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
ENVIRONMENTAL DEGRADATION AND THE RELIGION OF THE MARKET
CONTENTS
I. FRAMING THE PROBLEM
II. ENVIRONMENTAL DEGRADATION: DECOMPOSITION INTO COMPONENT
FACTORS
III. ECONOMIC (European) RELIGION
IV THE ECOLOGICAL FRAME
V.SOCIAL RESPONSE
VI. SUMMARY AND CONCLUSIONS
SELECT BIBLIOGRAPHY
ABSTRACT
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.
return to Table of Contents
SUMMARY
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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I. FRAMING THE PROBLEM
In
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.)
The
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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II. ENVIRONMENTAL DEGRADATION: DECOMPOSITION INTO COMPONENT
FACTORS
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
Where:
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
and
P represents total population.
Notes:
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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III. ECONOMIC (European) RELIGION
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.)
In
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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IV THE ECOLOGICAL FRAME
The
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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V. SOCIAL RESPONSE
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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VI. SUMMARY AND CONCLUSIONS
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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