The Environment

Public and private goods

 Private: my enjoyment precludes your

enjoyment
– Examples: car, pencil, pint of beer

 Public: my enjoyment doesn’t preclude

your enjoyment
– Examples: beach, park, air, water
 Internal and external costs
 Internal costs: borne by agents of action
– Examples: buildings, materials, supplies, labor,
marketing
 External costs: borne by others
– Examples: air and water pollution, noise,
government subsidies, erosion
 External costs = harms to others
 External costs on private goods
 Person harmed may pay costs, complain, or
sue for damages
 Someone has an incentive to do something
about the harm
 By holding someone responsible
 Parties may negotiate to have agent pay
cost, making it internal
 External costs on public goods
 Nobody harmed can sue for damages
 Nobody has incentive to do anything about
the harm
 Nobody is held responsible
 Nobody is in a position to negotiate to make
agent pay costs
 Tragedy of the commons
 People have incentives to
impose costs on public goods
(“the commons”)
 People have no incentives or
standing to make agents pay
costs
 So, public goods inevitably
deteriorate
 Liberal solutions

 Regulation: Empower government to

protect public goods from external costs
– Preventing their imposition
 Enforcement of rules
 Taking over decision-making
– Making agents pay costs
Conservative solutions
 Privatization: Make public
goods private, so people have
incentives to protect them
 Coase’s theorem: if
transaction costs are zero,
negotiations among private
parties yield optimal use of
public goods
 So, auction public goods, or at
least rights to impose costs on
them
Liberal Arguments

The Case for Government

Regulation
 Costs and benefits
 Problems in computing costs
and benefits
– Not always conflict between
environment and the economy
– How to put value on a life?
– Uncertainty of estimates—
harms and probabilities
– Behaviors OK for one become
dangerous for many
– How much risk is OK? People
differ
 Private computations

 Private computations of costs and benefits

are untrustworthy
– People act out of self-interest, not for the
good of society
– People undervalue public goods
– Randomness of harm leads people to
undervalue them (cf. highway deaths)
– Cognitive blindspots: We’re not attuned to
subtle, long-term effects
Private decisions
 Private decisions are
untrustworthy
– The market prefers short- to
long-term horizons for returns
– The market prefers large- to
small-scale investments over
long periods
– Initial investments may be too
large for any private agent to
make
 Market failures

 Prisoners’ dilemmas: each can act to

maximize his/her own welfare, given
what others do, and produce less than
optimal outcome
 Individual maximizing —/—> group
maximizing
 Environmental examples: walking on
grass; driving; air and water pollution
 Negligible costs add up
 Market failures
 This can happen even if each
acts, not from self-interest, but to
promote the good of the whole
 Utilitarianism is indeterminate—
what happens if we each try to
maximize good doesn’t
necessarily maximize good of
the whole
 Maximizing good requires
coordination
 Government solutions
 The government is uniquely able to
make environmental investments
that are
– Small-scale
– Long-term
– Capital-intensive
– Directed at the public good
 Must act to increase humanity’s
margin of error
Conservative arguments

Against government regulation

 Tradeoffs

 Tradeoffs: other values matter too

– Prosperity
– Economic growth
– Employment
– Farming
– Leisure
– Pleasure
– Liberty
 Environmental Improvement
 Necessity: the environment is
steadily improving
– As people become more affluent,
they choose environmental
goods over other kinds of goods
– Market economies produce
cleaner environments over time
Global Warming
Virtues of markets
 Rent-seeking: seeking a
reward not justified by effort
 People are lazy: Everyone
seeks rent
 In a market economy, there is
competition
 Anyone seeking rent may be
undercut by someone seeking
less rent
 So, market economies
minimize rents
 Resource Allocation

