The Environment. Public and private goods Private: my enjoyment precludes your enjoyment –Examples: car, pencil, pint of beer Public: my enjoyment

The EnvironmentThe Environment

Public and private goodsPublic and private goods

Private: my enjoyment precludes your enjoyment – Examples: car, pencil, pint of beer

Public: my enjoyment doesn’t preclude your enjoyment– Examples: beach, park, air, water

Private: my enjoyment precludes your enjoyment – Examples: car, pencil, pint of beer

Public: my enjoyment doesn’t preclude your enjoyment– Examples: beach, park, air, water

Internal and external costsInternal and external costs

Internal costs: borne by agents of action– Examples: buildings, materials, supplies, labor,

marketing External costs: borne by others

– Examples: air and water pollution, noise, government subsidies, erosion

External costs = harms to others

Internal costs: borne by agents of action– Examples: buildings, materials, supplies, labor,

marketing External costs: borne by others

– Examples: air and water pollution, noise, government subsidies, erosion

External costs = harms to others

External costs on private goodsExternal costs on private goods

Person harmed may pay costs, complain, or sue for damages

Someone has an incentive to do something about the harm

By holding someone responsible Parties may negotiate to have agent pay

cost, making it internal

Person harmed may pay costs, complain, or sue for damages

Someone has an incentive to do something about the harm

By holding someone responsible Parties may negotiate to have agent pay

cost, making it internal

External costs on public goodsExternal costs on public goods

Nobody harmed can sue for damages Nobody has incentive to do anything about

the harm Nobody is held responsible Nobody is in a position to negotiate to make

agent pay costs

Nobody harmed can sue for damages Nobody has incentive to do anything about

the harm Nobody is held responsible Nobody is in a position to negotiate to make

agent pay costs

Tragedy of the commonsTragedy of the commons

People have incentives to impose costs on public goods (“the commons”)

People have no incentives or standing to make agents pay costs

So, public goods inevitably deteriorate

People have incentives to impose costs on public goods (“the commons”)

People have no incentives or standing to make agents pay costs

So, public goods inevitably deteriorate

Liberal solutionsLiberal solutions

Regulation: Empower government to protect public goods from external costs

– Preventing their imposition Enforcement of rules Taking over decision-making

– Making agents pay costs

Regulation: Empower government to protect public goods from external costs

– Preventing their imposition Enforcement of rules Taking over decision-making

– Making agents pay costs

Conservative solutionsConservative solutions

Privatization: Make public goods private, so people have incentives to protect them

Coase’s theorem: if transaction costs are zero, negotiations among private parties yield optimal use of public goods

So, auction public goods, or at least rights to impose costs on them

Privatization: Make public goods private, so people have incentives to protect them

Coase’s theorem: if transaction costs are zero, negotiations among private parties yield optimal use of public goods

So, auction public goods, or at least rights to impose costs on them

Liberal ArgumentsLiberal Arguments

The Case for Government Regulation

The Case for Government Regulation

Costs and benefitsCosts and benefits

Problems in computing costs and benefits– Not always conflict between

environment and the economy– How to put value on a life?– Uncertainty of estimates—

harms and probabilities– Behaviors OK for one become

dangerous for many– How much risk is OK? People

differ

Problems in computing costs and benefits– Not always conflict between

environment and the economy– How to put value on a life?– Uncertainty of estimates—

harms and probabilities– Behaviors OK for one become

dangerous for many– How much risk is OK? People

differ

Private computationsPrivate computations

Private computations of costs and benefits are untrustworthy– People act out of self-interest, not for the

good of society– People undervalue public goods– Randomness of harm leads people to

undervalue them (cf. highway deaths)– Cognitive blindspots: We’re not attuned to

subtle, long-term effects

Private computations of costs and benefits are untrustworthy– People act out of self-interest, not for the

good of society– People undervalue public goods– Randomness of harm leads people to

undervalue them (cf. highway deaths)– Cognitive blindspots: We’re not attuned to

subtle, long-term effects

Private decisionsPrivate decisions

Private decisions are untrustworthy– The market prefers short- to

long-term horizons for returns– The market prefers large- to

small-scale investments over long periods

– Initial investments may be too large for any private agent to make

Private decisions are untrustworthy– The market prefers short- to

long-term horizons for returns– The market prefers large- to

small-scale investments over long periods

– Initial investments may be too large for any private agent to make

Market failuresMarket failures

Prisoners’ dilemmas: each can act to maximize his/her own welfare, given what others do, and produce less than optimal outcome

