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

Announcements Mexico course Start reading Local Politics of Global Sustainability

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

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

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

Market relevant characteristics of resources

Excludability Excludable resource regime Non-excludable 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?

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

How do We Allocate?

Non-rival, congestible 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

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

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

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

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

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

Solution Community ownership and provision of non-rival benefits

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

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

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