711, in a decision concerning straying cattle. It said, “the law bounds every man’s property, and is his fence.”

So that’s the principle: Use your own property so as not to harm another’s. And how does the principle work in practice? Agricultural pollution usually violates people’s common-law rights in one of three ways: It may be a trespass, a nuisance, or a violation of someone’s riparian rights.

Trespass

The most straightforward of these is trespass. Traditionally, it was a trespass to place anything upon someone else’s property. It didn’t matter if the trespassing substance was toxic or perfectly harmless. It didn’t matter if there was a lot of it or just a tiny bit. In a 1976 Alberta decision, the judge cited a ruling made 200 years earlier. “Every invasion of private property,” he said, “be it ever so minute, is a trespass.”

Trespass has occasionally been used to keep agricultural pollutants off of neighbouring land. It’s been especially useful when the pollutants have constituted direct, tangible invasions – invasions that could be seen or felt, such as manure or dust.

Nuisance

For indirect invasions, and for those that can’t be seen or felt, nuisance law has often applied. Nuisance is a bit more abstract, more nuanced, than trespass. A nuisance is something that interferes with the use or enjoyment of private property. Unlike a trespass, a nuisance is something that actually causes harm. In fact, the word comes from the Latin nocere, which means “to harm.” A nuisance might cause physical damage, it might cause financial harm, or it might cause annoyance, or discomfort, or inconvenience.

Nuisance law has been of tremendous help to those fighting agricultural pollution. People have used it to protect themselves from smoke and foul smells. They’ve used it to challenge noises and vibrations. Sometimes, nuisance has been used to fight more tangible forms of pollution as well – whenever the pollution has interfered with the use or enjoyment of private property.

Of course, there are all sorts of qualifications. First of all, nuisance law doesn’t concern itself with so-called “trifling matters.” Minor, everyday smells or noises aren’t considered nuisances. The thinking is that everyone creates such common irritants, and everyone benefits from their being allowed. So these kinds of activities are protected by a rule that is summarized as “give and take, live and let live.”

Nor does nuisance law concern itself with the suffering of unusually sensitive people. To be a nuisance, an activity must be severe enough to harm a normal person of ordinary sensibilities.

Another factor in determining whether something is a nuisance is the character of the neighbourhood in which it occurs. An activity might be perfectly acceptable in an agricultural neighbourhood, but unacceptable in a residential neighbourhood. If the activity results in material injury or financial harm, then even the character of the neighbourhood is no excuse. But if it only results in personal inconvenience, discomfort, or annoyance, then the neighbourhood may justify the activity.

Finally, when determining if something is a nuisance, there’s the question of “reasonableness.” A nuisance is often described as an unreasonable interference with the use or enjoyment of property. There’s no single definition of what’s reasonable, but usually it encompasses all of the other issues I’ve been talking about. Significant pollution is almost never considered reasonable. In the words of one legal text, “No use of property is reasonable which causes substantial discomfort to others or is a source of damage to their property.”

I should mention one factor that is not a consideration. And that is: Who came first? In both England and in Canada, the courts have insisted, “Whether the man went to the nuisance or the nuisance came to the man, the rights are the same.”

I’ve found that this is the single most controversial aspect of the common law, so I’d like to spend some time discussing it. It seems that people naturally embrace the principle of “first in time, first in right.” They feel it’s a matter of fairness, or just common sense. They say, if you don’t like the smell of manure, don’t move to the country. I understand that logic, but I don’t agree with its implications.

Legally, the farmer who was there first never had a right to pollute his neighbour’s land. His rights stopped at his property line. Before he had a new neighbour, he may have enjoyed the opportunity to pollute for a limited time. He may have used the neighbouring land as a free receptacle for his waste. But he would not have acquired any right to continue to use it – not unless he actually purchased the land, or purchased an easement, or signed a contract with the land’s owner.

Let’s say that the polluting farm was beside another farm, whose owner had never complained about the nuisances it created. That’s fine. But giving the farmer a right to continue existing nuisances would, in effect, be giving him an easement over his neighbour’s land. The easement would reduce the number of uses to which the land could be put. And so it would de-value the land. In effect, a “first in time, first in right” regime allows a farmer to expropriate a portion of his neighbour’s property without compensation.