Individual maximizing —/—> group maximizing

Environmental examples: walking on grass; driving; air and water pollution

Negligible costs add up

Prisoners’ dilemmas: each can act to maximize his/her own welfare, given what others do, and produce less than optimal outcome

Individual maximizing —/—> group maximizing

Environmental examples: walking on grass; driving; air and water pollution

Negligible costs add up

Market failuresMarket failures

This can happen even if each acts, not from self-interest, but to promote the good of the whole

Utilitarianism is indeterminate— what happens if we each try to maximize good doesn’t necessarily maximize good of the whole

Maximizing good requires coordination

This can happen even if each acts, not from self-interest, but to promote the good of the whole

Utilitarianism is indeterminate— what happens if we each try to maximize good doesn’t necessarily maximize good of the whole

Maximizing good requires coordination

Government solutionsGovernment solutions

The government is uniquely able to make environmental investments that are– Small-scale– Long-term– Capital-intensive– Directed at the public good

Must act to increase humanity’s margin of error

The government is uniquely able to make environmental investments that are– Small-scale– Long-term– Capital-intensive– Directed at the public good

Must act to increase humanity’s margin of error

Conservative argumentsConservative arguments

Against government regulationAgainst government regulation

TradeoffsTradeoffs

Tradeoffs: other values matter too– Prosperity– Economic growth– Employment– Farming– Leisure– Pleasure– Liberty

Tradeoffs: other values matter too– Prosperity– Economic growth– Employment– Farming– Leisure– Pleasure– Liberty

Environmental ImprovementEnvironmental Improvement

Necessity: the environment is steadily improving– As people become more affluent,

they choose environmental goods over other kinds of goods

– Market economies produce cleaner environments over time

Necessity: the environment is steadily improving– As people become more affluent,

they choose environmental goods over other kinds of goods

– Market economies produce cleaner environments over time

Global WarmingGlobal Warming

Virtues of marketsVirtues of markets

Rent-seeking: seeking a reward not justified by effort

People are lazy: Everyone seeks rent

In a market economy, there is competition

Anyone seeking rent may be undercut by someone seeking less rent

So, market economies minimize rents

Rent-seeking: seeking a reward not justified by effort

People are lazy: Everyone seeks rent

In a market economy, there is competition

Anyone seeking rent may be undercut by someone seeking less rent

So, market economies minimize rents

Resource AllocationResource Allocation

Market economies minimize rents Market economies allocate resources to

those who can make the best use of them

Market economies allocate resources optimally

Coase: if no transaction costs, amount of pollution would be optimal

Market economies minimize rents Market economies allocate resources to

those who can make the best use of them

Market economies allocate resources optimally

Coase: if no transaction costs, amount of pollution would be optimal

Market failure?Market failure?

Market failure: sometimes individual maximizing —/—> group maximizing

Market allocations aren’t always optimal Transaction costs aren’t zero Tragedy of the commons arises But government regulations face same

problem

Market failure: sometimes individual maximizing —/—> group maximizing

Market allocations aren’t always optimal Transaction costs aren’t zero Tragedy of the commons arises But government regulations face same

problem

Regulatory failureRegulatory failure

Barnett’s lunch law; my corollary Added spending and regulation may

produce benefits, with seemingly negligible costs spread over many people

Barnett’s lunch law; my corollary Added spending and regulation may

produce benefits, with seemingly negligible costs spread over many people

Tragedy of the CongressTragedy of the Congress

But small costs add up (Dirksen: “A billion here, a billion there, and pretty soon you’re talking about real money!”)

