Farley, J. (2017). Market and Non-market Solutions to Ecological Crises. Solutions 8(1): 1-2. https://thesolutionsjournal.com/article/market-non-market-solutions-ecological-crises/
Editorial by Joshua Farley
Market and Non-market Solutions to Ecological Crises
Sascha Voss
Food prices at a grocery store in Barcelona, Spain.
E
cological crises ranging from climate change to biodiversity loss arise when self-interest outweighs the common good; for example, people aware of the catastrophic social costs of carbon emissions drive anyway because it is personally convenient. Markets, in theory, channel selfinterested, competitive behavior towards the common good, leading an increasing number of economists and environmentalists to argue that market mechanisms offer the most efficient solutions to environmental problems.1 People respond to higher prices—a tax on carbon—by using less. Industry responds to profit incentives—monopoly property rights to patented information—with environmentally-friendly innovations. These market mechanisms are certainly better than ignoring the costs of ecological degradation or investing nothing in green technology, but they
remain highly inefficient. Demand for essential resources, such as food and energy, is only responsive to price when expenditures account for a large share of the household budget. Internalizing the full ecological costs of agriculture would cause food prices to skyrocket. Yet, when food prices did soar from 2007 to 2008, rich countries scarcely noticed. Americans actually increased wheat consumption even as the price tripled.2 In contrast, in poor countries where food expenditures account for more than half the household budget, people slashed consumption,3 resulting in rising malnutrition, rioting, and political breakdown.4,5 Allocating the last loaf of bread to the overfed American who throws a third in the trash, rather than to the destitute African mother desperate to feed her starving children, is clearly inefficient.6 If society develops a clean, decentralized, dependable, and inexpensive
alternative to fossil fuels, it is equally inefficient to limit use to those who can pay monopoly prices, leaving others to burn coal. True, patents become part of the public domain after twenty years, but can we afford to delay the adoption of green technologies for that long? Most of the ecological problems we currently face are prisoners’ dilemmas: even when universal cooperation is clearly the best strategy for society as a whole, individuals are better off acting in their own self-interest regardless of what others do.7,8 Prisoners’ dilemmas can only be solved through institutions that successfully promote cooperation. Several articles in Solutions have called for one very promising cooperative institution: common asset trusts (CATs), designed to manage our shared natural and cultural heritage for the common good of this, and future generations.9-15 CATs can even use market mechanisms, such as auctioning off rights to resource extraction or waste emissions, and can use the resulting revenues to address the undue burdens on the poor and invest in the common good. Most global CATs will require detailed and complicated international agreements, which can be time consuming and difficult to negotiate. In contrast, a green technology CAT could be developed unilaterally and help pave the way for other CATs. A single wealthy nation, or even an individual, could start a CAT in green technologies by funding research— especially for sustainable agriculture and alternative energy—with results made freely available to all on the condition that any improvements are also open access.16 Unlike CATs for resource extraction or waste emissions, where the goal is to ration access to ensure sustainable consumption, the optimal property rule for information is open access—free, unlimited use for all. The major input into developing new technologies is information, so open
www.thesolutionsjournal.org | January-February 2017 | Solutions | 1