This post continues a dialogue with professor Lisa Heinzerling: see Revesz's initial post and Heinzerling's response.
-----
Cost-benefit analysis, correctly applied to many environmental problems, will show that strong environmental regulation is often economically efficient. Although some environmentalists, including Lisa Heinzerling in a recent post, have expressed reservations about the use of cost-benefit analysis to evaluate environmental rules, rejecting cost-benefit analysis instead of seeking to reform it would be a major strategic error for the environmental movement.
Heinzerling raises some legitimate concerns about cost-benefit analysis as it is currently practiced, but unfortunately she condemns cost-benefit analysis wholesale based on certain flaws that are not inherent to the technique. For example, Heinzerling argues that discounting benefits that accrue to future generations is a mistake, and results in "treating the future as less important than the present." I couldn't agree more -- discounting benefits to future generations is a major source of anti-regulatory bias in cost-benefit analysis. In fact, my recent book with Michael Livermore, Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health, has a whole chapter attacking the practice of intergenerational discounting.
Such discounting is not a necessary part of cost-benefit analysis, as Heinzerling claims. Instead, it is a flawed methodology currently used in the regulatory process -- in part, perhaps, because there have been too few environmental voices in support of cost-benefit analysis that does not use discounting.
Heinzerling also argues that it is the fault of industry and the federal government -- not environmentalists -- that cost-benefit analysis is biased against regulation. She points to a number of examples where environmentalists have advocated for better cost-benefit methodology. It is true that on several occasions, environmentalists and other pro-regulatory groups have become politically engaged on certain methodological issues.
Perhaps most notable was the successful fight against a practice of the Bush administration to undervalue risk reduction for older Americans, dubbed the "senior death discount" -- another methodological fallacy explored in our book. The senior death discount was bad economics, and when environmentalists and others (including the AARP) organized to fight it, they handed the Bush administration an important defeat. This example underscores the importance of the environmental community engaging in the debate over cost-benefit analysis -- when they fight on these issues, they can win.
But usually, they have been absent from the regulatory conversations in which the most important decisions on cost-benefit analysis were made. In particular, our book explores at length how the environmental community failed to take advantage of the opportunities provided by the Clinton administration to reform cost-benefit analysis. Instead of seizing the moment and working to counter the antiregulatory biases adopted during the Reagan and Bush Administrations, environmental groups declined to engage either in conversations with the Office of Information and Regulatory Affairs (the key player in the area) or with EPA as it developed its extremely important guidelines for the preparation of cost-benefit analyses.
Responsibility for the current impoverished state of cost-benefit is shared. Industry, in seeking less stringent regulation, favors cost-benefit methodologies that are biased against regulation. Federal regulators may, at certain times, have had anti-regulatory proclivities as well. But if pro-regulatory groups (and scholars like Heinzerling) focused more of their efforts on reforming cost-benefit analysis rather than futilely trying to persuade the federal government to abandon it, there would be fewer biases, and cost-benefit analysis would not be so manifestly anti-regulatory. This does not mean that cost-benefit analysis would be perfect -- but it would likely be better.
To be sure, there are non-cost-benefit analysis reasons to regulate. But there are cost-benefit reasons as well, and environmentalists should use those reasons to buttress their arguments. By arguing that cost-benefit analysis is anathema to environmental values, Heinzerling does the environmental community a disservice by encouraging it to drop a potentially powerful set of arguments that could support its policy initiatives. Limiting the political coalition for strong environmental regulation is not a recipe for success in Congress. We need to use every tool in the kit to convince the entire American public that environmental regulation makes sense for everyone -- and that environmentalists are not just trying to impose their set of preferences on the rest of the country. Cost-benefit analysis can be used to make this argument convincingly.
Heinzerling also makes an aesthetic case against cost-benefit analysis. She states that because environmentalists "prefer concreteness over abstraction," they should reject cost-benefit analysis because "the glimpse of the infinite in a summer storm" is "foreign to the cost-benefit mindset." Both of her premises are incorrect. First, environmentalists come in all shapes and sizes. The environmental movement embraces scientists and organic farmers, evangelical environmentalists and environmental economists. The movement is big enough to incorporate abstract thinkers. Second, even if some environmentalists do prefer the concrete to the abstract, it would be foolish to allow this preference to override the need to use data, models, and analysis -- all necessary abstractions -- to understand the pressing problems facing our planet.
It would be equally foolish to avoid making common cause with Americans who are not convinced by appeals to "spring's first warbler" and who prefer hard numbers to back up policy choices. In building the political coalition for strong environmental rules, groups should call attention to the beauty of the natural world, our innate sense of justice, and our moral obligations to each other and the planet. But cost-benefit analysis, and economic arguments generally, fit comfortably among the range of reasons that people believe in strong regulation. As our book discusses, both reason and compassion need to be part of the arsenal of environmental groups.
Most pollutants -- including all carcinogens -- are no-threshold contaminants. They have adverse health effects at every concentration, though of course the effects are worse at higher concentrations. There is no such thing as a "safe" level. Without understanding the economic consequences of regulation, there is simply no intelligible way to decide how to regulate such contaminants because there will always be some residual exposure (whether one-in-a-million, one-in-a-hundred-thousand, or one-in-a-billion).