The costs are imposed on other people

Tragedy of the Congress: We don’t get optimal amount of government spending and regulation; we get too much

But small costs add up (Dirksen: “A billion here, a billion there, and pretty soon you’re talking about real money!”)

The costs are imposed on other people

Tragedy of the Congress: We don’t get optimal amount of government spending and regulation; we get too much

IndividualityIndividuality

Regulation requires rules, to be applied to all similarly situated agents

But often it is optimal to allow some to pollute – General: auto or power plant emissions– Special circumstances: economic or other

benefits



benefits

Distributed knowledgeDistributed knowledge

People make decisions every day about tradeoffs between various kinds of goods, including public goods

They also negotiate about external harms Government officials can’t know enough

to substitute their judgments for those of millions of people




Why? Public choice theoryWhy? Public choice theory

Governments don’t act to promote the public good

Bureaucrats act to promote their own good

They insulate themselves from competition, accountability

They have little incentive – To resist special interests– To consider private costs– To resolve issues efficiently


Bureaucrats act to promote their own good

They insulate themselves from competition, accountability

They have little incentive – To resist special interests– To consider private costs– To resolve issues efficiently

Undermining accountabilityUndermining accountability

No citizen has time to analyze every issue Those with large interests at stake exert most influence Voters assess candidates on the basis of thousands of

issues, making most risk-free for officials; many are not elected

Environmental issues concern the future; political rewards and punishments depend mostly on present effects

There is no tangible measure of efficiency

No citizen has time to analyze every issue Those with large interests at stake exert most influence Voters assess candidates on the basis of thousands of

issues, making most risk-free for officials; many are not elected

Environmental issues concern the future; political rewards and punishments depend mostly on present effects

There is no tangible measure of efficiency

Political rent-seekingPolitical rent-seeking

If government decides, there is no competition Nothing to minimize rents Decisions are inefficient Decisions are political Public goods may be neglected or harmed Public goods may be protected at excessive expense

If government decides, there is no competition Nothing to minimize rents Decisions are inefficient Decisions are political Public goods may be neglected or harmed Public goods may be protected at excessive expense

IncentivesIncentives

If government makes decisions, then people have incentives to invest time, money, etc., in influencing political decisions

Those resources could have been invested in improving the environment or producing goods and services

People have greater incentives to weigh tradeoffs than officials do

Government regulation makes us all worse off




Government regulation makes us all worse off

Case studiesCase studies

Internationally– Soviet Union– Eastern Europe– China– India– Kyoto treaty


United States– Hudson River

dredging– Western forests (fires)– National Parks– Ethanol subsidies– CAFE standards

United States– Hudson River

dredging– Western forests (fires)– National Parks– Ethanol subsidies– CAFE standards

Kantian ArgumentsKantian Arguments

Who deserves respect?Who deserves respect?

Everything has a price or a dignity

Human beings do not have a price; we have dignity

What about – Animals?– Plants?– Natural formations?

Everything has a price or a dignity

Human beings do not have a price; we have dignity

What about – Animals?– Plants?– Natural formations?

Land ethic & deep ecologyLand ethic & deep ecology

We must see nature itself as having dignity Self-realization: spiritual growth— self —>

other people —> other animals —> nature itself

Biocentric equality: All organisms have equal intrinsic worth and so equal rights to live and flourish

We must see nature itself as having dignity Self-realization: spiritual growth— self —>

other people —> other animals —> nature itself

Biocentric equality: All organisms have equal intrinsic worth and so equal rights to live and flourish

Criteria for dignityCriteria for dignity

All life forms deserve respect

But they lack autonomy What are the criteria for

having dignity?– Humans– Animals– Plants– Rocks

All life forms deserve respect

But they lack autonomy What are the criteria for

having dignity?– Humans– Animals– Plants– Rocks

PredatorsPredators

Many life forms harm other life forms in order to live– Carnivores and omnivores– Herbivores– Parasites– Bacteria

