02 June 2015

Chopping down trees to fight climate change

It's inefficient, at best, for central government to try to prescribe how to achieve most social or environmental goals. Society's just too complex for any large, fixed organization fully to understand. But politicians aren't known for their humility. This is what happens when government thinks it knows how best to achieve its environmental goal of reducing greenhouse gases (not to be confused with trying to prevent climate change, but that's another story):

For the sake of a greener Europe, thousands of American trees are falling each month in the forests outside this cotton-country town [Oak City, North Carolina, US]. .... Each day, dozens of trucks haul freshly cut oaks and poplars to a nearby factory where the wood is converted into small pellets, to be used as fuel in European power plants. Soaring demand for this woody fuel has led to the construction of more than two dozen pellet factories in the Southeast [of the US] in the past decade, along with special port facilities in Virginia and Georgia where mountains of pellets are loaded onto Europe-bound freighters. European officials promote the trade as part of the fight against climate change. Burning “biomass” from trees instead of coal, they say, means fewer greenhouse gases in the atmosphere. .... But ...scientists say, Europe’s appetite for wood pellets could lead to more carbon pollution for decades to come, while also putting some of the East Coast’s most productive wildlife habitats at risk. How Europe’s climate policies led to more U.S. trees being cut down, Joby Warrick, 2 June
 It's a typical government intervention; confusing the causes of a problem (climate change) with the supposed causes of a problem (coal burning) and imposing a restricted (geographically limited to the EU) pseudo-solution to a problem that goes beyond politicians' sphere of influence. The result: government intervention makes things worse even on its own terms.

The same confusion arises in other areas, especially those where experts think they have all the answers. So we see the targeting of a surrogate indicator like blood cholesterol in medicine, through the mass prescription of statins, which might, but probably won't, do anything to reduce the overall health of a population - with large upfront and certain costs in terms of finance and side effects. Of one thing we can be certain: government will not (pdf) look back at its policies and learn from its mistakes.

The solution, I think, is for governments to stick to what they are good at: articulating society's goals and raising the funds to achieve them. But, for complex social and environmental goals, government should contract out the actual achievement to a motivated coalition of interests, which will have incentives to explore diverse, adaptive ways of achieving our goals. A Social Policy Bond regime would effect such a contracting out. The bonds, being tradeable, would imply that this coalition could change, always to be composed of those who will be most efficient at achieving our goals. This, in turn, would mean that we could target long-term goals, including those, like climate change, that transcend national boundaries.

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