Furthermore, the argument that we should take the least costly path to reducing environmental health risks is very compelling -- both politicians and the American public recognize that regulations can have benefits, but they are also closely attuned to the costs that are imposed. When environmentalists are reluctant to engage in cost-benefit analysis, they leave themselves open to the characterization that they are insensitive to the economic costs of regulation, and they can lose a great deal of their potential effectiveness in the political process.
As we prepare for the presidential election and the transition to a new administration, the time is ripe for the environmental movement to reevaluate its feelings about cost-benefit analysis. There is a growing awareness of the need to address a second generation of environmental threats like climate change. But the country is also in the economic doldrums, and there will be fear of any new rules that impose costs on the American public or are seen as hampering economic growth. To make much needed progress on environmental issues in this political climate -- full of opportunities but also challenges -- environmentalists would do well to drop the fight against cost-benefit analysis, and to take up the opportunity to reform it.
Cash for Clunkers brought us ... more clunkers!
Seventh Generation launches anti-toxics campaign with wee gimmick
Climate psychology in cartoons: clues for solving the messaging mystery
Comments
View as Flat
Laurence Aurbach Posted 2:35 am
05 Jun 2008
Two features of cost-benefit analysis distinguish it from other approaches to evaluating the advantages and disadvantages of environmentally protective regulations: the translation of lives, health, and the natural environment into monetary terms, and the discounting of harms to human health and the environment that are expected to occur in the future.
The more I learn about CBA (as it is defined above) the less suited it seems to be as a tool to identify environmental policy goals. Its ethical flaws are intrinsic and intractable; its implementation is inherently political; and its practical impact has been to weaken and dismantle important environmental protections.
None of this is to say we should not consider hard numbers and accounting when developing environmental policy. Heinzerling points to performance standards and pollution trading as better regulatory mechanisms than CBA, for example. She writes,
Cost-benefit analysis cannot overcome its fatal flaw: it is completely reliant on the impossible attempt to price the priceless values of life, health, nature, and the future. Better public policy decisions can be made without cost-benefit analysis, by combining the successes of traditional regulation with the best of the innovative and flexible approaches that have gained ground in recent years.
Ped Shed Blog
Permalink
JMG Posted 5:57 am
05 Jun 2008
Using cost-benefit analysis to find the keys to protect the livability of the only known habitable place in the universe is acting like the drunk who searches for his keys under the lamppost far from where he dropped them -- because the light's better. Sure the numbers are crap, but they're the only ones we've got! Brilliant!
The 5% Project
Permalink
Russ Posted 6:58 pm
05 Jun 2008
Its two main points are:
1.CBA as constituted does not recognize the moral abhorrence of externalities, that those who inflict climate (and other environmental) harms are not the same as those who suffer them.
So, if the cost to the aggressor is "10" and the benefit he'd receive is "1", CBA says that's a bad deal, and never mind that the cost to others of his actions is 1,000,000, and the benefit they receive zero.
2.Lomborg and others' favorite diversionary tactic is the abuse of the concept "opportunity cost". But again, in practice it's only the opportunites foregone by the rich polluter which mean anything, while the allegedly better things which can be done for the poor are never going to be done regardless - they're just fraudulent debate points. (If Kyoto or something similar were not implemented, the "costs" saved wouldn't then be spent in the 3rd world, the 1st world would just pocket them.)
Everywhere, there's only two questions to ask:
Cui bono? - Who benefits?, and
Who gets screwed?
(That's why you should always remember, e.g. whenever you hear a politician or economist speaking, that there's no such thing as "the economy", and no such thing as "the market".)
Here's my earlier comment on the Heinzerling post, within this thread.
Revesz is right that CBA nevertheless often does favor the environment side, and we should be alert to opportunities to use the enemy's weapon against him.
But this should be seen as a purely tactical matter, for CBA is the enemy's weapon, forged by his way of thinking, drenched in the blood he has shed. As I tried to say earlier, and as the Climate Ethics post displays, it is not part of the fundamental ethic of environmentalism or of the broader humanist stewardship project.
Permalink
Russ Posted 7:05 pm
05 Jun 2008
Permalink
spaceshaper Posted 3:56 am
06 Jun 2008
Revesz is right that CBA nevertheless often does favor the environment side, and we should be alert to opportunities to use the enemy's weapon against him.
But this should be seen as a purely tactical matter, for CBA is the enemy's weapon, forged by his way of thinking, drenched in the blood he has shed. As I tried to say earlier, and as the Climate Ethics post displays, it is not part of the fundamental ethic of environmentalism or of the broader humanist stewardship project.
I'd say that I have never in my adult life made a significant decision without making some kind of cost/benefit analysis, whether instantaneous and intuitive or measured and calculated, and I doubt if Russ has either. To claim its is "not part of the fundamental ethic of environmentalism" is preposterous. Should I buy a Prius? Gas is still not high enough (even in Europe at $9/gallon) to make that a slam dunk without attaching specific value to intangibles. I'd pay a few thousand bucks over the going rate because of my environmental values but not a few hundred thousand. The value I attach to the Prius' better environmental performance falls somewhere between those points. Why should national environmental policy cleave to a different standard?
