Posts Tagged ‘Ostrom’

Sustainability and some final thoughts

Saturday, August 27th, 2011

In the end, politics, economics and perhaps even environmentalism are practical matters dressed up as intellectual theory, following on from my previous blog on the theory behind sustainability.

Economics is good at analysing what happens at the point when things of value are exchanged, but is not much good at anything else.  Real economics cannot tell you how to sustain you or your family.  For example, were you have a budget of £100 to spend on your weekly shop, it cannot tell you what is the best way to spend that money on in terms of your health, or taste or what you have in your cupboards or what takes your fancy as you walk around the store.  It cannot tell you why you prefer one brand over another or why we buy olive oil from one country of origin over another, because none of us really make rational decisions based on utility, however neat a theory.  In fact, many of our decisions are decidedly irrational – for example, it is cheaper and quite easy to cook meals from scratch yet we buy, for example, fish pie or pancakes ready-made rather than make them ourselves.  A rational economist might say that we do this because we can use our labour or time more effectively elsewhere, but how many actually do redeploy that small amount of money or time rationally to optimise their wage earning potential – very few, methinks.

For me, I think the best way to think about sustainability is to think of families rather than economics, or at least money economics.  To keep a family going into the future, you first need to have children, which is rarely an economic decision, because under most cost-benefit analyses there is no rational economic justification in having children, but our desire to continue and sustain our genes into the future simply overrides and ignores any financial considerations.  Then you need to consider how you equip your children to sustain themselves in the future and the key things are to give them the capabilities to navigate their way through their own futures, with all its ups and downs, twists and turns.  So we educate them formally to enable them to open up their minds and get employment, and informally we teach them a moral code of what is good and bad and that hard work, honesty, fairness and good manners will get them pretty much anything they desire in time, or at least laziness, dishonesty, unfairness and bad manners will not get you far in life.  We might try and give them some seed capital to buy a home, but they may not get much financial support until they themselves have had a family and we can bequeath them something after death.  Finally, throughout all of this we nurture and love them as best we can.  And so it is in real life with economic sustainability, we must focus on the means of giving people the capabilities to navigate future generations through future uncertainties rather than get bogged down with numbers, which are but meaningless figures on a page or spreadsheet – one can create almost any set of numbers or scenarios that you desire to justify any position you want but to what useful end.

But while Governments, quangoes and international bodies like the World Bank or the United Nations can help with this in certain areas, they are not the best placed to act as custodians of economic sustainability.  Firstly, they have no long term perspective as their terms of office are short and their times of influence are probably even shorter.  Secondly, Governments are remarkably bad custodians of peoples’ money, even as they need that money as it is their lifeblood.  They tax and spend with impunity because they are dealing with other peoples’ money rather than their own.  Milton Friedman perhaps explained this best as he wrote in his book “Free To Choose” – “There are four ways in which you can spend money.  You can spend your own money on yourself.  When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.  Then you can spend your own money on somebody else. For example, I buy a birthday present for someone.  Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.  Then, I can spend somebody else’s money on myself.  And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!  Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.   And that’s government.  And that’s close to 40% of our national income.”

These capacities of Government to tax and spend are the root of their power and without this ability to take and then distribute with seeming largesse, Governments are nothing.  Hence, sustainability becomes another self-justification for why Governments must tax and spend, even though individuals and private collectives may be better at optimising humankind’s response to sustainability.  This takes the environment out of sustainability and it simply becomes a matter of power and control over capital.  For me, economics and environmentalism are different ways of looking at resource allocation, where money has been hugely successful at getting people to organise themselves to do things they do not want to do for a cash reward and also to exploit the natural capital resources (but note per my previous blog that money does not buy happinness or well-being beyond $10,000, while people will do charity and community projects for little or no finacial reward).  Conversely, environmentalism explains that there are limits to the natural capital available and we must all be mindful of this.  They are different, but overlap where the externalities from the economy degrade nature and where natural capital is available for exploitation.  However, they are not the same thing and do not overlap at all times.  Hence, they are different ways of looking at the world we live in, and we must be careful in merging them together.

So we must keep sustainability away from economists, Governments and politicians and per Ostrom focus on personal and community selflessness over selfishness, and look to our children and future generations rather than just the here and now.  Similarly, I would argue money is economics, and that money and sustainability do not mix.  However, I expect politicians, economists and everyone to argue that they all mix perfectly happily together, so the future will be a great and wonderful place.

