Elinor Ostrom breaks the mould
Nobelist Analyzes Commons vs. Tragedy
| Alfred Nobel, the inventor of dynamite, left no money for either mathematics or economics. Number-crunchers went on to fund their own honorarium, the Field Prize. But bankers paid the Nobel committee to grant a prize to economists called “Nobel”. This year the committee gave the money to an outsider, which could give the discipline a needed wake-up call, an impetus to examine landed property critically. This 2009 article is from The Guardian, October 13. |
by Kevin Gallagher
The economics profession is in such disarray that one of the Nobel prizes in economics this year went to political scientist Elinor Ostrom -- the first woman to be awarded the economics prize. This is an excellent choice (in any year) not only because of what Ostrom has contributed to social theory but also because of how she goes about her work.In a nutshell, Ostrom won the Nobel prize for showing that privatizing natural resources is not the route to halting environmental degradation.
In most economics classes the environment is usually taught as being the victim of the "tragedy of the commons". If one assumes, like many economists do, that individuals are ruthlessly selfish individuals, and you put those individuals onto a commonly owned resource, the resource will eventually be destroyed. The solution: privatize the commons. Everyone will have ownership of small parcels and treat that parcel better than when they shared it.
Many environmental experts also reject the tragedy of the commons argument and say the government should step in.
Ostrom says the government may not be the best allocator of public resources either. Often governments are seen as illegitimate, or their rules cannot be enforced. Indeed, Ostrom's life work looking at forests, lakes, groundwater basins, and fisheries shows that the commons can be an opportunity for communities themselves to manage a resource.
In her classic work, Governing the Commons: The Evolution of Institutions for Collective Action, Ostrom shows that under certain conditions, when communities are given the right to self-organize they can democratically govern themselves to preserve the environment.
At the policy level, Ostrom's findings give credence to the many indigenous and peasant movements across the developing world where people are trying to govern the land they have managed for centuries but run into conflict with governments and global corporations.
Some economists on the frontier of their discipline have started to use Ostrom's insights in their work. In their recent book, Reclaiming Nature: Environmental Justice and Ecological Restoration, James Boyce, Liz Stanton, and Sunita Narain show how communities in Brazil, India, West Africa, and even in the United States have managed their resources in a sustainable manner when given their rightful access to their assets.
Indeed, Boyce and his collaborators find that communities should be paid for their services, since they can sometimes do a far better job than government or corporations at managing resources. Indeed, "payment for environmental services" has become a buzzword in development circles. Now even the World Bank has a fund for PES schemes across the world.
In terms of methodology, Ostrom proves her findings three times over. As opposed to many economists who never leave the blackboard, Ostrom often conducts satellite analyses of resource depletion to measure amounts of degradation. Second, she actually goes out into the field and performs case studies of human and ecological behavior all across the world. However, she doesn't stop there. When she gets back from her fieldwork she conducts behavioral experiments to see if random subjects replicate her findings in the field.
The Nobel committee should be applauded for recognizing such rigorous theoretical and empirical work. Shining light on Ostrom is a call to economists to spend a lot more time analyzing human behavior, rather than assuming that we are all rational selfish individuals. It is also a call on economists to become more empirical and to find ways to validate their theories.
Adopting Ostrom's approach will not only help us forge a better relationship with the natural environment, but will help us become more realistic about the economy in general. It's time for a fresh approach to both.
JJS: And it might help resurrect the commons as a popular notion. And to natural resources as common property, we’d be well put to include natural rents, all the money we spend for sites, resources, EM spectrum, and ecosystem services. To share those trillions of dollars, we could use geonomics: charge taxes or dues or fees or leases to recover the socially-generated values of land and have the public treasury pay equitable shares to the people (a Citizens Dividend).
A couple questions pop up regarding the recently lauded research. Did Ostrom and Boyce’s team control for the level of technological sophistication? Somebody with a steam shovel can do much more alteration of the environment than somebody with a shovel, yet both people could have identical environmental values.
Further, should people be paid for not rigorously exploiting an ecosystem? Or, should we all get a rent-share from the market value of nature? In the latter system (geonomics), people way out in the wilds would get a share of the value of locations in cities, which are far more valuable. Thus, country folk would still be paid, not for non-use, but for being a member of society.
Paying people for stepping lightly on Earth, while sounding appealing, also overlooks two political realities. One, our wasteful subsidies make exploiting resources too easy. And two, people won’t demand excessive amounts of virgin resources when they recycle and find artificial alternatives. Both recycling and substitutes come to the fore when we don’t tax labor (recycling is labor intensive) and don’t tax capital (R&D for alternatives is capital intensive).
And finally, our demand for natural resources is driven not just by our wish to prosper and live comfortably but also by poverty and the need to at least survive. Once we quit taxing our efforts and start sharing our “rents”, virtually everybody will feel materially secure. And when a society reaches that stage, it stops breeding for security. In a steady-state of population and production, the demands we place on nature would first stabilize then decline as techno-progress does its thing and raises efficiency, meaning we’d all get more from less. May the Nobelists some day recognize that.
---------------------
Jeffery J. Smith runs the Forum on Geonomics.
|
Also see: How Did Economists Get It So Wrong?
What is needed to be totally human?
A cost benefit analysis of trees vs logs |
| Email this article | Sign up for free Progress Report updates via email |
What are your views? Share your opinions with The Progress Report:
| Page One | Page Two | Archive |
| Discussion Room | Letters | What's Geoism? |
