Environmental Degradation and the Religion of the Market

by Dr. A.R. Dobell

Winspear Professor of Public Policy

School of Public Administration

University of Victoria


Paper prepared for the 1993 SSHRC International Summer Institute on the topic:

"Population And The Environment: Population Pressures, Resource Consumption, Religions And Ethics"

Whistler, British Columbia August, 1993

(revised December 1993; final editing September, 1994)

(electronic version published September, 1994)

This paper will appear in the forthcoming volume "Population And The Environment: Population Pressures, Resource Consumption, Religions And Ethics" to be published by the Press of the State University of New York in 1995.

In its present form, the contents are copyright by the Press and all rights reserved. Comments and criticism would be welcome by the author, who can be reached by e-mail at the address rdobell@uvic.ca











This paper introduces three ideas. First, in examining concerns with environmental stress and degradation, it is useful to extend the conventional analysis in terms of population, affluence and technology to distinguish two aspects of technology, namely "dematerialization" ("industrial ecology") and "wanton by-catch" (harvesting). Second, it is essential to recognize that poverty may generate environmental degradation through the forced appeal to destructive harvesting in the pursuit of survival, while affluence may generate environmental stress through adoption of wasteful technologies forced by a material-intensive life-style and distorted pricing systems. Third, more generally, these problems of environmental degradation may be addressed in part through the recommendations flowing from environmental economics, which emphasizes the pricing of resources and ecological services to reflect their value in meeting human needs, but this is only part of the answer, necessary but not sufficient. More fundamental is to recognize the conclusions from ecological economics, which set the economic mechanisms and the "wisdom of the market" in the context of the natural systems of the biosphere. From ecological economics flows the pre-eminent imperative of preservation of natural capital and biodiversity, but in addition the analysis calls attention to the importance of institutional and cultural capital, and forces consideration of concerns for future generations in setting terminal conditions on the stock of natural capital to be maintained by each generation. Appropriate social ground rules to govern such preservation are discussed.

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This chapter examines the teachings of what has become a modern European or Western religion-- individualist economics, or the "religion of the market"--concerning the twin problems of allegedly excessive population growth and excessive resource consumption. In doing so, the importance of a fundamental reframing of our analysis will be emphasized, based on an image of the economy as simply one among the many social institutions and constructs by which we organize human activity, and through which we mediate relations with the biosphere of which we and all our activities are simply one part.

In particular, a simple formula helps us to disentangle some of the relationships by which the increasing scale and material content of human activities lead directly to growing environmental stress and the degradation of the biosphere. The key observation is that the prevailing economic religion pushes human decisions inexorably toward increasing incomes, increasing consumption, and continuing "wanton by-catch" because relevant social and environmental costs are not captured in calculations about so-called efficient technologies or appropriate resource use.

To address this problem, the role of "free market environmentalism" is sketched, and the inescapable necessity for these economic mechanisms to be embedded in an essentially ethical or spiritual framework of social ground rules is highlighted. The key purpose of these social ground rules, in turn, is the preservation of "natural capital" (and social capital) to achieve the goal of sustainability and consequent intergenerational equity. Further, the emphasis of free market environmentalism on property rights and the need for, in effect, a new enclosures movement embracing all the elements of the global commons demonstrates the necessity to consider the ownership of this global commons, and possible redistribution of the initial endowments with which individuals and nations participate in market activity.

Such measures to achieve sustainability or intergenerational equity in the face of existing population pressures and resource imbalances will demand financial and technological transfers far beyond current levels. Piel (1992) has argued that the real costs of such transfers are remarkably low, and the tangible benefits remarkably high. Singer (1979) has argued that the obligation is inescapable. Nevertheless, neither the massive redistribution of wealth entailed in recognition of intrinsic claims of humanity on a share of the global commons, nor even the more modest resource transfers entailed in full environmental costing seem likely without some dramatic shift in underlying values, a shift going far beyond the bounds of the economic religion.

The central thesis of this chapter, then, is that the market can be made to capture more of the social and environmental costs that must be taken into account in arriving at equitable resource use, but in the end both our obligations to others and our obligations to Nature can be sufficiently communicated only through broadly accepted social ground rules or religious principles. These may be captured to some extent in "green consumerism" or "socially responsible business", but in either case they reflect a move away from utilitarian calculation toward concerns for fairness and procedural justice.