Another problem with “first in time, first in right” is that it actually creates incentives for farmers to establish nuisances. A farmer’s land is more valuable with nuisance easements, since they increase the number of uses to which it may be put. A farmer thus has every incentive to grab as many free easements as he can while he can – in other words, to create as many nuisances over as much land as possible.

And finally, the “first in time, first in right” approach works against progress. It entrenches land uses that may be of lower value than the alternatives. For all of these reasons, I think that courts are right to reject the argument.

Riparian Rights

There’s a third branch of the common law that can also be used to protect the environment – that’s riparian law. Under the common law, the people who either own or occupy land beside lakes and rivers have the right to the natural flow of the water. They have the right to water substantially unaltered in quantity or quality.

Riparian law, of course, was developed in England, where there was lots of water. It didn’t take long for folks to learn that it didn’t really suit Canada’s dry West. Irrigation required the diversion of water. So a different system of water allocation evolved out here. But riparian rights dealing with water quality remained in place.

Remedies

I’ve been describing the three major environmental torts – trespass, nuisance, and violations of riparian rights. Let me spend a moment now on remedies. Under any one of these torts, if someone goes to court and wins, the court will award either damages, or an injunction, or both.

Damages are like a fine. But there’s an important distinction between a farmer paying damages when he’s sued under the common law, and a farmer paying a fine when he’s prosecuted for violating a statute. In the former case, the money goes to the person who has sued. It goes to the victim of the pollution. It’s a way of compensating him for the harm he has suffered. In contrast, a fine for violating a statute usually goes to government coffers. The fine is designed to deter certain behaviours and to punish wrongdoers, but it’s not designed to compensate people who have been harmed. To me, the common law system of damages seems much fairer.

The common law also allows for injunctions – court orders requiring the farmer to cease a particular activity or requiring him to take corrective action. At one time, an injunction was the automatic remedy in a common-law case. It was considered a right. Courts are no longer required to issue injunctions, but they do remain very reluctant to grant damages instead of injunctions.

And with good reason. Judges understand that they can’t put a dollar value on many injuries. Only the victim himself can know what value he places on clean water, or how much money he’d be willing to accept for breathing foul air. An injunction allows the victim to negotiate a price. If his environment is priceless, he may simply enforce the injunction. He may tell the farmer to stop violating his rights.

Alternatively, he may bargain away his rights. He may say: I’ll withdraw my complaint if you pay me enough. Or he may reach a compromise that benefits both him and the farmer. Perhaps the farmer will agree to cover his manure storage, or compost his manure, or install bio-filters, or plant a windbreak. Whatever the solution, it has to be acceptable to the victim.

Another extremely important aspect of an injunction is that it prevents the recurrence of property rights violations. A court that replaces an injunction with damages says, in effect, that a farmer who is willing to pay may go on polluting. In a way, it licenses the pollution. Fortunately, Canadian courts generally reject this role. Once they find that pollution has violated someone’s common-law property rights, they generally issue an injunction to stop the pollution.

The Common Law at Work

So that’s a brief outline of the three environmental torts, and the remedies that are available under the common law. Sometimes someone who has been harmed by an agricultural operation will claim a couple of causes of action. For example, he might sue for both trespass and nuisance. But by far the most common cause of action in agricultural cases is nuisance.

Over the years, Canadian courts have found all sorts of agricultural operations to be nuisances. I’ve come across successful cases concerning a smelly henhouse, a noisy dairy, a horse-barn, the compost substrate at a mushroom farm, a pig farm that contaminated a lake, another pig farm that smelled, a dusty grain-drying facility, a berm that blocked the natural drainage of water, manure that contaminated a well, bees from an apiary, and insecticide sprayed from an airplane.

The cumulative effect of these and similar rulings was this: In exercising their common-law property rights, farmers’ neighbours, with the help of the courts, ensured that farms did little lasting harm, to them or to the environment. They ensured that as farms grew, and operations changed, they did so sustainably. As one jurist explained back in 1628, the common law tested innovations, severing the gold from the dross.