 Market economies minimize rents

 Market economies allocate resources to
those who can make the best use of
them
 Market economies allocate resources
optimally
 Coase: if no transaction costs, amount
of pollution would be optimal
 Market failure?
 Market failure: sometimes individual
maximizing —/—> group maximizing
 Market allocations aren’t always optimal
 Transaction costs aren’t zero
 Tragedy of the commons arises
 But government regulations face same
problem
 Regulatory failure

 Barnett’s lunch law; my corollary

 Added spending and regulation may
produce benefits, with seemingly
negligible costs spread over many people
 Tragedy of the Congress
 But small costs add up (Dirksen: “A
billion here, a billion there, and pretty
soon you’re talking about real money!”)
 The costs are imposed on other
people
 Tragedy of the Congress: We
don’t get optimal amount of
government spending and
regulation; we get too much
 Individuality

 Regulation requires rules, to be applied

to all similarly situated agents
 But often it is optimal to allow some to
pollute
– General: auto or power plant emissions
– Special circumstances: economic or other
benefits
 Distributed knowledge

 People make decisions every day about

tradeoffs between various kinds of goods,
including public goods
 They also negotiate about external harms
 Government officials can’t know enough
to substitute their judgments for those of
millions of people
 Why? Public choice theory
 Governments don’t act to
promote the public good
 Bureaucrats act to promote their
own good
 They insulate themselves from
competition, accountability
 They have little incentive
– To resist special interests
– To consider private costs
– To resolve issues efficiently
 Undermining accountability
 No citizen has time to analyze every issue
 Those with large interests at stake exert most influence
 Voters assess candidates on the basis of thousands of
issues, making most risk-free for officials; many are not
elected
 Environmental issues concern the future; political rewards
and punishments depend mostly on present effects
 There is no tangible measure of efficiency
 Political rent-seeking

 If government decides, there is no competition

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

 If government makes decisions, then people have

incentives to invest time, money, etc., in influencing
political decisions
 Those resources could have been invested in improving
the environment or producing goods and services
 People have greater incentives to weigh tradeoffs than
officials do
 Government regulation makes us all worse off
 Case studies
 Internationally  United States
– Soviet Union – Hudson River
dredging
– Eastern Europe
– Western forests (fires)
– China
– National Parks
– India – Ethanol subsidies
– Kyoto treaty – CAFE standards
Kantian Arguments
 Who deserves respect?
 Everything has a price or a
dignity
 Human beings do not have a
price; we have dignity
 What about
– Animals?
– Plants?
– Natural formations?
 Land ethic & deep ecology
 We must see nature itself as having dignity
 Self-realization: spiritual growth— self —>
other people —> other animals —> nature
itself
 Biocentric equality: All organisms have
equal intrinsic worth and so equal rights to
live and flourish
Criteria for dignity
 All life forms deserve
respect
 But they lack autonomy
 What are the criteria for
having dignity?
– Humans
– Animals
– Plants
– Rocks
 Predators
 Many life forms harm other life
forms in order to live
– Carnivores and omnivores
– Herbivores
– Parasites
– Bacteria
 Must minimize harms to other
forms
 Basic principles
 Biodiversity is intrinsically and instrumentally
valuable
 Humans may reduce biodiversity only to
meet vital needs
 Flourishing of nonhuman life requires
human population decrease
 Present human interference is excessive
 Basic principles
 Policies must be changed to
reduce human interference
 We must appreciate quality of life,
not strive for higher standard of
living
 We face a crisis: population
growth, extinction of species,
ozone depletion, global warming
 Ecofeminism

 What gives us a right to dominate nature?