Attaching financial value to the environmental values we hold dear should not scare or disgust environmentalists: remember it's not money itself but the consuming love of it that is the root of all evil. Hell, I have no idea exactly how but even a tree does CBA when it puts sturdier roots on this side to resist prevailing winds, and just the minimum on that side where the allocation of extra precious resource is not justified. Or a panther, deciding when to quit pursuit of a fast-moving lunch - when does the metabolic cost exceed the value of the meal?
If environmentalists reject CBA as a central element not only of human discourse but of the whole of the unfolding of the natural world then is it any wonder that the environmentally unaware (whom I will refuse to call "the enemy") are left to frame the entire calculus of this irreplaceable process?
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
Russ Posted 5:48 am
06 Jun 2008
Well, given that, at least since the onset of the industrial revolution in the West (and wherever the West has imposed its values, which by now is pretty much everywhere), "the consuming love of" money has been the universal practice, no matter what the proclaimed theory (though at least in capitalism the theory has been Greed is Good as well), I'd say by now the jury is in - that it's pointless to separate a pretty theory like money itself not being a problem from the grotesque practice of money-grubbing, if the latter practice invariably prevails regardless of the fig-leaf theory.
What should be needless to say, I'm not saying every individual behaves this way, but institutions and systems do so almost without fail. Indeed it's philosophically and legally enshrined in capitalism, that the CEO must seek profit and only profit, and can be sued if he ever acts purely in the service of any other ideal.
As for this:
Should I buy a Prius? Gas is still not high enough (even in Europe at $9/gallon) to make that a slam dunk without attaching specific value to intangibles. I'd pay a few thousand bucks over the going rate because of my environmental values but not a few hundred thousand. The value I attach to the Prius' better environmental performance falls somewhere between those points.
...you say it all right there - you start out a priori with "intangibles", values outside of clinical materialism, and only then try to find a rough quantification. And of course I sometimes do the same thing (though I can assure you that with me there are some things that are non-negotiable).
But this sort of individualized "CBA", deployed only in specific situations and only as a supplement to underlying non-monetary values, is completely different from a bureaucratic, computerized, clinical technocratic process which assumes the growth ideology and GDP aggrandizement as its anchoring "value", and which in practice consistently seeks the right of the stronger.
Of course, what you've done here is stretch the meaning of CBA far beyond the technical scope of the original discussion. In the Heinzerling post she said something about summer storms and warblers which set off some of the commenters. Well, to frame it in the terms you set here, it would turn out neither she nor her detractors (both agreed that this aesthetic value is outside of CBA) knew what they were talking about, since I imagine evolutionary psychologists could at least theorize about the utility (CBA) of enjoying a summer storm.
Similarly, I guess in economic textbook terms we could talk about the utilitarian "calculation" of a cat deciding to leave off chasing prey (even though such a decision is really just unconscious instinct), or the even more elemental and unconscious calculations of a plant, but I think this would be just mythologizing (like pretty much everything else in economics textbooks).
No, if we're going to speak realistically, we must recognize that the "CBA" we're talking about is a specifically ideological construct which has no relation to the natural way of the world, but which has been artificially constructed by greed.
(BTW, I'll assume you were just carried away when you wrote that you think the likes of Monsanto, Massey, General Motors, ExxonMobil etc. are "unaware" of the environmental - and social - consequences of their campaigns. You can't possibly believe that.)
Permalink
spaceshaper Posted 8:51 am
06 Jun 2008
This cynical assertion has no basis in history. There are countless examples of massive institutionalized greed before the industrial revolution and of altruistic social behavior after that date. Our age is no different than any in history in this regard.
it's pointless to separate a pretty theory like money itself not being a problem from the grotesque practice of money-grubbing
Disagree completely. Money itself is a morally neutral civil system of exchange of value. Greed is something else entirely. Greed does not require money, it requires only the acquisitive compulsion.
Indeed it's philosophically and legally enshrined in capitalism, that the CEO must seek profit and only profit, and can be sued if he ever acts purely in the service of any other ideal.
This is pretty much true, and is a problem within the system that will have to fixed if we are to move forward as a culture. Nothing to do with cost benefit analysis except to the extent that if environmentalists permit such out-of-control playas to set the rules you can guarantee you'll lose.
you start out a priori with "intangibles", values outside of clinical materialism, and only then try to find a rough quantification.
Absolutely. Your point?
And of course I sometimes do the same thing (though I can assure you that with me there are some things that are non-negotiable).
You have suggested that corporations have almost overwhelming power on issues that are important to you. In that context "non-negotiable" attitudes seem kinda - well - ineffective.
But this sort of individualized "CBA", deployed only in specific situations and only as a supplement to underlying non-monetary values, is completely different from a bureaucratic, computerized, clinical technocratic process which assumes the growth ideology and GDP aggrandizement as its anchoring "value", and which in practice consistently seeks the right of the stronger.
My assertion is that this "individualized CBA" is deployed in all situations of note, and not as a supplement to underlying values but as an expression of them.
Of course, what you've done here is stretch the meaning of CBA far beyond the technical scope of the original discussion.