Right-to-Farm Legislation

That all began to change in 1976. That’s the year that Manitoba passed Canada’s first so-called right-to-farm law. The law came in response to a nuisance action against a large hog farm near Winnipeg. The suit was launched by the farm’s neighbours. They complained about the stench from the farm’s three sewage lagoons. It drove them inside on even the hottest days. It forced them to keep their windows closed. It fouled their laundry, spoiled their butter, curtailed entertaining, and made their home a source of embarrassment rather than pride.

The judge hearing the case used all of the tests that I described a few minutes ago. Did the farm’s odours interfere with the neighbours’ use and enjoyment of their property? Was the interference severe and unreasonable? Were the neighbours unduly sensitive? What was the character of the neighbourhood?

The judge found that the odours were, at times, “disastrously offensive,” and that they did, indeed, constitute a nuisance. He awarded $10,000 in damages, and he ordered the farm to abate the nuisance within eight months.

The ruling enraged the provincial government, which had long supported this particular hog farm. It was determined that future courts would not issue similar decisions. So it introduced the Nuisance Act, which protected farms and other businesses from common-law liability for any odours they generated. No longer – at least in Manitoba – would odours be considered actionable nuisances.

By now, we’re used to right-to-farm laws. But you know, that was an extraordinary measure for a government to take. It took the property rights from one set of citizens, and handed them over to another set of citizens! Rural residents lost their age-old right to enjoy their property. Farmers, on the other hand, gained a new right – essentially a right to harm their neighbours. That was a fundamental shift.

And there was nothing anyone could do about it. The legislature is supreme. If it determines that a particular activity is lawful, then that activity – and all of its inevitable effects – are protected from common-law liability. Statutes always take precedence over the common law.

In the three decades since Manitoba passed its Nuisance Act, every province has protected agricultural nuisances. The laws have varied considerably. Some have protected only existing farms. Some have protected only farms that meet certain standards. But all have diminished the property rights of farmers’ neighbours – they have curtailed their right to use and enjoy their property.

Here in Alberta, the government passed the Agricultural Operation Practices Act in 1987. It was a short act – just two pages. It protected agricultural operations as long as they met three criteria: They could not contravene a local land-use bylaw, they could not contravene provincial agricultural regulations, and they could not contravene “generally accepted practices for similar agricultural operations.” As long as they met these criteria, they would not be liable for nuisance, and they would not be subject to injunctions.

That was a big change. Before 1987, Alberta’s farmers could not unreasonably harm others. After 1987, they could harm others, as long as they used so-called generally accepted practices. Note the shift in emphasis. Before 1987, it was the outcome that mattered. After 1987, it was the input, or method, that mattered. As long as the farmer’s practices were generally accepted, the effects of them became irrelevant.

That was Alberta’s first right-to-farm act. Over the years, there have been many changes. An entirely new dispute resolution process has been set up. In effect, it has bypassed the courts. If someone has a complaint against a confined feeding operation, he has three options. He can ask the Farmers’ Advocate to mediate. Or he can go to the Natural Resources Conservation Board, which will determine if the CFO is complying with regulations. If it is, but if problems persist, the NRCB may ask the Farmers’ Advocate to establish an Agricultural Practices Review Committee. This committee will provide a kind of peer review. It’ll determine whether the operation is following generally accepted practices. Alternatively, someone can take a nuisance complaint to the Minister of Agriculture, and he can ask the Farmers’ Advocate to establish a Review Committee.

The biggest change here is one of bias. Courts, at least in theory, are un-biased. They don’t favour one set of people over another, or one kind of land use over another. They simply apply age-old principles to a specific set of facts. The Farmers’ Advocate, in contrast, is just that – an advocate. And a Review Committee is also likely to be sympathetic toward farmers. Two of its three members must have experience in the type of operation that is complained of.

Effects of Overriding the Common Law

What has – and hasn’t – this new regime done for Alberta? Well, it hasn’t established an effective dispute resolution process. I was talking to Jim Kiss, the Farmers’ Advocate, a couple of days ago, and he admitted that in reality, the process doesn’t work very well. Since the new rules came into effect in 2002, there has been just one full review by a Review Committee – that was the review of the hog farm that used to be called Bacon Acres, near Bentley.

