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Yuppie 911.

Last September, four inexperienced hikers found themselves without water during a strenuous hike in Grand Canyon National Park. When they pressed "HELP" on their emergency satellite locator beacon, rangers were dispatched by helicopter to their location in a remote section of the park. But when rescuers arrived, the hikers had located a water source and declined help.

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That evening, the hikers activated their beacon again. The Park Service called in another helicopter to locate the hikers in the middle of the night, only to discover that, again, no real emergency existed--the water they had found simply "tasted salty," the hikers said. The next morning, after the group sent a third dubious alert, a rescue team removed them from the canyon. When asked what they would have done without the emergency locator beacon, the leader stated, "We would have never attempted this hike."

Since becoming available for public use in 2003, the price of personal locator beacons has fallen significantly and they are now standard fare for outdoor adventurers wanting the peace of mind that rescuers are just one button away. Accordingly, hikers and mountain climbers are increasingly relying upon the high tech gadgets for rescues in national parks and forests when circumstances go awry. When activated, the locator device, which is slightly larger than a cell phone, transmits GPS coordinates to a 24-hour emergency service, which then notifies the appropriate agency to send search and rescue personnel.

Moral Hazard The devices have often led to timely and heroic rescues of backcountry hikers in emergency situations. In 2008, a hiker with sudden abdominal pain was evacuated from the backcountry of Sequoia National Park and received emergency surgery. Last year, a hiker who sustained head and back injuries from a fall in a remote area of Olympic National Park was airlifted to a Seattle hospital for immediate treatment. In both instances, personal locator beacons alerted search and rescue officials of an emergency and likely saved lives.

However, some are beginning to ask if these devices are encouraging people to be more careless in the wilderness and causing them to take on more risk than they would otherwise. While data are sparse, anecdotal evidence and standard economic theory suggest that these devices do create moral hazard. Because individuals engage in more risky behavior when rescue is either explicitly or implicitly guaranteed, the head of California's search and rescue operations, Matt Scharper, has nicknamed the beacons "Yuppie 911."

Moral hazard does not only affect inexperienced yuppies. Seasoned mountain climbers are also known to take on extra risk when they are insulated from the full cost of having to self-rescue. Before the advent of helicopter rescues on Alaska's Mount McKinley in the 1970s, few people attempted to climb North America's highest peak, and those who did knew they were completely on their own. Prior to 1970 there were only 35 rescues on the mountain, but in the 1976 season alone there were 33 rescues.

This moral hazard effect on the decision calculus of climbers can be fatal. Last year, a beacon-bearing climber on McKinley attempted the mountain solo. He was last seen carrying minimal survival gear and no stove for melting snow, but he had his beacon. Whether he would have exercised more caution without the beacon--which was never activated--is unknown, but it is reasonable to assume he would have taken more survival gear with him.

The moral hazard problem that results as a consequence of guaranteed safety is well established in the economics literature. In the 1970s, Sam Peltzman's seminal research on the effects of automobile safety regulation found that seat belt laws induce people to drive less safely. In effect, seat belts lower the cost of riskier driving because the probability of harm to the driver in a crash is significantly reduced. Peltzman found that any benefits provided by the safety regulation were offset by risky driving behavior. Similarly, a recent study by economists Russell Sobel and Todd Nesbit found that NASCAR drivers drove more recklessly in response to increased safety measures in their automobiles. This offsetting response to safety regulation, now known as the "Peltzman effect," is crucial for understanding how hikers and climbers might respond to regulations mandating the use of personal locator beacons, which some states have proposed.

Externalities Making mountain climbing ostensibly less dangerous induces more offsetting behavior, which can dissipate any benefits received from the safety device, as seen in the case of seat belts. However, the costs and benefits of beacon use do not only fall on the hikers and climbers who use them, but also on search and rescue personnel. Just as Peltzman found that the safety effect of seat belts was partially offset by more fatalities to non-occupants such as pedestrians, bicyclists, and motorcyclists, the increase in rescues can result in more fatalities to rescue personnel.

Rescue efforts require the use of tremendous amounts of limited emergency resources. Most public land agencies contract with the U.S. Coast Guard and other agencies for emergency helicopters, which cost upwards of $4,000 per hour. But personal locator beacons often cause officials to over-respond with helicopters to minor or nonexistent emergencies. In September, a rescue helicopter responded to a beacon alert in the Grand Canyon that proved to be trivial. Rescuers arrived to find three people asleep in their tents and in no danger. One of the hikers had become alarmed during the night when she heard "odd noises emanating from the leader of the group as he slept," stated the park report. She activated the emergency locator and went back to sleep. Since the beacons only tell authorities that an emergency exists and provide no further information, it forces rescuers to always prepare for the worst.

Over the past 15 years, the Park Service has performed, on average, 11 search and rescue operations per day. The costs of those rescues add up. In 2008, the National Park Service spent nearly $5 million on search and rescues, mostly in Yosemite National Park, a haven for rock climbers. Denali National Park, home of Mount McKinley, averaged $18,000 per rescue in 2005.

"Free" Resources It is misleading, however, to view personal locator beacons as the sole culprit in many of these costly and dangerous rescues. Just as the innovation of seat belts came about as rising income levels increased the demand for safety, personal locator beacons are a high tech (and now affordable) electronic device that utilizes satellite technology to meet our modern-age demand for safety in the wilderness. It is at the intersection of helpful safety innovation and misplaced regulation where unintended consequences emerge.