Yes indeed, and most intentionally if by original discussion you mean Heinzerling's previous thread. Allowing narrow framings by the opposition concedes the debate. Revesz makes a similar point in his original post on this thread.
No, if we're going to speak realistically, we must recognize that the "CBA" we're talking about is a specifically ideological construct which has no relation to the natural way of the world, but which has been artificially constructed by greed.
No, if we're going to speak realistically we must recognize nothing of the sort. If that is, we want our environmentalist values to have any effect in the world.
(BTW, I'll assume you were just carried away when you wrote that you think the likes of Monsanto, Massey, General Motors, ExxonMobil etc. are "unaware" of the environmental - and social - consequences of their campaigns. You can't possibly believe that.)
Here's what I do believe: that these powerful corporations and the individuals of which they are composed are not incorrigibly evil, and that they are capable of being compelled, cajoled and trained, over time, to do the right thing. In their own interests if not the whole world's.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
Russ Posted 5:53 pm
06 Jun 2008
1.that's not the way it has been enshrined;
2.if we ever had the power to enshrine it in a radically different sense, we'd have the power to simply enshrine something completely different, like the polluter-pays principle, which if I had the power I'd extend to ALL externalities. In that case there'd no longer be a debate over CBA, since it would no longer have an important role.
3.Since we're stuck for the time being with this sociopathic system, it's best, as I already said, to use it to tactical advantage wherever possible (and like I said, Revesz is right, it's often possible), but not to soften in the underlying statements of principle, including the fact that systematically enshrined profit-seeking CBA is a monstrosity completely at odds with all environmental and human values.
I notice you didn't adduce a counter-principle which could encompass polluter-pays/ precautionary/ best-available science/ MACT (all the examples I gave in my original comment, linked above) concepts, as well as any sort of enshrined CBA principle.
Instead, what we seem to have is environmentalism as a vague ideal, while in practice everything is looked at in an ad hoc, instrumental way. We see this especially with the constant obsession with how the enemy* is going to frame things, instead of focusing on asserting our own "frame" (god, I'm getting sick of that term). It's you who are conceding the enemy's frame when you concede at the outset that CBA must be the central mechanism. All the talk about how to reform the concept, which reforms somehow never get done, never changes the fact that you're already fighting on his profit-sanctifying battlefield.
What I would like to do is move, if only philosophically and rhetorically at first (but with the clear goal of making it reality), to a stewardship vision and system where the profit motive is only one tool among many, not both enshrined as the purpose of the system, and installed as the process of its functioning, which is the role CBA performs now.
This change requires, among other things, that we don't acquiesce in fighting the battle of principles on their chosen battlefield just because that's temporarily where the preponderance of power lies, and the path of least resistance (which is certainly what the right wing has faced in recent years) dictates that it's easier that way.
You say:
You have suggested that corporations have almost overwhelming power on issues that are important to you. In that context "non-negotiable" attitudes seem kinda - well - ineffective.
Well, first of all, I'm alive in order to be who I am, not to go along in order to get along. That may make things difficult sometimes, but it's not a matter of choice.
Second, where it comes to fundamental historical conflicts,I do not believe "going along" ever accomplishes anything more than losing without even trying to fight.
But then again, if people don't care about this, if the spirit of
"Here I stand, I can do no other..."
which has accomplished so many miracles down through history, no longer exists in this post-modern too-cool-for-school arcade, then I guess there's nothing left to do but individually prepare and look with hope to Peak Fossil Fuel.
[*I think it's part of the problem when people are temperamentally squeamish about calling someone an enemy when that's evidently what he is. You say above you believe in the Socratic/Enlightenment myth that there is no evil, only ignorance, and that the worst malefactors can be "compelled, cajoled and trained" into good behavior.
It seems incoherent to say that where you must compel someone "to do the right thing", you have in fact redeemed him for virtue. It seems to me he would just be bowing to force.
Same for "training", i.e. brainwashing.
So neither of those would disprove the existence of evil. We're only left with cajoling.
While I don't claim that no one has ever been dissuaded from a course by moral appeal or rational argument, anyone who knows history knows how rare such examples are.
So I'm afraid the evidence is against you there. And then we come back to core existential questions - I'm simply not willing or temperamentally able to sincerely try to reason with or morally cajole an unprovoked assailant. If I'm temporarily too weak to fight back in any other way, I may tactically dissemble these things, as I said is what should be done vis CBA. But if I had the power to fight back on my own terms, I'd do so. Which is what I say should be done vis superseding CBA.]
BTW, doesn't your money-doesn't-kill-people, people-kill-people position somewhat contradict your position that deep down people are all good? Those who believe in the noble savage usually blame social ills on social constructs like money. If you grant that the ills exist, but refuse to locate the fault either innately in man or in his social constructs, then I can't imagine where you could locate it. The Socratic/Enlightenment myth, that man is merely ignorant but can be rationally educated for goodness, has of course been completely trounced by the evidence of history.