Odours from Bacon Acres generated hundreds of complaints. Even the NRCB admitted that, although the farm followed the rules, it created an “inappropriate disturbance.” The Review Committee didn’t see it that way. It found that the farm used generally accepted practices and that it was an “excellent operation.” Unfortunately, as Jim Kiss said, that didn’t resolve anything. The parties are still feuding.

And indeed, parties are feuding all over Alberta. The AOPA has not brought peace to rural areas. In recent years, the NRCB has received more than 1,000 complaints a year. Well over half of these have concerned odours and other nuisances.

Such numbers suggest that the regime is not one that encourages farmers to avoid creating nuisances. That’s certainly no surprise. There’s a moral hazard here. Protecting farmers from liability destroys their incentives to avoid nuisances. Reducing a farm’s impacts on the surrounding environment requires time, and effort, and money. Why make the investment if polluting has no consequences?

Why not simply let others bear the costs? Because that, of course, is what the AOPA permits. The law allows farmers to offload, or externalize, some of their environmental costs. It shifts the costs of pollution from the polluter to those living downwind. These costs may take the form of lower property values, or lower business revenues, or higher health costs. Whatever the form, the victims are subsidizing the polluters. That’s a violation of the principle of polluter pay – a principle that’s at the very heart of environmental sustainability.

Unfortunately, farmers are growing used to externalizing their costs – not just the costs associated with nuisances, but the costs associated with other forms of pollution, as well. As was discussed this morning, farmers are demanding payments to stop polluting. They don’t call it that. They call it payments for environmental services. But these services include things like runoff control.

There’s a big difference between stopping a harm and providing a service. I don’t think it’s appropriate to pay someone to stop a harm. If a farmer isn’t allowed to pollute a stream, why should taxpayers pay him to plant buffers? On the other hand, I think it’s perfectly appropriate to pay a farmer to provide a benefit that he wouldn’t normally provide, or to compensate him when his legitimate right to do something is taken away.

Let me give you an example from Ontario. Normally, farmers have the right to develop their land. But the Ontario government wants to create a green-belt around Toronto. Essentially, it wants to put a development freeze on farmland. The government is taking a valuable right from the farmers – and that calls for compensation.

Another, completely different, effect of the AOPA is that it has centralized decision-making authority. It’s taken decision-making out of the hands of the single, or dozen, or hundreds of people most directly affected by a polluting activity, and it’s moved it into the hands of politicians and bureaucrats. Likewise, it’s taken decision-making out of the courts, and moved it, among other places, to the NRCB. The NRCB calls itself a quasi-judicial agency. But it plays a kind of central planning role that the courts never played. It tries to weigh the interests of the economy, the environment, and a community. It sees its role as “balanced decision-making in the public interest.”

I tend to distrust central planners. Compared to the individuals who are directly affected by an agricultural operation, the NRCB can’t possibly know all of the costs of its decisions, or weigh them against all of the benefits. It doesn’t know how individuals use their environments, and it doesn’t understand individuals’ priorities, or values. Without that information, it can’t accurately foresee the consequences of its decisions.

Another problem is that it and other provincial regulators tend to work with a very broad brush. They tend to impose one-size-fits-all solutions. But let’s face it, one size rarely fits all.

Restoring Property Rights

For all of these reasons, I think that the current approach to regulating agriculture is profoundly misguided. I’d like to see a return to the old way of doing things. I’d like to see governments repeal right-to-farm laws, and restore the property rights of all rural residents.

I admit that, realistically, that’s not likely to happen any time soon. But there is one glimmer of hope – and that’s constitutional reform. The federal Conservatives have spoken of enshrining property rights in the Charter. If they do so, it’s possible that right-to-farm laws will be deemed unconstitutional.

That happened in Iowa, where property rights are, of course, protected in the Constitution. In 1998, the Iowa Supreme Court ruled that the state’s right-to-farm law was unconstitutional. It ruled that giving farmers immunity from nuisance suits amounted to a taking of private property for public use without just compensation.