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Fig. 13-1In reporting periodically on the state of human affairs, the Human Development Reports produced by the United Nations Development Program serve in some respects as companions and complements to the economically-oriented World Development Reports of the World Bank. Figure 13-1 shows the figure used on the cover of the 1993 Human Development Report. In explanation, the inside front cover of that Report notes that the diagram refers to weighted averages of regional GDP (gross domestic product) and employment growth, and notes:

"The cover design reflects the disturbing phenomenon of jobless growth in the world. The upper curve represents GDP growth (1975-1990) and its projected trend (1990-2000) weighted for major regions (OECD countries, Latin America, Sub-Saharan Africa, South Asia and East Asia). The lower curve represents employment growth, weighted by region. Since 1975, employment growth has consistently lagged behind output growth, and this gap is likely to widen during the 1990's."

Interestingly, however, one could speculate that the same design, with exactly the same variables and shapes, might appear on the cover of the World Development Report, but with a different explanatory note. Inside its front cover, the WDR might say something like:

"The cover design depicts the success with which industry and national governments have pursued aggressive adjustment measures to downsize operations, trim excess staff, de-layer hierarchies and achieve more efficient operations. ... Since 1975, output growth has consistently outpaced employment increases, and this gap is likely to widen in the 1990's and beyond. This record of rising productivity makes possible continuing increases in wages for those employed, and creates an environment favourable to continued new investment and economic progress."

Thus, depending on whether one interprets employment as someone's opportunity to participate in production and thereby claim a social role and a share of the world's material resources or as simply a cost of doing business, the record of the last fifteen years will be read either as a disturbing trend toward jobless growth or as an encouraging indicator of steady increases in productivity and rising incomes per person employed.

The problem with the latter view, of course, arises in its emphasis on incomes per person employed. It is this which raises all the concerns about the emerging dual economy and enclave society where rising incomes for a falling proportion of the population lead to an increasingly polarized and strained community. (See Homer-Dixon [1991] for a research agenda linking these concerns with issues of environmental degradation and global security.)

Fig. 13-2The Human Development Report for the previous year (1992) reveals starkly the massive gap between two economic worlds, the industrial countries (mostly) of the economically developed North and the less economically developed countries (mostly) of the South. This is the reality behind the issues of environmental stress and resource management to be discussed here. Figure 13-2, reproducing the inside cover of the 1992 Report, portrays a startlingly inequitable world, a world of maldistribution and disparity which underlies a so-called "ticking time bomb" of potential ecological degradation and collapse. The situation portrayed by the diagram seems on its face to be an unjustifiable result of indefensible policies. Yet day-by-day we accept these outcomes and live placidly (more or less) with their consequences. Why is that so?

It will be argued here that the explanation lies largely in our embrace of a peculiarly European or Western religion, an individualistic religion of economics and of markets, which explains all of these outcomes as the inevitable results of an intricate but objective system in which discretionary collective intervention is counterproductive. In particular, the explanation resides in the adoption of a perspective or frame which rests on an economic calculus in which employment is simply a cost of doing business, and Nature is merely a pool of resources for use in production. In this calculus, the world of business is so fundamental and so separate from the environment or the biosphere that intervention in the ongoing economic system is a threat to the natural order of things, and hence to future human welfare. In this way of thinking, that outcome is just (or at least inevitable) which emerges from the natural workings of this economic system, and the "wisdom of the market" on which it is based. The hegemony achieved by this particular intellectual construct -- a "European religion" or economic religion -- is remarkable; it has become a dogma of almost universal application, the dominant religion of our time, shoring up and justifying what would appear to be a patently inequitable status quo. It has achieved an immense influence which dominates contemporary human activity.

Core elements in the dogma of this religion of the market include two counter-intuitive but basic propositions:

i) That it is right and just, through the medium of the limited liability corporation, to separate one's personal morality from responsibility for acts undertaken in the name of corporate objectives. Contemporary rhetoric may be weakening the phrasing of this proposition, but the expression "the market made me do it" remains a fundamental element of explanations for actions which would otherwise seem morally unjustifiable. This proposition leads on to the primacy of corporate-form bookkeeping, which, as will be noted below, is a long way from any concept of full environmental accounting.

ii) That value can be adequately signalled by prices, and exchange of value can be adequately accomplished by free transactions on impersonal market mechanisms.

What is necessary as an antidote to this strange world view is to shift to a dramatically different frame, in which the economic sphere is inexorably embedded in the biosphere, and the functioning of the larger ecological system provides the natural benchmark; intervention in that functioning for economic purposes will be acceptable only when demonstrably not threatening to the natural order. Before dealing in detail with this process of inversion or reframing, however, it is useful to look more closely at the relationships between human activity and environmental stress.

