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Governance Questions and Answers

This article explores governance and policy making, tackling questions such as why policies with high benefit-cost ratios are not adopted and who owns enterprises that need to change behavior. It also examines the role of political interest groups and potential solutions when policy-making fails.

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Governance Questions and Answers

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  1. Governance:4 Questions and Some AnswersDavid G. VictorUniversity of California, San DiegoIndia-California Air Pollution Mitigation Program (ICAMP)22 October 2013

  2. Why do policies with huge benefit-cost ratios not get adopted?

  3. 1. What is the organization of political interest groups?

  4. The public as an interest group • Highly decentralized and thus difficult to organize • Key roles for NGOs and the press

  5. 2. Who Owns the Enterprises that Must Change Behavior?

  6. Industries that tend to be state-dominated • High value extraction (mining, oil & gas) • Visible public benefits (electricity, water and sewerage, trash collection, public transport) • Convenient locales for corruption (e.g., banking) • USA is highly unusual in extremely low level of state ownership

  7. Figure 1NOC Share of Booked Oil Reserves 7

  8. Tensions in Ownership • Privately held firms • Organized around private interest, but.. • Responsive to credible regulation and efficient • State-owned enterprises • Often organized for public interest, but… • Often managed incompetently.

  9. 3. When policy making fails, who acts?

  10. Some backstops • California: • Federal Clean Air legislation • State CARB • Public petition process • Elections? • India: • Supreme Court • Elections?

  11. 4. Will Exogenous technological surprise “fix” governance failures?

  12. U.S. CO2 emissions from Electricity

  13. Oil and Natural Gas Prices:Three Markets Sources:  Heren and BP via BP Statistical Review of World Energy 2012

  14. May 2012 Issue of Foreign Affairs…

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