The federal government's long-standing policy not to charge negligent hikers and climbers for rescues exacerbates the moral hazard problem. Outdoor adventurers, often taking undue risks, are rescued free of charge, enticing even more risk taking. Indeed, economists Dwight Lee and J. R. Clark's examination of rescue policy concludes that saving lives in the short run by offering free rescues encourages more rescue-creating activities, which result in more lives lost in the long run. With personal locator beacons becoming increasingly common, the problem has only worsened. It is simply too easy to get rescued for free.

Because of escalating rescue costs, some states and counties are beginning to experiment with charging for rescues. Altogether, eight states have laws that enable them to charge for rescues, although they are seldom enforced and often weak. Oregon law permits the state to collect up to a paltry $500 when "reasonable care" is not exercised, but only one fine has been assessed in the 15 years the law has been in place. New Hampshire is perhaps the most aggressive, billing up to $10,000 for rescues where negligence is demonstrated. Since the law began in 1999, the state has recouped $47,000 to offset its expenses. To protect its taxpayers, Utah's Grand County began charging the extreme sport tourists that frequent the local deserts for rescues.

Many search and rescue groups find the notion of charging for rescues objectionable, contending that hikers will be wary to seek help out of fear of being charged a hefty rescue bill. But in areas where officials charge for rescues, the calls still come in. New Hampshire's Fish and Game Department conducts 150 rescues each year, 60 Percent of which are for hikers. Charges are only applied in circumstances in which negligent or imprudent behavior is demonstrated, and those charges are capped at certain amounts. The fees defray a portion of the search and rescue costs, and more importantly, minimize the offsetting behavior that results in more overall rescues.

Despite the compounding moral hazard effect of both personal locator beacons and no-charge rescue policies, some are proposing to require the use of the devices. In the aftermath of the tragic deaths of three climbers on Mount Hood in Oregon this winter--the second such event in three years--officials are mulling whether to mandate that all climbers carry emergency beacons. However, not everyone is in favor of the requirement. Portland Mountain Rescue, a local volunteer rescue group, strongly opposes efforts to require beacons because of the unintended consequences, claiming that "mandating beacons actually increases risks for both climbers and rescuers."

Rescue Market Doing away with free rescues may do more to decrease fatalities and scale back excessive rescue costs than requiring beacons. Alternatively, requiring climbers on particularly dangerous mountains such as Mount Hood or McKinley to purchase climber rescue plans or to post a climbers' bond would force them to consider the financial costs of their decision to climb and alleviate the problem of moral hazard.

In the United States, free rescues have largely crowded out opportunities for markets to address this issue of risk in the wilderness setting. However, in areas where there are no free rescues, such as most international hiking destinations, such markets exist. Global Rescue, a crisis response company out of Boston, provides medical and security evacuations throughout the world and is a common provider of emergency services to adventurers who hike and climb internationally. Global Rescue coordinates emergency services for its members in almost all activities, including climbing, skiing, kayaking, and mountain biking. Full membership, which is a little over $300 a year, covers any emergency from the point of injury or illness to a hospital of choice and covers $500,000 of rescue services. Less expensive short-term memberships are also available.

Recently, the American Alpine Club (AAC), a prominent rock climbing organization, partnered with Global Rescue to offer its members a limited, $5,000 coverage for rescues coordinated through Global Rescue. In 2008, the company handled 22 incidents from AAC members in locations ranging from the United States to Nepal and Bolivia, and in many cases the members' expenses were fully covered. In addition, climbers of Mount Everest are often required by their guides to purchase independent travel insurance plans that cover "extreme sports" or "hazardous risk" before attempting the world's highest peak.

But in the United States, why would hikers and climbers avail themselves of such coverage when they know that they will be rescued at taxpayer expense? Some recent efforts by the National Park Service have attempted to address the high cost of free rescues. Mount McKinley now charges a $200 climbing fee to those daring enough to attempt its summit. This extra cost funds wilderness ranger positions, which provide information and orientation to climbers to mitigate potential rescues. Similarly, climbers on Mount Rainier in Washington must purchase a $30 annual climber pass to travel on the mountain. Those small efforts represent only a fraction of the cost of rescues and likely deter only a few marginal climbers. Further, the fees fall equally on safety-conscious climbers, who seldom need assistance, and novice climbers, who are more likely to require rescue services. Regardless, fees are a step in the right direction toward striking a balance between risk taking and the cost of mishaps.

Conclusion If regulators truly want to reduce climbing deaths on mountains such as Mount Hood, charging for rescues, rather than requiring locator beacons, would be prudent. While detractors of charging for rescues argue that firefighters do not put out flames and then bill the homeowner, they ignore the fact that homeowners have fire insurance to cover such a disastrous event. Likewise, climber rescue programs such as Global Rescue act as adventure insurance and force hikers and climbers to face the costs of their actions. Adopting such measures would reduce moral hazard, Yuppie 911 calls, and save both taxpayer dollars and human lives.

Readings

* "Automobile Safety Regulation and the Incentive to Drive Recklessly: Evidence from NASCAR," by Russell S. Sobel and Todd M. Nesbit. Southern Economic Journal, Vol. 74, No. 1 (2007).

* "The Effects of Automobile Safety Regulation," by Sam Peltzman. Journal of Political Economy, Vol. 83, No. 4 (1975).

* "Too Safe to be Safe: Some Implications of Short- and Long-run Rescue Laffer Curves," by Dwight Lee and J.R. Clark. Eastern Economic Journal, Vol. 23, No. 2 (1997).

BY SHAWN REGAN

Berry College

Shawn Regan is a Charles G. Koch Scholar at Berry College in Mount Berry, GA and a former backcountry ranger for the National Park Service in Folks, WA.
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Title Annotation:BRIEFLY NOTED
Author:Regan, Shawn
Publication:Regulation
Geographic Code:1USA
Date:Mar 22, 2010
Words:2189
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