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It is clear that increasing population and the increasing scale of human activity are straining dramatically the carrying capacity of the Earth. The increasing pressure of the anthroposphere on the biosphere is undeniable, and persistent environmental degradation is an observable consequence. But that stress reflects not one simple problem of population growth, but four problems, of which population is only one. These four include:

1. The scale of population and its still-too-high rates of growth;

2. Dramatic inequity in employment opportunities, income and wealth, leading to the coexistence of absurd "absolute affluence" and grinding "absolute poverty";

3. Excessive material content and resource use in consumption;

4. Wanton, wasteful stress imposed on the environment and ecological systems as a result of inappropriate technologies in the harvesting of renewable resources and the utilization and disposal of material resources or energy.

In attempting to examine the relative roles of population and technology in the explanation of environmental stress and degradation, there is a little trick which, though simple, is illuminating. Used already by Ehrlich and Ehrlich in their path-breaking 1972 book, Population, Resources and Environment, and subsequently employed in various descriptive comparative studies at OECD and elsewhere, it consists of breaking down or decomposing a complex notion like environmental stress into component elements for separate analysis. Although it is tautological, it is useful for expository purposes to examine the following formula.

S = (Y/P) x (M/Y) x (S/M) x P

Decomposition of pressures leading to environmental degradation or stress


S denotes some measure of environmental stress

Y/P stands for income per capita

M/Y stands for the material content or resource use per unit of income or output

S/M denotes the environmental stress per unit of material output or resource input


P represents total population.


S It must be remembered, of course, that environmental stress is experienced differently in different places: in the North concerns may be abstract and global -- e.g., CFCs and ozone depletion problems; in the South they are more immediate and local-- e.g., the loss of communal grazing land or fuelwood.

(Y/P) Obvious distributional issues are central in examining the impact of changing levels of income per capita.

(M/Y) Represents a choice of lifestyle (materialistic consumer society versus a conserver society [Science Council, 1977]) and orientation to production [Wuppertal Institute, 1993].

(S/M) Relates to the question of appropriate technologies [Schumacher], "wanton by-catch" and social or environmental stress.

But the major impact of the religion of the market on environmental degradation is probably in the latter two terms of the formula, which reflect income aspirations and technological choices more than they do population. The first of these (M/Y) can be thought of as representing the material content of consumption and production, thus reflecting choices on production techniques; the second (S/M) represents the environmental stresses associated with the utilization of resources and ecological services, reflecting decisions on the technologies adopted for harvesting or conservation.

Relevant to the first of these two are discussions of dematerialization and reduction of resource demands in production -- increasing energy and resource efficiency. (See Schmidt-Bleek [1993] for examples and references.) Relevant to the second is the concern with wasteful and destructive, non- selective resource extraction or harvesting techniques. Because ecological resources and natural capital are unpriced, harvesting techniques like driftnets and draggers, clearcuts and stripmines are not only tolerated, but forced in the name of competitiveness. The extent to which market forces can lead in this area to what would seem obviously irrational, if not obscene, practices such as the harvesting of species to the point of extinction has been clearly demonstrated by Colin Clark, for example, in his book Mathematical Bioeconomics (Clark, 1976).

The economic religion thus seems to push inexorably toward high incomes, highly material-intensive and environmentally-stressful modes of production -- toward the adoption of technologies which are unselective and wasteful of ecological resources and ecological integrity. At the same time, it leaves behind absolute poverty on a large scale, from which environmental degradation also flows inevitably. Within the framework of this religion, it seems, the conserver society is not commercially viable, and the consumer society is largely inevitable.

Interestingly, and paradoxically, it is in the harvesting of renewable, rather than exhaustible, resources, that we appear to go most wrong, and put ourselves most at risk. Examples are all around, in the adoption of destructive technologies such as strip mining on land, strip mining of oceans (draggers, drift nets), massive clear-cutting of forests and so on. Thus environmental choices are embedded in and driven by the economic religion, though not explicitly articulated in the process. At the same time, it can be argued that economic adjustment processes, technological progress and substitution of more plentiful materials has consistently generated, and will continue to generate, increasing supply and decreasing real supply prices for almost all minerals and exhaustible resources (Moore, 1992). Some observers would extend this argument not only to wood products but to water and other renewable resources. Doubts are greater with respect to concerns about biodiversity and the functioning of ecosystems more generally.

It is obvious that religious teachings and traditions influence the last term (P) of the formula, through impacts on rates of population growth, but it is also widely recognized now that the level and distribution of income, and social factors such as the treatment and education level of girls and women, probably influence it more. (References dealing with this question of demographic transition can be found in several other papers in this volume, for example, that of Margaret Catley Carlson.)