Keep Governments Out Of Saving The World

Tuesday, November 17th, 2009

One of the areas of society that is exercising my thoughts at present is how societies organise themselves, are governed and whether we (as citizens) are actually free … or just whether we are being told that we are free, but in reality are all just tax and regulation slaves beholden to some amorphous and distant SuperState.  And one of those areas of concern relates more specifically to how society addresses environmental problems, such as climate change.

Will there be a tragic destruction of the commons?

Elinor Ostrom is a relatively controversial winner of this year’s Nobel Prize for Economics.  She is not an economist, but a political scientist with a current interest in social-ecological systems, which is the cause of the ruffled feathers amongst pure economists.  The Nobel Foundation cites that her award (she actually won ½ the prize with the other ½ going to Oliver Williamson) is in recognition of “her analysis of economic governance especially the commons”.

However, the concept of social-ecological systems and how to manage the commons is fundamental to all our environmental concerns, and since the potential destruction of the environment is regarded as one of the most pressing medium-term issues for the global economy, we can surely regard her work as impacting on the global economic system.  Or as Stern wrote in his seminal report on the economics of climate change: “Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen.” (Source: Stern review on Economics of Climate Change, HM Treasury, October 2006).

What is Ostrom interested in?

Firstly, let me explain what is meant by the commons.  It is the natural resources of the earth, ranging from the fisheries, lakes and forests and the soil through to the air quality and temperature and the planet’s biodiversity in animal, plant and microbial life.  Pretty serious stuff.  These are being impacted by everything from massive climate change and local pollution to overpopulation, the advancement of cities and urban developments.

The basic theoretical concept is called the tragedy of the commons.  In 1968, Garrett Hardin coined the phrase “the tragedy of the commons”.  In this case, the tragedy is that people, businesses or countries will continue using a bit more of the the earth’s free natural resources, the commons, while there is still some economic benefit left within Mother Earth until those resources are finally wiped out.  Then everyone suffers.

So for example, in an arid climate, herders will graze their livestock on all available vegetation until finally all the vegetation is destroyed and this method of farming collapses, ie there is no capacity within humans to mediate their actions to maintain the vegetation so that they can continue with their particular agrarian lifestyle.

Or forest communities in the equatorial rainforests have a reputation that suggests they will trash their forests, slashing them down for timber or burning them to clear land for small-scale agriculture.  But is this really so?

Even worse than this, there will be a short-term tragi-comedy where businesses and Governments see significant short-term benefits deriving from global warming as the Arctic becomes ice-free during the summer months within the next 20 years, and largely ice-free within 10 years.  This will open up shipping lanes across the North Pole and will expose land in Greenland, Northern Russia and Canada that can be exploited for mineral, oil and gas resources.  So businesses like Angus & Ross, a British minerals exploration company, which owns large tracts of land in Greenland has seen what were large areas of valueless ice are now fast becoming regions of prospectable mineral wealth as the ice retreats.

How do you protect the commons then?

The mainstream argument goes on that it is best for Governments to intervene, taking ownership and control of the land and so protecting it.  In fact, the United Nations intends to pay Governments to protect their forests ascribing a price per hectare in a way that the European Community offers farmers a subsidy for unused agricultural land under the set-aside scheme.

The climate change meeting in Copenhagen this December 2009 is expected to formalise this method by agreeing a formula for a scheme called Reduced Emissions from Deforestation and Forest Degradation (or REDD). 

But Ostrom’s work contradicts this State driven paradigm.  Elinor Ostrom addresses social-ecological systems at the ground level and how natural resources can be best managed without Government input and without the free market.  She highlights that while the free market might work in many circumstances the non-market part of society is also vitally important. 

She poses questions like the following: “”Why do some locally managed forests thrive better than government protected forests?…what factors affect the likelihood that farmers will effectively manage irrigation systems?…When will the users of a resource invest time and energy to avert “a tragedy of the commons”?” (Source: Ostrom, Science, Vol 325, p420, 24 July 2009, edited by Axel Steenberg and annotated with my emboldening for emphasis).

She suggests that communities will, in certain circumstances, self-organise to protect and manage their resources rather than let them be razed to nothing.

