Tall Trees, People, And Politics: The Opportunity Costs Of The Redwood National Park

Because individuals in the marketplace directly face opportunity costs, they must balance marginal costs against marginal benefits. In contrast, in politics, the opportunity costs facing decision makers are diluted. Estimates of the social costs of various public programs are generally understated, while the estimates of social benefits are exaggerated This paper places the establishment and expansion of the Redwood National Park within this framework and analyzes it as a public investment decision. It is shown that in the initial creation of the Redwood National Park in 1968, the costs of land acquisition and employment loss were underestimated, while the projections for gains in tourism were excessive. Despite the opposition of local landowners and residents, the Park was further expanded 10 years later in 1978. There was again a misstatement of costs and benefits and also the creation of an expensive new entitlement program to defuse the opposition of labor The experience with the redwood National Park illustrates the results of the political process, which allows decision makers to internalize benefits and externalize costs. Emotion and rhetoric tend to displace a careful weighing of marginal costs and benefits