James Taylor, Hopewell Township
There’s been a lot of opposition voiced to the proposed PennEast pipeline in Hopewell Township and the many other communities that would be adversely affected by it. Some of this opposition has focused on criticizing PennEast as an example of market capitalism at its worst.
That type of criticism is unfair — to market-based capitalism. A fundamental principle of market capitalism is that trade makes both parties better off. If I voluntarily exchange my dollar for your apple I do so as I value your apple more than my dollar, and so I’m made better off by this trade. Similarly, if you trade with me voluntarily you’re also made better off as you value my dollar more than your apple.
But PennEast’s pipeline isn’t based on a series of voluntary exchanges. Instead, it is threatening to use the power of eminent domain to force landowners to grant it easements across their properties. Even if PennEast compensates them, landowners will lose in this transaction, for the amount of compensation would be less than the amount they would have voluntarily agreed to. It’s as if I offered you 50 cents for your apple, you refused as you valued your apple at more than 50 cents —and I took the apple anyway and gave you two quarters as compensation. I benefit, you lose. PennEast benefits, landowners lose.
But there’s more. Another fundamental principle of market capitalism is respect for private property rights. If I damage your property, I owe you compensation. PennEast might be compensating landowners for easements (although if they use eminent domain, at unfairly low levels) but they are not compensating property owners outside the easement area for loss of property value.
In a peer-reviewed study of the effects that pipelines have on property values, Professors Julia L. Hansen, Earl D. Benson and Daniel A. Hagen found properties located as far as 1,000 feet from a pipeline suffered a decrease in value, with the loss of value being correlated to proximity to a pipeline. (Source: “Environmental Hazards and Residential Property Values: Evidence from a Major Pipeline Event,” Land Economics, Nov. 2006, pp. 529 – 541).
This should worry Hopewell residents—15 percent of whom have their homes within the 1,000-foot “damage zone.” (Source: Prof. Michael Brogan, drawing on 2010 U.S. Census Block Group Data for Hopewell Township.) If PennEast was playing fairly by the rules of market capitalism each and every one of these property owners would be properly compensated for the losses the pipeline will inflict on them. But PennEast is not offering this. Instead, it is forcing people whose homes are near its pipeline to absorb the costs of these losses themselves.
Through its threats of eminent domain and its infliction of uncompensated damages onto the property owners PennEast is violating two of the most fundamental principles of market capitalism — voluntary trade and respect for the rights of private property owners. PennEast’s proposed pipeline is thus not an example of market capitalism run amuck. Instead, it’s an example of what happens when large corporations collude with politicians to avoid playing by rules of the market.
James Taylor
Hopewell Township