Examining this formula, then, we note that traditional religions appear pro-natalist, and press towards high total population (P). Western individualist consumer-based religions, on the other hand, press towards the joy of high Y/P, high income and high consumption per capita, though there may be some possibilities of promoting the conserver society as an alternative. Technological developments offer considerable promise of reducing the material content of output and consumption, for example, through "dematerialization". (Schmidt-Bleek, 1993.) But the pressures toward efficiency and competitiveness in a world economy with a religion based on a bizarrely incomplete price system seems to condemn us to continuing problems in the methods of resource utilization.

Thus it seems that the biggest difficulties arise precisely where one or another religious tendency is strongest. In the name of authority, traditional religions appear, at least to some, to press a pro-natalist view and encourage excessive population growth. In the name of efficiency, on the other hand, economic religions encourage environmentally wasteful, destructive technologies for the harvesting of renewable resources , utilization of ecological services and extraction of exhaustible resources. So we turn to a closer look at that peculiar intellectual perspective.

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The basic posture or orientation of the economic religion is well captured in a recent comment of Jagdish Bhagwati, who notes "There are at times philosophical differences between the two [proponents of free trade on the one hand and of the environment on the other] that cannot be reconciled, as when environmentalists assert nature's autonomy, whereas most economists see nature as a handmaiden to humankind." (Bhagwati, 1993). The economist's outlook, as so described, can be illustrated as in Figure 13-3.

It is by now widely recognized in the economics literature--though much less so in practice--that this model itself demands attention to the costs and prices of many resources and ecological services previously treated as free. Given its claim to scientific rationality, this economic religion rests on a surprisingly small base of information (even though it may be vast relative to what can be handled within a central planning agency). Interestingly, more or less everybody now knows that market systems are profoundly flawed, in the sense that, left on their own with present pricing and practices, they will lead inevitably to environmental damage and destruction of irreplaceable ecological systems. (See Solow, 1992 and Daly 1993.) In particular, market mechanisms are widely recognized to be incomplete with respect to prices, property rights and accounting information when it comes to environmental concerns. Indeed, on examination, prices, markets and market principles appear to cover such a small portion of overall human activity, even economic activity, that the hegemony achieved by the religion over all social action is startling, as noted earlier. It is a puzzle that Western society has bought so fully into the particular intellectual construct, but the undercurrent of dissent which has always been present does now seem to be moving toward a stage of much more fundamental questioning. (The political philosopher Charles Taylor (1991) offers one critique, as does the more popular volume of John Ralston Saul (1992). (See also Sagoff, 1988.)

Fig. 13-3In the school of "Free Market Environmentalism" (Figure 13-3), these problems are to be remedied by completing the market through the introduction of prices and property rights which attach appropriate market signals to resources presently not properly valued in economic calculation. In particular, property rights governing the use of common pool resources, and property rights governing the exploitation of ecological services for waste disposal are all to be created in order to ration access in socially optimal fashion. One can consult Ostrom (1990) and Block (1990) for two views, and the seminal work of Dales (1968) for the origins of much of this thinking.

From Ostrom's work it is clear that we need to take much more fully into account the richness of social institutions, beyond the market, involved in such regulation. But in any case it is also clear that we need to know much more about the dynamics and interactions of ecological resources with the natural processes of the biosphere. For this purpose, then, it is essential to consider an alternative frame or world view.

Indeed Stevenson (1991) emphasizes the necessity to recognize a whole range of common property arrangements which represent alternative institutional solutions to the difficulties of open access resources, short of the full private property (FME) solution. Such intermediate arrangements include as alternatives not just general access through a structure of government regulation, but also more restricted access governed formally by well-defined organizations or community groups, or informal access controlled by less well-defined traditional or cultural groupings. It is these last which have been of particular interest to Ostrom and her colleagues in many settings.

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Fig. 13-4The alternative, then, is to construct a broader frame of reference. In Figure 13-4, the economy is portrayed as one set of structures and activities, developed within a broader set of social institutions, all of which in turn operate within the context of a biosphere with its own internal logic and natural dynamics.

