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Geoengineering: Don’t Ignore Economics and Governance

by Guest • November 1, 2012 @ 11:47 am

By Gernot Wagner Ph.D. Economist, Environmental Defense Fund

How serious is global warming? Here’s one indication: the first rogue entrepreneurs have begun testing the waters on geoengineering, as Naomi Klein laments in her must-read New York Times op-ed.

Sadly, Klein misses two important points.

First, it’s not a question of if but when humanity will be compelled to use geoengineering, unless we change course on our climate policies (or lack thereof). Second, all of this calls for more research and a clear, comprehensive governance effort on the part of governments and serious scientists – not a ban of geoengineering that we cannot and will not adhere to. (See point number one.)

Saying that we ought not to tinker with the planet on a grand scale – by attempting to create an artificial sun shield, for example – won’t make it so. Humanity got into this mess thanks to what economists call the “free rider” effect. All seven billion of us are free riders on the planet, contributing to global warming in various ways but paying nothing toward the damage it causes. No wonder it’s so hard to pass a sensible cap or tax on carbon pollution. Who wants to pay for something that they’re used to doing for free – never mind that it comes at great cost to those around them?

It gets worse: Turns out the same economic forces pushing us to do too little on the pollution front are pushing us toward a quick, cheap fix – a plan B.

Enter the Strangelovian world of geoengineering – tinkering with the whole planet. It comes in two distinct flavors: (more…)


Tribute to Elinor Ostrom

by Guest • June 12, 2012 @ 8:29 am

By Gernot Wagner, Environmental Defense Fund

Economists typically aren’t known for being nuanced. They are known, though, for responding to incentives. So perhaps this should change things: in 2009, Elinor Ostrom shared a Nobel Prize in economics for looking at exactly the question of what happens in between the two extremes: the tuna’s global free for all and the straw man of all-private, all-the-time. The Nobel citation commended her “for her analysis of economic governance, especially the commons.”

Her analysis applies to anything from Maine lobstermen to Swiss Alpine pastures to small forests in India, irrigation rights in Spain and the Philippines and umpteen other cases. Ostrom set out to find patterns across these disparate cases. At first, she was looking to deduce a blueprint, a single rule. That was harder than it looks.

Bear with me. Ostrom won a Nobel for her nuance for a reason.

She identified six common themes of what works and what doesn’t.  First and foremost, avoiding the tragedy of the commons takes well-defined territories. Maine’s lobster gangs definitely share that feature. Anyone who violates the boundaries of their own lobstering ground might find their lobster traps cut or their outhouses burning. Even Hardin’s pastures should have clear boundaries: fences, usually, or other natural limits. Second, she found a rough link between the costs and benefits of the rules of the game. If lobstermen felt that sticking to their gangs’ edicts didn’t provide them with appropriate personal benefits, gangs would quickly fall apart. Self-interest still rules the day. Similarly, and point number three, everyone wants a say in setting up the rules. Not everyone’s advice will be heeded, but everyone at the very least will be heard. That’s not just an act in futile pseudo-democracy; it’s key for keeping everyone on board and committed. Fourth on Ostrom’s list is monitoring. Someone ought to keep track of what’s going on. That could either be the unelected gang kings or the duly elected head of the local Lobstermen’s Association. In either case, he or she needs to draw their authority by cultivating the respect of everyone involved, and also provide a forum for grievances, another one of Ostrom’s points. Which leaves us with her sixth: There must be sanctions for violations of any kind. These can’t be too exorbitant at first but ought to be increasingly stiff for repeat offenders. Three strikes and you are banished from the harbor.

Preventing the tragedy of the commons turns out to be a messy business. Systems that combine private efforts, public governance and communities of various shapes and sizes tend to manage resources best. And it’s often the community function that has the biggest influence.

Maine lobstermen don’t just compete with each other once to catch as many lobsters as possible for themselves. They face each other season after season and also in other walks of life, whether at the market, at their kids’ school, or in church.

