Friday, February 29, 2008

Solving Environmental Problems

This arises out of a discussion (more an agreement) I had the other day with one of my tutors...

The fundamental problem with the environment is that people usually act in their own interests. If there is a publically available resource (for example, air or the sea), then costs caused by damage to that resource are shared between everyone, but benefits arising out of use of that resource belong to the person who used it. Hence cost/benefit analysis for any one individual or small subgroup (e.g. a country) tends to be skewed towards exploitation of the resource.

In order to prevent such environmental problems happening, we need to find a way of making the personal interest of the individual coincide with the best interests of humanity, as Adam Smith nearly did with capitalism where the interest of the individual coincides with the wealth of society as a whole, which is why it is such an effective way of making countries richer. And in the case of states such as China, we need to find a way to make the best interests of the government coincide with the best interests of humanity.


Otepoti said...

Are you talking about the "Paradox of the Commons" here? (See Garrett Hardin). Environmental resource management seems to be the way to go - introducing a pricing/rationing structure to make sure resources are used, not abused. ERM is big here, the side effect being, lots of work for lawyers, and occasionally undesirable outcomes, such as small groups opposing development plans being saddled with large court costs.

John said...

Good call - that was one of the papers that came up in discussion.

I've seen ERM used for resources; not for pollution (which is essentially an inverse resource) unless you count the idea of carbon credits.