Within this framework, one can view the economic system, as just noted, as meeting the needs of current generations by utilizing produced means of production (physical, human and intellectual capital), drawing on natural ecological systems as a source of raw materials, and on the absorptive capacity of the natural environment as a source of waste disposal services, with the whole set of activities governed by a well-established set of property rights, price signals and market exchange mechanisms, but mediated also by a set of social institutions and traditions. The point of the "free market environmentalism" idea is that this process can, with appropriate prices and accounting, achieve appropriate utilization of environmental resources, taking into account intangible benefits, option values and the like. Indeed, in a theoretical ideal world, it can be argued that the very short term pursuit of maximum net national product, appropriately priced, can lead to the long term objective of sustainability. (In a model focussed particularly on pollution costs, Hartwick [1990] demonstrates this mathematical result; in a more general argument, Solow [1992] suggests an "almost practical" definition of sustainability drawing on the same analysis.) Even in this ideal setting for free market environmentalism, however, the argument does depend both on assumption of the "right" prices for all ecological and social, as well as physical goods, and on the existence of a social rule that provides for appropriate social reinvestment to maintain the value of society's capital stock, including natural capital. (And all of this therefore requires the assumption of appropriate repricing of resource flows from South to North, for example, to reflect the scarcity value of natural resources as well as compensation for pollution costs customarily unpriced.)

With some such understanding about a better contemporary balance in resource flows, one can turn to the question of sustainability and intergenerational equity more directly. The starting point is simply that to meet the needs of current generations without compromising the capacity of future generations to meet their own needs, it is necessary to undertake sufficient investment to maintain the capital stock of society undiminished. A generation ago, Solow (1973) noted that the normal pattern of economic growth entailed a process of transformation whereby existing natural resources are drawn down and converted to manufactured goods (produced means of production), thereby creating a constructed capital stock capable of generating the flow of goods and services necessary to meet the needs and desires of growing numbers of people with rising incomes. The key to sustainability is simply that in this process of transformation, the consumption of natural resources is matched by a sufficient buildup of physical capital and industrial capacity. In his "An Almost Practical Step toward Sustainability", Solow (1992) spells out how this calculation can be accomplished, noting the correspondence with what has become known as "Hartwick's Rule". (See Hartwick [1990] for references.) The logic is evident, and the process natural. That logic corresponds directly to an obvious industrial strategy for oil-based economies like the Middle East or Alberta, the transition strategies of which obviously must build up heritage funds sufficient to assure adequate income when the oil runs out.

A minimal concept of sustainability, therefore, would be one which insists on at least a "constant capital" rule, or on the responsibility of current generations for passing along an aggregate capital stock no smaller than the present. But as Figure 13-4 emphasizes, it is important to keep in mind not only a general social asset which might be called institutional capital, reflecting a history of social organization and social relationships, but also a potentially still more fundamental asset called natural capital which reflects the continuing productive capacity flowing from the maintenance of biodiversity and the integrity of the natural ecological processes of the planet. It is not clear that we can treat all these forms of capital as fully interchangeable and easily substitutable.

In particular, it is not clear that produced means of production (physical capital) can fully replace critical natural capital, or ecological systems indispensable for human wellbeing and ultimately for human survival. Examples of such critical natural assets often cited include the ozone layer, the carbon cycle, and biodiversity, but also might relate simply to fisheries, or wilderness. Following up earlier work of David Pearce (see for example, Pearce et al [1989, 1991]), Pearce and Atkinson (1993) suggest specific constraints on the preservation of critical natural habitat.

Thus a notion of "weak sustainability", or a rule of non-decreasing capital per capita, assures an undiminished productive potential for future generations by requiring a sufficiently high rate of reinvestment, essentially that total resource rents be reinvested, in addition to appropriate physical depreciation allowances (Pearce and Atkinson, 1993). Such a rule is adequate if in fact physical capital can always be substituted for natural capital, and there exist no critical natural capital stocks the sacrifice of which would represent an irreversible loss of capacity to meet the needs of future generations.

If this assumption is not warranted--as it seems it clearly might not be--then something more is needed. If forms of capital stock are not easily substitutable, then Pearce and Atkinson argue for a requirement of "strong sustainability" which insists on preservation of a minimum stock of critical natural capital as such. Since it is probably too much to hope for a pricing system which can adequately value critical natural capital stocks, the requirement of strong sustainability translates into an imposed ceiling on the rate of exploitation or transformation of natural resources, and a floor on the preservation of critical natural capital. The Brundtland target for wilderness preservation--now adopted formally by the Government of British Columbia--is one obvious example of such a constraint on the utilization of natural capital.

Adopting this approach to natural capital also leads inevitably, it might be noted, to the inversion of the frame or image of the free market environmentalism approach. Rather than viewing the environment as a pool of resources embedded in the economy, the utilization of which as raw material or as disposal capacity should be properly priced and rationed, it becomes more natural to see our pool of natural capital as a continuing heritage or bequest to future generations, a fund from which withdrawals can be made on a continuing basis for investment, for example in a "working forest" base or a commercial fishery. In this image, the maintenance and continuity of the fund constitute the fundamental social obligation and the natural starting point; withdrawals for current production can be warranted only so long as the continuity of the fund is not compromised. In this image, one does not "withdraw" land from the "working forest" for parks or wilderness preservation purposes; those purposes form the starting point, and "withdrawals" from the fund for commercial forestry (or settlement) can be contemplated only when they do not jeopardize the integrity of the overall commitment to sustainability.

