Ecosystem Services, Information, and the Tragedy of the Non-commons

1. Ecosystem Services,Information, and theTragedy of the Non-commons

2. Announcements • Mexico course • Start reading Local Politics of Global Sustainability

3. Brief Outline • Description of ecosystem services • What do we need to know about resources before we can decide how to allocate them? • Tragedy of the non-commons defined • Solutions proposed

4. Ecosystem goods • Raw materials = ecosystem structure • Timber, fish, minerals, fossil fuels, etc. • Required for all economic production • Benefits generally privatized • Scarcity price increase innovation of substitutes

5. Ecosystem services • Structure generates function= ecosystem services • Life support functions, Nutrient cycling, Water regulation, Climate regulation, Erosion control, etc. • Benefits equally distributed • Loss of structure = loss of function • Scarcity  price increase  innovation

6. Market relevant characteristics of resources

7. Excludability • Excludable resource regime • One person/group can prevent another from using the resource • Necessary for markets to exist • Non-excludable • No enforceable property rights • Can’t charge for use • Is this a policy variable?

8. Rivalness • Rival resources • My use leaves less for you to use • Non-rival • My use does not leave less for you to use • Inefficient to ration through prices

9. How do We Allocate?

10. Allocation Matrix Excludable Non-Excludable Market Good: Ecosystem structure, Waste absorption capacity (e.g. SO2) Open Access Regime: Unowned ecosystem structure, waste absorption capacity (e.g. CO2) Rival Tragedy of the non-commons: patented information Pure Public Good: Street lights, national defense, most ecosystem services, unpatented information Non-rival Non-rival, congestible Club or Toll Good

11. Private property and ecosystem structure • Inefficient: Owner ignores critical ecosystem services • Unjust: Ecosystem services are public goods, destroyed for private gain • Unsustainable: Profit maximization may still lead to extinction

12. Example: Brazil’s Atlantic Rainforest • Ecosystem services of rainforest valued at $2006/ha/year • World’s highest biodiversity humid forest converted to pasture yielding $20/ha/year • Causes droughts, floods, erosion, biodiversity loss, microclimate change, etc. • Greedy self interest creates invisible foot

13. Private property and information • Inefficient: • Creates artificial scarcity • Patent = monopoly • Research ignores public goods • Unjust • Knowledge is cumulative • Raises costs for research that promotes the public good or serves the poor • Example: Golden rice, AIDS medicine

14. Patents and distribution (cont.) • Samuel Slater, “Father of American Industry” • Developed countries own 97% of all patents

15. The “Tragedy of the Non-Commons” • Occurs when private ownership is ecologically unsustainable, socially unjust, and/or economically inefficient • Any privately owned resource that provides non-rival benefits

16. Solution • Community ownership and provision of non-rival benefits

17. Allocation of Ecosystem Goods/Services • Macroallocation socially determined • Prices must adjust to socially determined supply, since ecosystem resilience and fecundity cannot adjust to prices

18. Allocating Information • Public financing of research on technologies that preserve or provide public goods • What percent of inventors are independent? • No patents on publicly financed research, or future research that uses it • Eminent domain applied when necessary

19. Conclusions • Solution to “tragedy of the non-commons” is public ownership • We cannot decide how to allocate until we understand nature of scarce resources • Rivalness is critical to allocation • Private ownership appropriate for rival resources • Common ownership more efficient, just and sustainable for non-rival resources • Socialism or capitalism is question of objective analysis, not ideology