Thursday, December 27, 2007

Tragedy of the commons - Oregonian Opinion

Originally published in The Oregonian November 24, 2007 08:00AM

Tragedy of the commons - Oregonian Opinion

Atlanta's water crisis has pitted that parched city against the farmers and endangered species of adjacent states. Pollutants from China's booming economy rain down on the Pacific Northwest.

These are large-scale effects of what economists call the "tragedy of the commons."

This blind-spot of the free market occurs whenever a group or individual exploits a community resource like the environment without paying the true costs -- dumping waste into a nearby stream instead of treating it, for example. The flipside of this concept is that someone acting unilaterally to protect a commons overpays for benefits that are reaped mainly by society; I could get rid of my furnace and appliances in an effort to save the planet, but at great personal discomfort.

George Bush wanly calls for voluntary reductions on carbon dioxide emissions, but corporations have the same incentives to comply as I do to wash and wax my rental car before returning it full of premium -- every extra penny comes out of my wallet, while someone else benefits. Moreover, since shareholders require corporations to maximize returns, a board of
directors could even be held liable if they followed Bush's voluntary reductions to the detriment of the bottom line.

Conservatives often rally behind issues of property rights, state's rights, and national sovereignty, despite the fact that many problems don't fit neatly within a geographic boundary like a farm plot or even a continent. Actions rarely happen in an economic or environmental vacuum -- nearby subdivisions run your well dry, CFC's destroy everyone's ozone layer,
today's international overfishing ruins future worldwide harvests. Therefore, we rely on jurisdictions larger than town, state, or even federal to address them.

The U.N. Secretary General has rightly called on world leaders to act decisively on climate change at next month's summit in Bali and reach a "grand bargain" between industrialized nations and developing ones. It is becoming clear that individual altruism and corporate do-gooders simply can't achieve the needed systemic changes in time. Market forces can only
work when these loopholes in the system are closed by globally-enforceable, predictable standards for all countries and corporations.

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