 What allows us to treat nature as having a
price rather than a dignity that requires
respect?
 Logic: cognitive superiority —> moral
superiority —> right to subordinate—
assign a price
 The logic of domination

 Argument
– We can change our environment
– Plants and rocks can’t
– What can change its environment is
morally superior to what can’t
– Moral superiority justifies subordination
– So, we have a right to subordinate plants
and rocks
 Nature <—> Women

 Similar reasoning justifies domination of

women
– Women identified with nature
– Men with humanity as a whole
– What is identified with humanity is morally
superior to what is identified with nature
– Moral superiority justifies subordination
– So, men have a right to subordinate women
 A faulty premise

 Feminists reject that conclusion

 If the conclusion is false, then
– The argument is invalid, or
– At least one premise must be false
 One false premise: moral superiority
does not justify subordination
 But then the argument about nature falls
too
 Ecology <—> feminism

 These arguments stand or fall together

 So, environmentalists should be feminists
 Feminists should be environmentalists
 We must rethink our relation to nature
 We should relate to nature without
subordinating it
Conservative arguments

Against government regulation

 People over penguins
 Only people have
dignity. Arguments:
– Common sense view
– Only we can live
according to a rational
plan
– Only we count as moral
agents
– Only we have
autonomy
People over penguins
 We depend on the health of
other species; we mustn’t
destroy them
 We share interests with other
species (e.g., clean air and
water)
 Penguins can’t vote; no one has
the right to speak for them
 No value without humans
The Environment
 Resources
 We have the right to use what we need for our
own
– Survival
– Biological welfare
– Rational agency
 But we must not go beyond that
 We have no right to domination for its own sake
 We must not do anything that would threaten our
own survival, biological welfare, or rationality
 Virtue as a mean
 Environmental concern is a virtue
 We can have too little or too much constraint
on our desire to use resources for our own
purposes
 Too little: recklessness
 Virtue: responsible stewardship
 Too much: inefficiency, ineffectiveness
 Responsible stewardship
 We must constrain our own drives to
– Pursue wealth and convenience without regard
to environmental consequences
– Impose costs on others
– Impose costs on the commons
– Exploit the environment for present benefits,
without concern for the future, especially future
generations
 Tradeoffs

 Other values matter too

– Prosperity
– Economic growth
– Employment
– Agriculture
– Leisure
– Pleasure
– Liberty
 Necessity
 The environment is steadily improving
– As people become more affluent, they choose
environmental goods over other kinds of goods
– Market economies produce cleaner environments over
time
– Water and air quality have improved
– Human health is better than ever
– Nevertheless, there remains much room for
improvement
 Complexity

 Regulation requires rules, to be applied

to all similarly situated agents
 But often it is optimal to allow some to
pollute
– General: auto or power plant emissions
– Special circumstances: economic or other
benefits
 Distributed knowledge

 People make decisions every day about

tradeoffs between various kinds of goods,
including public goods
 They also negotiate about external harms
 Government officials can’t know enough
to substitute their judgments for those of
millions of people
 Tradition
 Burke: given complexity, competing goods,
– We must seek balance, compromise
– Judged on the basis of experience
– Without relying on universal rules
 The social arrangements that evolve for
doing this are likely to be better than any we
consciously devise
 They embody distributed information and
wisdom over time
 Why? Public choice theory
 Governments don’t act to promote the
public good
 Bureaucrats act to promote their own good
 They insulate themselves from competition,
accountability
 They have little incentive
– To resist special interests
– To consider private costs
– To resolve issues efficiently
 Undermining accountability
 No citizen has time to analyze every issue
 Those with large interests at stake exert
most influence
 Voters assess candidates on the basis of
thousands of issues, making most risk-free
for officials; many are not elected
 Undermining accountability
 Environmental issues concern the future
 Political rewards and punishments depend
mostly on present effects
 There is no tangible measure of efficiency
 Political rent-seeking

 If government decides, there is no

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

 If government makes decisions, then people have

incentives to invest time, money, etc., in
influencing political decisions
 Those resources could have been invested in
improving the environment or producing goods
and services
 People have greater incentives to weigh tradeoffs
than officials do
 Government regulation often makes us all worse
off
 Case studies
 Internationally  United States
– Soviet Union – Hudson River dredging
– Eastern Europe – Western forests (fires)
– China – National Parks
– India – Ethanol subsidies
– Kyoto treaty – CAFE standards