The conclusion from all this is that even with the fullest pricing of ecological goods and services, some form of social valuation or target is required to guide the market system in its interactions with the biosphere. It is interesting that this result, developed here from consideration of environmental and social values seems to be, in fact, a general property of economic models with many durable goods. In an old paper which anticipated somewhat the application of butterfly theorems and chaos theory in economic analysis, the present author and colleagues working in economic growth theory noted that even in the purest of models of economic dynamics, the inescapable requirement for a competitive economic model to pursue an optimal (or even a stable) path of growth is that the terminal valuations of capital goods be fixed from outside the economic model. That is, in effect, a society must be prepared to specify the values of its resources in the longest run (for future generations) before it can be argued that decisions about resource allocation can responsibly be delegated to the wisdom of the market (Burmeister, Dobell, et al, 1973).

In the absence of such a valuation, we are forced to respond to the impossibility of a so-called rational or scientific analytical solution by falling back on a more pragmatic mechanism: adaptive (participatory) management--perhaps at community level and employing economic instruments--but within an overall resource use framework and conservation constraints that "preserve the heirlooms"--the basic natural capital.

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A first social response, then, is to set up ground rules to guide the market. The discussion in the previous section suggests two such rules to begin with, one requiring adequate reinvestment to assure maintenance of the productive capital stock, and the other to require preservation of a minimum stock of critical natural capital (parks, wilderness, biosphere reserves, etc.) in its original form, even if current market signals suggest that its highest and best use lies in some other application. This use of a preemptive rule on minimum "set-asides" of biosphere reserve or wilderness as an overriding constraint on land and resource use decisions in place of market calculations raises some serious questions about the perceived rationality of the proposed constraints, and has given rise to a vast literature in a wide range of applications. In the Uruquay Round of trade negotiations, for example, the idea of "tariffication" to replace rules (import quotas) by prices (tariffs) is central, as a way to achieve a better allocation of agricultural resources more appropriately geared to the circumstances of different countries.

Similar controversies arise in arguments about regulations governing waste disposal, for example. Rules like the Basle Convention, which restricts or prohibits international traffic in toxic wastes, even though some countries may be enthusiastic about the revenues which might accrue from trade in waste disposal services; or like the Ontario government's regulations precluding transport of waste from Toronto to Elliot Lake, even though both communities seem keen on the respective benefits which might be realized from the transaction; or like proposed regulations requiring massive investment in sewage treatment facilities for the city of Victoria, even though scientific evidence is cited to show that there is no discernible harm from current discharges into the ocean -- all these have the effect of preempting economic decisions and preventing economic activity which might leave all parties to the transactions feeling better off. Such rules are seen as lacking variety, flexibility, differentiation; failing to reflect the differing ecological circumstances and assimilative capacities in different environments; ignoring scientific evidence and economic reason -- in short, they are argued to be unscientific, offering an irrational response insufficiently sensitive to calculable consequences of alternative actions. Equal treatment, in circumstances that differ radically, it is argued, is neither sensible nor equitable; equal outcomes might call for different actions or different sacrifices in different circumstances.

The counterargument to the suggestion that such rules are irrational and overlook current opportunities to achieve a better allocation of resources is often to the effect that pricing is simply an inefficient way to achieve prohibition of actions we truly want to prohibit (witness the problems of smuggling generated by high cigarette taxes). Rules may be necessary to change behaviour directly, to force acceptance of individual responsibility for waste, for example, in ways that price systems (given existing inequities in wealth or resources) may not. In such a situation, the perception of equal sacrifice may be essential to social acceptance of action, even if this demonstrably leads to wasteful social expenditures by failing to take advantage of differences in circumstances, assimilative capacity of the environment, or preferences.