Permalink
spaceshaper Posted 9:11 pm
06 Jun 2008
I do not accept that that cost benefit analysis is the 'enemy's weapon', one which we are temporarily compelled to brandish ourselves but which we can abandon once we have 'trounced' them on the 'battlefield'. On the contrary, as I have tried to express above, I believe that it is based in a powerful and positive process central to our essence as humans, as it is central to the essence of other living things in this world. I also believe it is central to wise resource use, which I always understood to be a primary environmentalist value. A developed sense of cost/benefit informs probably three quarters of the posts in this blog, invoked whenever environmentalists point to the carbon-absorbing capacity of the rainforest or the relative merits of rail vs road transportation. Whenever we exclaim at the resource-squandering wastefulness of our culture and invoke better ways to achieve our ends, we are using cost/benefit thinking.
Perhaps in heaven all costs will be eliminated, and all benefits will be limitless. Perhaps we'll get pie in the sky when we die. Meantime here on earth we will continue to be making demanding decisions, some affecting our very survival and the survival of other living things with which we share the planet. You envisage a human culture directed by values of stewardship, as do I. It's a poor steward who operates without a thorough and mindful assessment of costs and benefits.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
JMG Posted 2:50 am
07 Jun 2008
The "cost benefit analysis" applied by a predator in pursuit (is the energy required for the kill more than compensated by the energy value of the prey) and the "cost benefit analysis" applied by a human to decisions (bicycle or Prius; eat meat or go vegan, etc.) are wholly different than the true cost benefit analysis applied by immortal institutions such as governments and corporations.
Nearly every society studied has had a culture based on inculcating, from birth, pro-social values into its members, values that are expected (and normally do) direct the members' behavior even when it costs those people greatly, even up to their lives. The project of society is all about curbing and dealing with our basic tendencies to put ourselves before the well-being of our clan. We even have a DSM category for people whose brains aren't wired to do that -- sociopaths (society killers).
Institutions, on the other hand, are explicitly directed to pursue exactly the opposite course. As many have noted, and particularly relevant here, corporations are externalizing machines; their basic operational paradigm is to increase the margin between cost and benefit (revenue) by shifting their costs to others.
To name one example, a small, privately held drug store chain of my acquaintance refused to sell tobacco products; the owners thought it was inconsistent with their values and their role as providers of medicines and products to support health. As soon as they sold their stores to a large chain, in came the cigarettes and snuff. The corporate masters do not consider the well being of their communities when defining benefit; the original owners of the stores did.
Second, the idea that money is morally neutral and that only the "excessive love of money" is the problem is absurd. Money does not just facilitate commerce, it promotes it, and it permits those in possession to make calls on resources -- to obtain benefits -- while shifting all the costs onto other people (electronic goods and sweat shops made with slave labor, e.g.). Money is no more morally neutral than is a loaded weapon. It has its purpose and, if put under the control of people who are subject to pro-social controls, can be useful. But given over to sociopaths (corporations), it is distinctly not morally neutral--it is morally corrosive.
The whole basis of all environmentalism is, at bottom, a recognition that, as the saying goes, you can't eat money --- that when we confuse economic values with reality ... which money strongly promotes ... we are on a course to destroy our only home (as we are). Because it pencils out.
The 5% Project
Permalink
spaceshaper Posted 5:51 am
07 Jun 2008
"It" doesn't promote or permit anything. Money is inanimate, has neither volition nor consciousness. We promote commerce, for very good reasons, and we have developed money structures to facilitate that. The alternatives - barter, preemption, theft - could only take us so far. Like democracy, our money systems may suck, but they're the best we currently have. We permit those in possession of money to make calls on resources, and when they succeed in externalizing costs it is because we have not prevented it. The only way in which the environmental voice can address that externalization is by identifying it and entering into the financial discourse with the relevant data.
Money is no more morally neutral than is a loaded weapon. It has its purpose and, if put under the control of people who are subject to pro-social controls, can be useful. But given over to sociopaths (corporations), it is distinctly not morally neutral--it is morally corrosive. JMG, I have always had great respect for your posts, but this has to be the worst argument for environmentalists refusing to engage in financial discourse that I have yet seen.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
spaceshaper Posted 6:44 am
07 Jun 2008
The biofuels debacle is a good example of issues argued on gut values that many environmentalists swallowed - some still do, that surely it's better to grow our fuel in Kansas than pump it out of the ground in Saudi Arabia. NOW the costs of that immense self-deception have burgeoned to include accelerated aquifer depletion, maritime pollution, ripping up of carbon sinks and global food shortages, while the environmental benefits measured in EROEI (a child of CBA) have proved to be around zero or less. Yes, hard to count the cost of starvation elsewhere in dollars here at home - smarter numbers earlier on could have saved us from that challenge.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
JMG Posted 6:24 pm
07 Jun 2008
The idea is that the polluter is required, where full remediation is not possible, to value the natural resource damages and do (and pay for) natural resource restoration work -- which might mean restoring another stream if the damaged stream can't be fully remediated, etc.
However, thanks to the magic of discounting, a fundamental tool in the CBA arsenal, the value of the damaged resources quickly (30 years or so) goes to zero. In other words, because the natural resource injury is so profound that many future generations will be denied the use of these resources, the polluter is supposed to make up for that --- but thanks to discounting and the CBA approach to evaluating the value of remediation and restoration, the polluter will pay only a tiny fraction of what the lost resources will actually cost future generations.