Let me read you a few lines from the Court’s decision: “When all the varnish is removed, the … statutory scheme amounts to a commandeering of valuable property rights without compensating the owners, and sacrificing those rights for the economic advantage of a few. In short, it appropriates valuable private property interests and awards them to strangers.”

That’s exactly what’s happened here. But here, it isn’t unconstitutional – at least, not yet.

Implications of Restoring Property Rights

Assume, for a moment, that the property rights of rural residents can be restored. One issue that often comes up in discussions about this is the possibility that farmers will get caught up in endless litigation. Frankly, I don’t think that will happen. It wasn’t a problem before right-to-farm laws were passed. And it hasn’t been a problem in Iowa, where the right-to-farm law was quashed. Lawsuits are difficult and expensive, and will not be undertaken lightly.

Regardless, the mere threat of a lawsuit will be an excellent deterrent of pollution. Once it becomes clear that farmers’ neighbours have rights, and that the courts are willing to enforce them, farmers will refrain from building or operating facilities that harm others. They’re not going to risk substantial investments in operations that may be subject to large damage awards or injunctions. So property rights will have a tremendous prophylactic value, even when they’re not being exercised in court.

The Carrot: Bringing Farmers Onside

The other thing I want to mention is that stronger property rights would often benefit farmers. I haven’t seen the figures for Alberta, but in Ontario, about half of the complaints about agricultural nuisances come from other farmers!

And farmers don’t just complain about agriculture. Currently, a lot of farmers are feeling abused by the energy industry. But farmers’ property rights aren’t as strong as they used to be, and they aren’t that useful in helping them defend themselves. The case books are full of stories about farmers in the past using their property rights to protect themselves from other industries. Farmers have fought mills and other businesses that have polluted streams. They’ve fought factories whose air pollution has harmed their crops. They’ve objected to transmission lines crossing their property. A resurgence of property rights would benefit farmers tremendously.

Property Rights and Regulation Are Not Incompatible

I do want to add that as much as I admire property rights, I’m perfectly aware that they are not the best tools to solve every environmental problem stemming from agriculture. They work best when a polluting farm can be identified, when a limited number of victims can be identified, and when the harm is substantial. When many people suffer minor, cumulative damages from many farms, no one has an incentive to sue. Each suit would be costly, and it would solve only a small part of the larger problem.

Nor will property rights work well when people can’t trace the source of a problem. Ammonia emissions might mix with other pollutants to create haze, but my guess is that it would be pretty difficult to trace the problem to a specific farm. Likewise, it might be difficult to trace the source of some groundwater contamination, or the spread of antibiotic-resistant bacteria.

And of course property rights won’t work when no one has rights to the resource that’s being harmed. For example, it would be hard to rely on property rights to challenge the creation of greenhouse gasses. Now, that’s not to say that restoring property rights wouldn’t help solve some of these problems. If a farmer is forced by a neighbour to compost his manure, he will emit significantly less methane – a potent greenhouse gas – into the atmosphere. The purpose may have been to reduce odours, but the effect may be to protect the environment in other ways, as well.

Be that as it may, there are many cases that call for laws and regulations. We need both the common law and government-made law. Neither one on its own can address all of the environmental challenges posed by agriculture. That said, I think that the common law has a great deal to offer statute law. We should be working on incorporating principles from the common law into our regulatory regime.

Principles such as:

• the responsibility to use one’s own property so as not to harm another’s

• the right to be free of harm from one’s neighbours

• the importance of ends rather than means, or outcomes rather than inputs

• the importance of stopping, rather than merely fining, polluting activities

• the direction of fines to victims rather than to governments

• the importance of internalizing the costs of pollution

• and the value of decentralized decision making.

Incorporating such principles into the laws and regulations governing agriculture would revolutionize the industry. It would create an industry that bears its own costs, that respects the rights of others, and that is truly environmentally sustainable.

Thank you.

Agriculture, the Environment, and Private Property Rights
Elizabeth Brubaker, Executive Director, Environment Probe
Alberta Agricultural Economics Association Annual Conference
Red Deer, Alberta, May 4, 2006