In the case of waste treatment, for example, an absolute prohibition on transport of hazardous waste might be seen in some longer-run sense as a risk-minimizing strategy. The loss of precise optimality is of less concern than the mobilizing of popular support that might come with a perception of equal treatment and equal application of the rules to all, or with acknowledgement of a concern to avoid the exploitation of the poor that would occur through the application of economic mechanisms in the absence of an absolute social prohibition. This concern for an offloading of fundamental human responsibilities is widespread. It underlies controversies like the volunteer army or procedures for a fair draft. Should wealthy individuals be able to compensate poorer to assume their responsibilities in something so fundamental? Is this different from simply a division of labour and the operation of comparative advantage? Should we be able to buy our way out of an obligation to change our own lifestyles by funding the poor to pick up the slack? "Debt for nature" swaps or "guardian of the rainforest" schemes seem to be of this character, for example, or schemes for acquisition of land in Paraquay to offset industrial development in Indiana, while staying within overall emissions limits. More generally, the idea of "joint implementation" whereby rich countries might fund more cost- effective measures for reduction of greenhouse gas emissions in poorer countries figures very strongly in the recent Framework Convention on Climate Change. Other such schemes are discussed in a recent volume on Ethics and Climate Change (Coward and Hurka, 1993). In short, these questions pit the argument that the poor should not be denied opportunities for increased income through pollution- intensive or risky activity against the argument that there should be no opportunity to escape our individual responsibilities for environmental sustainability--the obligation to clean up one's own emissions and wastes--by transferring these responsibilities through an exchange of funds.

It is these perplexing issues which lead on to the second social response to the need for social ground rules. The problem raised by the above examples is that equal treatment, at this moment, of people who have been unequally treated before now, need not be fair or equitable. In the debate around the goal of equal outcomes versus the rule of equal opportunity or equal treatment, it has been argued that one's position in the social spectrum now -- and hence one's ability to participate effectively in an individualistic market-driven world -- depends critically not just on history up to now, but also on a social lottery at birth: life chances differ widely, and consequently the mere assumption of equal treatment cannot assure either equal outcomes or even fundamental fairness. As the initial endowments with which individuals participate in the market system may be thought unfair, both absolute rules of access (e.g., to health care) and absolute prohibitions (e.g., against transfer of social responsibilities for waste disposal) may reasonably be adopted by a society, despite all the valid arguments about opportunities forgone thereby.

Indeed, in the end, it seems that societies are willing to give up much of the fine-tuning and precise optimization promised by market calculation in favour of broader but possibly more robust guidelines such as social rules or religious precepts. In some cases this amounts to giving up on opportunities to adapt to differing ecological circumstances and alter treatment according to different assimilative capacities, or to realize gains from trade. In effect, it is giving up on a scientific or consequentialist approach in favour of broader social goals seen as more fundamental. (See Taylor [1991], Saul [1992] or even Lindblom [1976].) In work identified after this chapter was completed, Sagoff (1988) sets out, from a philosophical perspective, a much fuller analysis of this issue. Two subsequent publications by Sagoff (1991 and 1993) are also directly relevant to the topic of this present chapter.

A second dimension of the social response, however, requires us to address the other challenge, which is the inequity in initial endowments, the problem of North-South disparity that must be addressed if the distribution of initial property rights is to be contemplated. To create property rights in the larger natural assets of concern to the North creates a truly formidable challenge.

We have argued above that our future interests and the interests of future generations both demand preservation of requisite biodiversity and natural capital, and pursuit of an environmentally responsible path of economic development throughout the world. To achieve this purpose, free market environmentalism envisages a new (and final) enclosures movement, one which will establish ownership, and hence rational allocation, not only of global open-access resources, but also of the elements of basic ecological systems such as the oceans, the atmosphere and biodiversity itself.

In the context of this question, an observation attributed to Ruskin, quoted by Ivan Head in his recent book On a Hinge of History (1991) is interesting:

"Whereas it has long been known and declared that the poor have no right to the property of the rich, I wish it also to be known and declared that the rich have no right to the property of the poor."

The property of the poor, for the most part, is the commons. Recognizing the claim of the poor to their share of such property is simply recognizing some part of intrinsic human claims to a share of the earth's life-support systems. And the idea of creating property rights for the poor by restricting access to the global commons is not new. It goes back in international discussions at least to the International Sea-Bed Authority created as part of the UN Convention on the Law of the Sea, which recognized the "common heritage of humankind". But these concepts came fully to the fore in the negotiations leading up to the 1992 United Nations Conference on Environment and Development meetings in Rio.

In those discussions, the South Commission (1991) set out a negotiating position featuring a number of basic propositions grounded on the central principle that developing countries have an inherent right to adequate environmental space to accommodate their basic development needs. These included:

recognized right of access to world's atmospheric resources for the South

recognition by the North of the enormous environmental debt already incurred as a result of the allegedly irresponsible development path followed thus far

recognition of special property rights systems and appropriate compensation mechanisms, in particular in respect of biodiversity and genetic materials.