Ultimately, CBA is the fruit of a poisoned assumption, namely that benefits reaped by corporations today should be compared to the costs imposed on people in the future and, if both can be massaged appropriately (which, thanks to discounting, isn't hard), the result is useful in determining whether the corporation can proceed to shove its costs onto those future generations.
Oh, and don't forget the other poisonous assumption, that the world "economy" continually increases in size, meaning that you can keep shoving costs into the future because, hey, they'll be richer than we are (because the we're in an infinite growth economy) so they should clean up our mess, not us. This has a nasty way of turning into a justification for maintaining business as usual, since anything we do that might interfere with the great god Growth is rejected out of hand -- after all, it's the fundamental basis of a money economy, where money is loaned into existence.
Rynn and Mobus (if I recall right) have made a number of posts advocating a necessary transition to a money system based on energy rather than on loans made in hopes of an ever-growing economy. In such a system, the amount of wealth would grow each year no faster than the amount of solar energy captured and put to productive use -- effectively producing a zero discount rate, which would at least deal with the insanity of our current plan: shoving our worst environmental costs onto the generations who are going to be inheriting a world of catastrophic environmental costs and depleted resources.
The 5% Project
Permalink
Russ Posted 7:18 pm
07 Jun 2008
2.You say in your response to JMG
"It" doesn't promote or permit anything. Money is inanimate, has neither volition nor consciousness. We promote commerce, for very good reasons, and we have developed money structures to facilitate that. The alternatives - barter, preemption, theft - could only take us so far. Like democracy, our money systems may suck, but they're the best we currently have.
I'll just render explicit two takes on this which anyone could infer from what I wrote earlier:
1.Yes, alternatives to money "could only take us so far". What's wrong with that? It's the totalitarian growth ideology which insists there's no such thing as Enough, while the sustainability concept says there is. As I'm an enemy of "growth" (or as I prefer to call it, intensification), it follows that I seek solutions which take us only "so far".
2.Yes, "they're the best we currently have", but isn't the point to seek something better, not accept the status quo as even the basis for negotiations, let alone implicitly concede it in perpetuity?
JMG, I have always had great respect for your posts, but this has to be the worst argument for environmentalists refusing to engage in financial discourse that I have yet seen.
I didn't see where JMG said he refused to engage. He didn't say so in this comment.
At any rate, speaking for myself, I did not say I "refused to engage". I said, in my original comment on this thread, engage on this CBA basis where favorable (and I agreed with Revesz that it often is), but hold your nose while doing so; always remember it's not a legitimate battlefield, just a temporarily necessary one.
Regarding polar bears, unfortunately I'm at the moment unsure whether or not cost considerations can play any role in ESA listing decisions (I've read conflicting accounts). But at least the concept of the ESA enshrines something beyond mere materialism, and so far this concept has been supported by the people. If you're saying that as oil supplies get chronically tighter and prices continue their upward march (not to mention nauseating volatilities like Friday's), people are going to be less and less concerned about the higher things vis polar bears, ANWAR etc., I fear you're right.
But in that case, it would be emotion vs. emotion, the fear and uncertainty, and subsequent irrationality regarding what Arctic drilling could do for oil supply and price (the answer is, nothing), overcoming the charismatic appeal of polar bears and ANWAR.
So rational arguments regarding the costs and benefits, however favorable to us, will hardly be likely to help much. We'll still be on better ground seeking an extra-rational counterargument, as well as insisting on enforcement of the law (where would we be over these seven horrible years without the courts?).
Regarding biofuels, while you're right that many environmentalists bought in on gut values, it's also true that many bought in based on mistaken (or cooked) cost-benefit and EROEI assessments. On the other hand, counter gut values (like that the answer is not finding mass substitute fuels, but using less fuel) as well as counter (more accurate) quantitative assessments like Pimental's did exist, but these simply lost (and are still losing) the day.
The point is, that there's always a welter of allegedly rational projections, which may be more or less objective (usually less, and often not at all), as well as extrarational values. Those interested only in exploitation and feeding their own "appetite, an universal wolf", will also be interested only in what is most instrumental to achieving those ends. CBA is a tool particularly amenable to their use and abuse. While particular applications of it may favor us if objectively applied,
they're easily and often twisted;
(my original point) the concept is in principle favorable to them, since it enshrines their profit motive as the basis for all further considerations and negotiations.
Permalink
Russ Posted 7:39 pm
07 Jun 2008
Namely, it religiously assumes that future generations will get "richer" in accordance with today's "growth" projections, when it's precisely those projections, and the well-being of future generations, which are called into question by Peak Fossil Fuel and climate change (and a host of other socioenvironmental issues).
You write:
Rynn and Mobus (if I recall right) have made a number of posts advocating a necessary transition to a money system based on energy rather than on loans made in hopes of an ever-growing economy. In such a system, the amount of wealth would grow each year no faster than the amount of solar energy captured and put to productive use -- effectively producing a zero discount rate, which would at least deal with the insanity of our current plan: shoving our worst environmental costs onto the generations who are going to be inheriting a world of catastrophic environmental costs and depleted resources.
