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The Environment. Public 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. Internal and external costs. Internal costs: borne by agents of action - PowerPoint PPT Presentation
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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
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
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
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
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
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
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
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
Case studiesCase studies
Internationally– Soviet Union– Eastern Europe– China– India– Kyoto treaty
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
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
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
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
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
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
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
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
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
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
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
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
Undermining accountabilityUndermining accountability
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
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 often makes us all worse off
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 often makes us all worse off
Case studiesCase studies
Internationally– Soviet Union– Eastern Europe– China– India– Kyoto treaty
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