There exist, by now, many analyses of the redistributional consequences of the various schemes proposed. On climate change, for example, one may see Dobell and Parson (1988) for a preliminary discussion of a world atmosphere fund, and Grubb (1990) for a more detailed analysis. On biodiversity and related questions of intellectual property, negotiations and controversy continue. Overall, however, it seems fair to conclude that the degree of redistribution entailed in recognition of anything like equal per capita claims on the global commons, or even the principle of adequate environmental space put forward by the South Commission would be far too great to be acceptable to the developed economies of the North.

For the time being, therefore, the debate remains centered on possibilities for a sharing of the responsibilities for sustainability through joint implementation, technical assistance, and transfers of resources, technology and intellectual property through individual efforts or official development assistance, where guidelines like those of Singer (1979) mentioned above may be brought to bear.

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The conclusions from this discussion can be summarized as follows:

1. We do face a crucial situation, and it is centered on the problem of scale--the scale of human numbers, activity and appetite--all pressing the limits of a finite biosphere.

2. Numbers and the growth of numbers--the expansion of population--are key factors contributing directly to this crisis. But if other factors can be addressed, a demographic transition to population stabilization may be accomplished quickly enough to avoid catastrophic collapse of human society. Key determinants of such demographic transition are more equitable income distribution, and more equitable treatment of women (including higher levels of education for girls and women).

3. A key factor in other components of the problem is the pervasive influence of a flawed--probably fatally flawed--religion or belief system: the European religion of the market. Interestingly, the proponents of this religion individually recognize its flaws and incomplete nature, but "in the absence of other measures" insist on its continued application in social decisions.

4. "Free market environmentalism"--the introduction of prices and property rights for ecological services and natural capital as steps towards filling some of the recognized gaps and completing the information base for social decision--is a necessary step in a social response to the current crisis, but is not, and cannot be, enough.

5. Beyond such steps to complete the market, we require measures to embed the market in a larger vision. We need acceptance of more fundamental principles, amounting to ethical guidelines, to shape our relationship with our land and control the pace of our harvesting from it. Two such basic ground rules may be sufficient to assure sustainability:

(a) "Do not eat into capital."--(Consumption must not exceed Net National Product--Solow, 1992.)

(b) "Do not sell the heirlooms."--(Preserve wilderness, the gene pool, the natural systems of the biosphere, biodiversity, cultural diversity, natural capital in general--Osberg, 1988; Pearce and Atkinson, 1993.)

Thus, there is a two-part requirement: the substitution, transformation or creation of a resource base must be adequate to preserve undiminished opportunities for the future, and some essential parts of the resource base must be preserved intact and unaltered.

6. Most fundamentally, in order to achieve this goal, it is essential to address current inequities in wealth and income, and hence to address a fundamental reallocation in property rights. One feasible target might be tithing for development assistance (Singer, 1979). The theoretical target of equal per capita claims on the Earth's common pool of ecological resources--equal shares in the biosphere for all individuals (South Commission, 1991)--seems compelling morally, but obviously is far beyond anything socially acceptable at this time.

Finally, then, the point of this chapter is that the link from population scale and growth to environmental stress and degradation is not simple--it must be recognized as affected by many social and technological considerations, of which this chapter focuses on three: the level and distribution of income, and hence consumption (the twin problems of absolute affluence and absolute poverty must be faced); the material content of consumption and hence production (the problems of inefficient resource use and the quality of development must be faced); and the choice of technologies for harvesting and disposal of the energy and material throughput and resource use in production (the problem of "wanton waste and bycatch" must be addressed, and obligations to Nature in its own right must be considered).

The key conclusion advanced here is that for a workable and responsible stewardship, some version of "free market environmentalism" is necessary, but not sufficient. Delegation of almost all environmental management responsibility to markets, or market-like community decisions, is inescapable. But the direction of those decisions ultimately demands social ground rules reflecting ethical judgements. In addressing these issues, no matter how faithfully we pursue the religion of economics, and particularly that of free market environmentalism, there are two points at which we must inevitably appeal to social ground rules of a more traditional religious character: on the question of sustainability, or the preservation of critical natural capital, where we must recognize our obligation to respect some intrinsic (or at least terminal) value to Nature in its own right--that is, we need some form of preservation ground rules such as the two noted above; and on the question of ownership of the commons, or the distribution of initial endowments, where we must recognize our obligation to others in some form--that is, we need some redistribution ground rule .

Neither of these can be found in the dogma of the market; both rest on more fundamental features of our relationships with others and with the earth around us.


A. R. Dobell

December 1993

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