I've read George Mobus' blog "Question Everything" from time to time. This is one of his core ideas, and he's gone into it there in considerable technical detail.
The basic idea has obvious moral and spiritual attractions. As for practicality, in the long run it's the only option anyway. If man doesn't plan for such a transformation, nature's going to tranform us in her own inimitable manner.
We can do this the (relatively) easy way or the hard way.
Permalink
spaceshaper Posted 11:44 pm
07 Jun 2008
Russ, I'll make lawyer jokes with the best of 'em but I'd rather have lawyers, courts and a civil police than warlords, private militias and thuggery. Similarly I'll take money as the medium of civil exchange over any of the alternatives history has so far presented. It is indeed a characteristic of money that it facilitates growth, and we are all very aware I think that the pursuit of economic growth as an end in itself is a foolish and unsustainable endeavor. But money also also facilitates art, music, public health, social stability, social compassion....
I've written before on profit, which many including Russ seem to mistakenly regard as a curse peculiar to the snarling wolf of corporate capitalism. Trees, which have been my principal life coaches over the last ten years or so, have shown me that even they must turn a profit in order to survive. Every year a little taller, every year a little more stored against drought and famine. They are good mentors, they take the long view.
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
Jon Rynn Posted 3:43 am
08 Jun 2008
Charles A. S. Hall, who I believe worked with Odum, has also developed a sophisticated view of the economy along ecosystem lines.
My posts, generally, have a different "metaphysics" -- I think we need to use more categories than energy, including materials, structure (form), and information. but enough about me --
I once asked the question in one of these discussions about the utility of the concept of discount rate. It may be that much of the confusion on CBA stems from this concept. Perhaps Spaceshaper is talking about CBA in a more philosophical sense -- simply weighing costs and benefits. On the other hand, it is when you combine that weighing with discount rate that everything goes haywire, because, basically, -- and this was a point I made a while back -- sustainability essentially means that there is no discount rate. the future is just as important as the present.
Permalink
David Roberts Posted 4:32 am
08 Jun 2008
CBA will be shaped, as all tools of social decisionmaking are, by those who have power. The fact is, recent history is chock full of corporations getting away with things that would fail CBA even when applied in the most narrow, technocratic possible way. That's because they have the power to manipulate the levers of social action.
CBA is a vessel that can be filled with virtually anything. An honest CBA would, as Revesz and Spaceshaper say, favor environmental regulation. That it is not applied honestly has little to do with CBA itself and everything to do with the fact that applying it honestly would not benefit those with power.
The failure of enviros to be in the room when the Clinton admin. reformed CBA has nothing to do with its feelings about the CBA as such. It's a failure to grab what measures of power become available to them -- that's because enviros, like so many progressives, are high-minded and tend to view the brute struggle for power as beneath them.
So Russ is right that CBA is used for ill and Spaceshaper is right that it could be used for good, all of which just goes to show that CBA itself is beside the point. Get people who value sustainability in positions of power, and decisionmaking will reflect that. Tools once thought intrinsically evil will miraculously become agents of good.
grist.org
Permalink
Gar Lipow Posted 6:29 am
08 Jun 2008
1) There is some evidence that people "naturally" (whatever that means) tend towards hyperbolic discounting. That is they use very steep discounts for the first few year, but then there discount rate drops rapidly past a certain point and then drops to zero or near zero. I've seen some economists starting to use this. One side note is that if this is valid, Stern used to high a discount rate in his report.
2)Something I'm starting to see should probably become universal. Most (maybe all) economists will acknowledge when asked that any kind of economic valuation of death or injury evaluates only economic costs. Often you will see in an LCA something long the lines of: these are some of the purely economic costs from increased death, illness and injuries. These are actual number of deaths, illnesses and injuries we anticipate. So they take their best guess at economic damage, and then emphasize that human costs, over and above the economics costs are anticipated. Again, this seems to be done fairly often, but in my opinion, if such human costs exist it should always be done, simply part of the professional standard.
3)Peter Dorman, whose challenge has recently been discussed on this blog, also made a statistical point years ago that needs to be considered. Official estimates of environmental damage, and health effects tend to bias too low. (He means statistical bias, not neccesarily personal prejudice on the part of estimators.) Examples that occur to me offhand: permissible lead levels turned out to be way too high: the National Academy of Sciences found in the last few years that the effects of low level radiation is much greater than was officially accepted, more along the lines of Goffman's estimates. Sodium Nitrate and Nitrite is now officially accepted as leading to serious lung problems (not neccesarily lung cancer, but they can contribute to or worsen asthma, increase reactions to allergies, and cause a variety of short term respitory symptoms.
Permalink
Russ Posted 7:04 pm
08 Jun 2008
I've written before on profit, which many including Russ seem to mistakenly regard as a curse peculiar to the snarling wolf of corporate capitalism. Trees, which have been my principal life coaches over the last ten years or so, have shown me that even they must turn a profit in order to survive.
I don't think anybody here attacked in principle the concept of a reasonable profit. Whether or not profit is a curse in itself is something I haven't had much cause to think about, because in this place where we live "reasonable" profit is a concept that does not exist, in principle or practice. On the contrary, greed fundamentalism is both the official and the popular ideology.