This propensity to self-organise depends on a large number of factors, including the size of the territory (a large resource is hard to manage while a small resource has no value), the predictability of the system (a forest is fairly easy to monitor whereas fisheries are chaotic), the mobility of the resource (trees stay still whereas herds of caribou move around), the number of users (large groups are harder to manage than smaller groups), leadership (respect for the leadership or elders), norms/social capital (where all users have the same moral-ethical code they are more likely to pull together), knowledge of the social-ecological system (you need to understand the resource to be able to manage it), importance of the resource to the users (fisheries off Mauritania are important to the Mauritanians rather than the British, even if the British and the rest of the EC are overfishing the North-West African Shelf, hence this disconnect between the beneficiaries of the overfishing and the actual resource has been and continues to be fatal to fish stocks in this highly productive area for marine biomass) and collective-choice rules (if locals have control over their destiny without interference they are more willing and able to defend their resources).

To quote again from Ostrom: “Larger-scale governance systems may either facilitate or destroy governance systems at a local SES level.  The colonial powers in Africa, Asia, and Latin America, for example, did not recognize local resource institutions that had been developed over centuries and imposed their own rules, which frequently led to overuse if not destruction” (Source: Ostrom, Science, Vol 325, p421, 24 July 2009) and (my words) a 100 or so years later local conflicts have arisen across ethnic groups where the colonial powers rode roughshod over traditional structures as they carved up Africa in the late 1800s and early 1900s.

She shows that if the State gets out of the way, local communities will respond by forming their own local, specific systems to manage scarce natural resources to prevent resource collapse, using their own rules (for which they have local buy in as they are home grown rules) and that this local social-ecological system is an adaptable framework that can apply in numerous different circumstances.

In other words, we (as in the human race) do not have an uncontrollable desire to self-destruct if we are left to our own devices and allowed to develop our own social-political systems on a local scale. 

So when we go back to the concept of REDD as introduced above, we find that perhaps the State is not the solution but perhaps the issue. 

Ashwini Chhatre and Arun Agarwal of the University of Michigan have compared data on carbon sequestration with types of forest ownership and have found that tropical forest under local management stored more carbon than those managed by Governments. 

One reason, per Ostrom, is that locals tend to be better at looking after forests if they own them as they then have an interest in ensuring the long term survival of the natural resource, as it is their livelihood.  Conversely, Governments (however good their intentions) will usually issue licences for destructive logging or free-for-all land grabs that strip forests bare.  The authors also suggest that locals may be better at managing common pastures, coastal fisheries and water supplies.  (Fred Pearce “Let the people look after their forests”, New Scientist p 12, 10 October 2009).

And then with all the best will in the world, you will get local political disasters that will create chaos with globally orchestrated plans, for example:

  1. The Burmese military government does not care about global political views so will continue to strip their tropical hardwood forests for their own gain whatever the developed world tries to tell them and it is estimated that two-thirds of timber revenues in Burma are from illegal trade and most of that simply crosses the border into China’s Yunnan Province and then elsewhere into China; or
  2. In Madagascar where there is currently no effective Government since the President was ousted in a political coup in March 2009 – so now the national parks are being logged at a rapid pace with 750 tonnes of rosewood “legally exported” this year to China while bushmeat hunters are exporting 100s (if not 1000s) of endangered lemurs to sell onto exotic meat restaurants (Catherine Brahic, “It’s open season on Madagacar’s biodiversity”, New Scientist p 12, 17 October 2009).

My current conclusion

What the work of Ostrom, and others, says to me about how to manage our global environment is that: (a) solutions by Governments or States are doomed to failure, as they will be destroyed inter alia by corruption and lack of local buy-in into their imposed schemes (however good and sensible and well meaning on paper); and (b) big global schemes will never work because they will never be specific enough to local factors and will be incapable of flexibility or have any in-built local intelligence, so will fail to marry up with the social, ecological and political requirements actually needed on the ground. 

In the end, global climate change will only ever be addressed by a concerted effort by people – that’s individuals, households and local communities – to work on their own towards a better planet, taking into account their own local, special circumstances.  It will mean forsaking the help of the State, and often working towards a distant, barely visible target, without any apparent success and even some possible failures. 

It really needs a wholesale lifestyle change, a change in our individual philosophies and how we interact with the world.  We need to look at the world holistically and sustainably – respect nature, don’t waste anything, work for a greater good and live together respecting people’s opinions and differences.

It, also, tells me that many of the modern political superstructures that have been built across nations, and even perhaps current social-political systems within countries, need to be re-appraised and new ways of organising societies need to evolve if humanity is successfully to sort out global environmental issues like climate change, overpopulation etc…but that’s for another day.