I am forwarding this message posted just now on the RESECON list because I think it might be interesting to some ONE-Lers.
Cybercollegially,
Charles Wankel ONE-L list director
http://management-education.net
-----Original Message-----
From: Land & Resource Economics Network [mailto:RESECON@LSV.UKY.EDU] On Behalf Of Joy Hecht
Sent: Friday, September 30, 2005 3:53 PM
To: RESECON@LSV.UKY.EDU
Subject: Re: Scientist statement
Well, maybe I'm a wild-eyed optimist or grossly naive. But it seems to me that much of the purpose of the discipline of environmental economics is to correct for market failures as they relate to how environmental concerns would be handled in a system of perfect competition – and thus to point out that society as a whole would be better off if we made choices that were not in the financial best interests of key individual decision-makers (corporations, consumers) in the short run. Another purpose should be to address the issues of intergenerational equity and sustainability, more particularly to identify when decisions are not reversible and therefore future generations will not have the option of going back to what we lose for them through our self-centered consumption and production decisions. That's what some people call identifying and protecting critical natural capital – recognizing that some choices that affect the environment can be reversed (timber can be regenerated later by planting forests where we had cut them down in the past) but others cannot (we will lose the biodiversity of the primary forest – do we need it, will future generations need it?) And while it is important to recognize prisoners' dilemmas, it doesn't seem that their presence means we should simply give up on trying to bring about changes in behavior.
Of course the political situation in this country at present isn't supportive of anything other than the unbridled self-interest of the private (supposedly-competitive) market in decision-making. But that process won't lead to socially-optimal choices, and it may be our responsibility to point that out and make ourselves heard, even if we don't really think we will lead the current administration to change.
On the other hand, the aftermath of Katrina, the melting of the <st1:placename w:st="on">Artic</st1:placename> <st1:placetype w:st="on">Sea</st1:placetype> ice and the <st1:place w:st="on">Greenland</st1:place> glaciers, and other current events may bring closer to home the social costs imposed by our self-interested choices. The current administration may not change, but many people in this country may come to recognize that we, like much of the rest of the developed world, must deal with GHG emissions, land use patterns, automobile use, and other current choices that are likely to hurt us significantly in the future. Because all of a sudden that future is getting pretty close. Intergenerational equity may be about us and our children, not people whom none of us will ever know.
Is anyone else out there interested in the idea of drafting a statement on the importance of recognizing that the future is coming upon us so our society should be using economic tools to figure out the most efficient way of making it a safer – should I say rosier? – one? And seeking signatures from people whose names will be recognized, in addition to ours (I'm sure some of you would be recognized!) so that we can perhaps draw some attention to what we say?
Joy
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Dr. Joy E. Hecht
Consultant on Environmental Policy and Information
Email: jhecht@alum.mit.edu
Phone: 1-202-494-1162
URL: http://www.joyhecht.net/professional.html
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From: Land & Resource Economics Network [mailto:RESECON@LSV.UKY.EDU] On Behalf Of Bob MacGregor
Sent: Friday, September 30, 2005 1:00 PM
To: RESECON@LSV.UKY.EDU
Subject: Re: Scientist statement
Darla, Joy, Jim, etc.
It is easy to define a role for economists who are on the financial analyst end of the economist spectrum-- industrial and production economics is everyday practice, and their analytical results are heeded because the (defensibly) predict bottom-line outcomes for enterprises. Unfortunately, the resource economist seems doomed to dwell in a neverland of "soft" answers: for every cost estimate for an externality, some other "expert" will come up with an equally plausible, but order-or-magnitude different estimate for the same externality.
Worse, although some environmental considerations pertain to approvals for resource development (eg endangered species habitat damage, water and air pollution, etc.), most of these are handled qualitatively, not quantitatively. That is, the environmental COSTS are not internalized in corporate development planning. These are just beans that the accountants don't have to count!
More generally (and especially in the context of international environmental economics), we're always faced with jurisdictional commons problems and, in the case of truly world-wide issues like climate change, prisoner's delimmas (eg best overall outcome is for all to cooperate fairly in conservation; best for country A is for everyone else to conserve while A does its own thing, unconstrained; worst outcome is for all to foresake cooperation-- BUT pursuit of the best country A outcome leads to all countries adopting it, that is, the worst-case scenario). Between the shortsighted desire not to change a way of life (or rile up the masses), and realization that our self-restraint is just as likely to promote increased consumption in others without appreciably altering the environmental outcome, we come to the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> position on climate change.
Sure, Joy is right that economists can contribute to calculation of least-cost solutions to GHG reduction; these are, for the most part production economic exercises that will occur in corporations anyway (and would even sooner if government adopted policies that made GHG emissions or other environmental damages more costly).
Not surprisingly, I lean more toward Darla's pessimism, but I still appreciate the efforts of researchers to further hone the techniques of estimating environmental values so the environment can (one hopes) gain a greater voice in broader economic development policy... yes, all the way down to the corporate level, eventually.
Regards,
BOB