ECONOMIES are like ecosystems in that everything is tied to everything else. We cannot do only one thing. Protecting owls by limiting timber harvest has multiple consequences, mostly unintended. People anticipate outcomes, estimate how regulations affect their security and livelihood, and often change their behavior accordingly.

Regulations that ignore this interconnectedness can make matters worse, despite good intentions. For example, giving people orders seems cheaper than creating positive incentives for them to cooperate, especially if the order limits what people can do rather than taking physical possession of their property. But we should be extremely careful because over the long run, "takings" are expensive. At a minimum, they erode faith in government's most important role: the fair protector of social life.

Most people agree that forests are environmentally and economically important. This is why there are strong pressures to impose regulations preserving watersheds, ecosystems, biodiversity and other forest values. But these restrictions do not come free. They may be worth the price they exact but we should recognize that they impose substantial costs upon owners, society and even ecosystems. As John Muir taught us more than a century ago, everything is tied to everything else.

In the Douglas fir region of the Northwest a landowner typically invests $300 to $500 per acre preparing the soil, planting it and tending the seedlings until they are established. This investment generates nothing until the first commercial thinning perhaps 25 to 35 years later. In Western Washington a landowner would normally have the final cut 50 to 75 years after planting. Some owners prefer older stands and keep timber standing long after it is economically mature.

Restrictive regulations, or the mere prospect of such regulations, reduce or eliminate the owner's future security. Without the certainty that they can harvest their trees a generation or two later, or sell to someone who can, landowners have weaker incentives to be good stewards. Trees are likely to be cut prematurely and the land converted to non-forestry use. This is happening throughout the Northwest today.

Throughout the 1980s, small woodlands owners in Washington obtained about 8,000 permits to cut their timber. That rose 50 percent by 1990 and preliminary estimates by the Washington Farm Forestry Association suggest an additional 50 percent increase by 1993. Money and fear, a powerful combination, are two important reasons for this increase.

First, let's consider money. Today, owners see extraordinarily high prices for timber from private lands. Concern for the spotted owl dramatically reduced the timber available from federal lands, shifting demand to private and state forests. Until recently, prices in the export market have been high. Finally, low interest rates have substantially increased new home construction and hence demand for forest products. Each factor contributes to higher log prices and stronger incentives to harvest timber.

Fear is also important, particularly the fear that if timber is not sold now, it will be impossible to sell later. This fear seems justified to many people who were counting on their timber as an investment, perhaps for retirement. There are many horror stories in the media and far more floating around rural cafes of people whose "nest egg" has been cracked by restrictive regulations. This gives landowners very strong incentives to cut while they still can.

Likewise, if timber mills fear that logs won't be available later, their buildings and equipment will decline in value and may become essentially worthless. They have incentives to run as long as they cover their out-of-pocket costs and just a smidgen more and wear out their capital. This fear causes them to buy logs at higher prices than could be sustained over the long run.

Forestry is quite different when people are secure in their holdings. Most important, people secure in their rights can prudently look ahead 35 to 60 years. When their rights to harvest in the future are secure, there are many things that landowners will often do to increase yields. For example, people can plant expensive but genetically improved seedlings, and thin, prune and fertilize. These practices can increase productivity per acre over 50 percent. This means fewer acres will be cut.

At the minimum, concern over regulatory "takings" causes rational people to dramatically reduce their investment in yield-enhancing efficiency. In addition, when productive forestry practices are reduced on private lands in the United States, more trees will be cut elsewhere. According to U.C. Berkeley forestry professor W.J. Libby, we will lose 49 species for every 25,000 acres of rain forest cut. To the degree that demand is shifted to tropical rain forests, some species will go extinct. Also, as wood supplies are constrained, substitutes with greater environmental impacts will displace wood products, e.g., steel studs in house construction.

Actions have consequences, in ecosystems and markets. Regulatory "takings" of private property will encourage behavior that defeats our environmental goals and strengthens opposition to environmental reforms. We should consider the reality of unintended consequences when designing environmental reforms.