I'm afraid your application of the concept "profit" to the activities of trees and animals is imprecise. Non-hominid organisms as a rule seek only Enough to survive, and often enough can barely achieve that. Only rarely does an animal have both the surplus energy and the surplus resources to engage in wanton "consumption". I'm not saying it never happens - shark feeding frenzies, wolverines trashing trapper cabins seemingly for the vandalistic thrill of it, a predator who gets inside an enclosure massacring chickens or sheep far beyond what he'll actually eat - but these are rare exceptions. (Also, in two of these examples one could argue it is man who has distorted the creature's behavior.)
It's only men who consistently behave this way, because they can find ways to profiteer from it.
You know alot more about trees than I do, so maybe there are examples of wanton war profiteering among them of which I'm unaware, but what I do know of trees tells me they take only what they need, including "storage against drought and famine". It's been a long time since I took accounting 101, but I don't think such storage, as long as it's not extreme hoarding, is considered "profit". At any rate, philosophically I don't consider it such.
Let me say that I'm well aware that greed is not endemic to corporate capitalism. Everywhere in practice communism lifted a greed class as well. But then, industrial communism even in theory is nothing but monopoly capitalism with the state as monopoly capitalist.
As with profit, the reason I'm so focused on corporate capitalism is because that's what we have here. If I had grown up in the Eastern bloc, I might instead be focused on the inherent ills of communism (though hopefully I wouldn't delude myself that capitalism is a beacon of freedom the way many anti-communist dissidents have).
Russ, I'll make lawyer jokes with the best of 'em but I'd rather have lawyers, courts and a civil police than warlords, private militias and thuggery.
If you don't think we have right wing private militias already, then I don't know what you think Blackwater and similar cadres are. One of the objectives of the Iraq war was to build up this private paramilitary structure for future domestic use. Naomi Klein's writings on the subject are a good place to start. There is also discussion and links at lifeaftertheoilcrash.net.
Permalink
caniscandida Posted 8:22 pm
08 Jun 2008
Spaceshaper,
could you please explain the connexion between "profit" and "sustainability"? (You know very well that I am nauseatedly fascinated by the latter term.) In what way do natural systems, such as trees, need to "turn a profit," in order to be sustainable? And why is that kind of "turning a profit" truly analogous to the profit-seeking of capitalist entrepreneurs and investers?
Chickens deserve our true friendship! So do fish! So do other sentient beings! Let us learn to be kind.
Permalink
spaceshaper Posted 11:05 pm
09 Jun 2008
I really don't have much to say about your quaint and rather touching conviction that non-hominids seek no more than they need for their day-to-day survival other than this is not born out by my own observation of the deer in my yard. They eat continuously any available food limited only by the capacity of their stomach and stored body fat. If they had opposable thumbs I have no doubt they would build larders and fill and defend them. On your later point, the presence here in the US of organized gun-for-hire groups like Blackwater does nothing to diminish my preference for a publicly accountable civil police force.
To Caniscandida:
I don't think I actually drew the connection between profit and sustainability in my posts above, perhaps because I consider it pretty much self-evident. A business plan which only aspires to break even can not be self-sustaining - how do you get through a bad year? Repay startup costs?
As for the trees and other natural organisms, I don't want to push the metaphor too hard but they generally take and metabolize whatever resources are available, use what they need for immediate purposes (operating expenses) and of the rest store what they can (retained earnings) and distribute the balance in the form of seed or other offspring to ensure that at the end of their individual life the species itself will continue - this is their visible profit.
Forest ecologies make an interesting study as a general market metaphor, either wild (unregulated) or managed (regulated) as Backcut prefers. Despite their calm outward presence they encapsulate a slow-motion fight to the death among ruthless competitors elbowing each other aside for access to light, water and soil nutrients. At the same time they contain life-sustaining symbioses without which all would perish. How cool is that!
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink
caniscandida Posted 12:38 am
10 Jun 2008
Similarly, it is obvious that the typically sustainable system which consists of, say, three generations of a species, must include collecting resources not only sufficient for the short-term survival of present individuals, but also for ensuring against negative contingencies in the short- and middle-terms, and for providing for viable, healthy, actuarially secure offspring, who can be counted on to produce more of the same in their turn. But the collecting of resources for those not immediate ends is not what I would call "profit."
Now that I read Russ's message more carefully, I note his interesting examples of wolverines in cabins, and foxes in henhouses. Presumably there are animal-behaviorists/ethologists who can say more about these phenomena. But my guess is that such well-observed instances of "vandalism" and "massacre" are not wanton, wasteful, purposeless expenditures of energy -- like, say, our leaving on the lights in the car; or, as happened many years ago in a dorm room in NYC, allowing the record player to play "Sad-Eyed Lady of the Lowlands" over and over and over again.
In cases such as those, my guess is, members of Order Carnivora such as wolverines and foxes receive some advantage by destroying resources that might be used later by their competitors. And they certainly might understand human beings to be their competitors.
Chickens deserve our true friendship! So do fish! So do other sentient beings! Let us learn to be kind.
Permalink
spaceshaper Posted 5:32 am
10 Jun 2008
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
Permalink