Must minimize harms to other forms

Many life forms harm other life forms in order to live– Carnivores and omnivores– Herbivores– Parasites– Bacteria

Must minimize harms to other forms

Basic principlesBasic principles

Biodiversity is intrinsically and instrumentally valuable

Humans may reduce biodiversity only to meet vital needs

Flourishing of nonhuman life requires human population decrease

Present human interference is excessive

Biodiversity is intrinsically and instrumentally valuable

Humans may reduce biodiversity only to meet vital needs

Flourishing of nonhuman life requires human population decrease

Present human interference is excessive

Basic principlesBasic principles

Policies must be changed to reduce human interference

We must appreciate quality of life, not strive for higher standard of living

We face a crisis: population growth, extinction of species, ozone depletion, global warming

Policies must be changed to reduce human interference

We must appreciate quality of life, not strive for higher standard of living

We face a crisis: population growth, extinction of species, ozone depletion, global warming

EcofeminismEcofeminism

What gives us a right to dominate nature? What allows us to treat nature as having a

price rather than a dignity that requires respect?

Logic: cognitive superiority —> moral superiority —> right to subordinate— assign a price

What gives us a right to dominate nature? What allows us to treat nature as having a

price rather than a dignity that requires respect?

Logic: cognitive superiority —> moral superiority —> right to subordinate— assign a price

The logic of dominationThe logic of domination

Argument– We can change our environment– Plants and rocks can’t– What can change its environment is

morally superior to what can’t– Moral superiority justifies subordination– So, we have a right to subordinate plants

and rocks

Argument– We can change our environment– Plants and rocks can’t– What can change its environment is

morally superior to what can’t– Moral superiority justifies subordination– So, we have a right to subordinate plants

and rocks

Nature <—> WomenNature <—> Women

Similar reasoning justifies domination of women– Women identified with nature– Men with humanity as a whole– What is identified with humanity is morally

superior to what is identified with nature– Moral superiority justifies subordination– So, men have a right to subordinate women

Similar reasoning justifies domination of women– Women identified with nature– Men with humanity as a whole– What is identified with humanity is morally

superior to what is identified with nature– Moral superiority justifies subordination– So, men have a right to subordinate women

A faulty premiseA faulty premise

Feminists reject that conclusion If the conclusion is false, then

– The argument is invalid, or– At least one premise must be false

One false premise: moral superiority does not justify subordination

But then the argument about nature falls too

Feminists reject that conclusion If the conclusion is false, then

– The argument is invalid, or– At least one premise must be false

One false premise: moral superiority does not justify subordination

But then the argument about nature falls too

Ecology <—> feminismEcology <—> feminism

These arguments stand or fall together So, environmentalists should be feminists Feminists should be environmentalists We must rethink our relation to nature We should relate to nature without

subordinating it

These arguments stand or fall together So, environmentalists should be feminists Feminists should be environmentalists We must rethink our relation to nature We should relate to nature without

subordinating it

Conservative argumentsConservative arguments

Against government regulationAgainst government regulation

People over penguinsPeople over penguins

Only people have dignity. Arguments:– Common sense view– Only we can live

according to a rational plan

– Only we count as moral agents

– Only we have autonomy

Only people have dignity. Arguments:– Common sense view– Only we can live

according to a rational plan

– Only we count as moral agents

– Only we have autonomy

People over penguinsPeople over penguins

We depend on the health of other species; we mustn’t destroy them

We share interests with other species (e.g., clean air and water)

Penguins can’t vote; no one has the right to speak for them

No value without humans

We depend on the health of other species; we mustn’t destroy them

We share interests with other species (e.g., clean air and water)

Penguins can’t vote; no one has the right to speak for them

No value without humans

The EnvironmentThe Environment

ResourcesResources

We have the right to use what we need for our own– Survival– Biological welfare– Rational agency

But we must not go beyond that We have no right to domination for its own sake We must not do anything that would threaten our

own survival, biological welfare, or rationality

We have the right to use what we need for our own– Survival– Biological welfare– Rational agency