The key word in all of this is “manage.” Garrett Hardin, Mr. Global Commons Problem, by now has acknowledged as much. Thirty years after his article that caused the original stir, he wrote a follow-up for Science in 1998, in which he declared his “weightiest mistake” to be “the omission of the modifying adjective ‘unmanaged.’” The tragedy of the unmanaged commons makes ruin inevitable. Although here again, he manages to present the solution as an either-or: the choice is between “socialism or the privatism of free enterprise.” If you like to describe Maine harbor gangs as “socialist,” fine. I have a feeling that they would strongly disagree and may even back up their verbal disagreement with decidedly non-social behavior.

The true system of checks and balances that keeps the system afloat is much more nuanced than that. It is “polycentric,” to use Ostrom’s Nobel-winning term.

The crucial question now becomes which kinds of commons can be managed—whether mafia-style as with Maine’s harbor gangs or in slightly less dramatic settings like Alpine pastures or ancient irrigation systems that have been managed successfully for many centuries? The example of the factory upstream and the pollution victim downstream is on one end of the spectrum. That’s Ronald Coase and Garrett Hardin’s territory. Maine lobster grounds are somewhere in the middle. That’s where Ostrom shines.

And shine she did. Only today, her latest analysis appeared about why cities can and must show the way on climate, Rio+20′s ambitious (and necessary) global goals notwithstanding.



Breaking the Association Between Believing in Climate Science and Big Government

by Guest • May 29, 2012 @ 12:23 pm

This piece was originally published on Gernot Wagner’s blog site.

Facts are polarizing, and are easily misused. That, in short, is the conclusion of the latest paper by Dan Kahan et al in “The Polarizing Impact of Science Literacy and Numeracy on Perceived Climate Change Risks,” expertly reviewed in “Another nail in the coffin of Enlightenment reason” by David Ropeik for Bigthink.

The conclusion Ropeik draws seems clear: Now that we know that facts are misconstrued by those trying to further their own agenda, let’s use that knowledge when trying to talk about facts in the first place. In other words, put them in context, look to culture, norms, psychology, group behavior and all the other messy things that make global warming such an intractable problem.

We—as in those worried about global warming and wanting to do something about it— also need to keep in mind how our own actions and words are perceived. It’s not so much that climate deniers don’t actually like the science. It’s that climate deniers think they don’t like the inevitable conclusion: a big government take-over, a move to zero growth, a change of the American way of life as we know it—in other words all the things the “Left” seems to think are indeed necessary to make the change, epitomized by Naomi Klein’s take on “Capitalism vs. the Climate.” No wonder the “Right” believes the “Left” has an insidious agenda, using climate policy as an excuse redistribute wealth and re-create society in their own image.

The problem with Klein’s take is that it’s smart, insightful, but only half right:

Her assessment of the obstacles to solving climate change — from ideology to misplaced faith in green consumerism — are exactly right. And she’s right that fixing this problem means changing how the world does business.

But Klein is wrong in her more serious assertion…that we can save the planet only if we abandon capitalism. …

The deeper problem is not that our markets are too free; it’s that they are woefully rigged in favor of pollution.

In other words, it’s about harnessing market forces to address climate change.

I’m under no illusion that saying as much, as many from Robert Stavins on down have been trying to do for years, will do the trick all by itself.

But—and that’s the big but here—all of that market-centric language—as much as it pains liberals to embrace it—may well be the best response to Kahan et al’s powerful psychological research. It’s about breaking all-too-simple alliances, factions, and associations.

If “Believe in Climate Science” = “Big Government” in some (most?) people’s minds, then yes, increased knowledge about climate science will turn off those who strongly believe in small government.

If “Believe in Climate Science” = “Better-Functioning Markets” = “Less Socialism” and even = “Leaner, Meaner, Better Prepared Military,” alliances may well begin to change—slowly, perhaps too slowly, but still. It seems to be the only answer we have.

Gernot Wagner is an economist with the Environmental Defense Fund.

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