But we must not go beyond that We have no right to domination for its own sake We must not do anything that would threaten our

own survival, biological welfare, or rationality

Virtue as a meanVirtue as a mean

Environmental concern is a virtue We can have too little or too much constraint

on our desire to use resources for our own purposes

Too little: recklessness Virtue: responsible stewardship Too much: inefficiency, ineffectiveness

Environmental concern is a virtue We can have too little or too much constraint

on our desire to use resources for our own purposes

Too little: recklessness Virtue: responsible stewardship Too much: inefficiency, ineffectiveness

Responsible stewardshipResponsible stewardship

We must constrain our own drives to– Pursue wealth and convenience without regard

to environmental consequences– Impose costs on others– Impose costs on the commons– Exploit the environment for present benefits,

without concern for the future, especially future generations

We must constrain our own drives to– Pursue wealth and convenience without regard

to environmental consequences– Impose costs on others– Impose costs on the commons– Exploit the environment for present benefits,

without concern for the future, especially future generations

TradeoffsTradeoffs

Other values matter too– Prosperity– Economic growth– Employment– Agriculture– Leisure– Pleasure– Liberty

Other values matter too– Prosperity– Economic growth– Employment– Agriculture– Leisure– Pleasure– Liberty

NecessityNecessity

The environment is steadily improving– As people become more affluent, they choose

environmental goods over other kinds of goods– Market economies produce cleaner environments over

time– Water and air quality have improved– Human health is better than ever– Nevertheless, there remains much room for

improvement

The environment is steadily improving– As people become more affluent, they choose

environmental goods over other kinds of goods– Market economies produce cleaner environments over

time– Water and air quality have improved– Human health is better than ever– Nevertheless, there remains much room for

improvement

ComplexityComplexity



benefits



benefits

Distributed knowledgeDistributed knowledge







TraditionTradition

Burke: given complexity, competing goods,– We must seek balance, compromise– Judged on the basis of experience– Without relying on universal rules

The social arrangements that evolve for doing this are likely to be better than any we consciously devise

They embody distributed information and wisdom over time

Burke: given complexity, competing goods,– We must seek balance, compromise– Judged on the basis of experience– Without relying on universal rules

The social arrangements that evolve for doing this are likely to be better than any we consciously devise

They embody distributed information and wisdom over time

Why? Public choice theoryWhy? Public choice theory


Bureaucrats act to promote their own good They insulate themselves from competition,

accountability They have little incentive

– To resist special interests– To consider private costs– To resolve issues efficiently


Bureaucrats act to promote their own good They insulate themselves from competition,

accountability They have little incentive

– To resist special interests– To consider private costs– To resolve issues efficiently


No citizen has time to analyze every issue Those with large interests at stake exert

most influence Voters assess candidates on the basis of

thousands of issues, making most risk-free for officials; many are not elected

No citizen has time to analyze every issue Those with large interests at stake exert

most influence Voters assess candidates on the basis of

thousands of issues, making most risk-free for officials; many are not elected


Environmental issues concern the future Political rewards and punishments depend

mostly on present effects There is no tangible measure of efficiency

Environmental issues concern the future Political rewards and punishments depend

mostly on present effects There is no tangible measure of efficiency

Political rent-seekingPolitical rent-seeking

If government decides, there is no competition

Nothing to minimize rents Decisions are inefficient Decisions are political Public goods may be neglected or harmed Public goods may be protected at excessive

expense

If government decides, there is no competition

Nothing to minimize rents Decisions are inefficient Decisions are political Public goods may be neglected or harmed Public goods may be protected at excessive

expense

IncentivesIncentives




Government regulation often makes us all worse off




Government regulation often makes us all worse off

Case studiesCase studies



United States– Hudson River dredging– Western forests (fires)– National Parks– Ethanol subsidies– CAFE standards

United States– Hudson River dredging– Western forests (fires)– National Parks– Ethanol subsidies– CAFE standards

Documents

The Environment. Public and private goods Private: my enjoyment precludes your enjoyment –Examples: car, pencil, pint of beer Public: my enjoyment