Nappies, LCAs, and the environment

From an article in a recent New Scientist:

Greenhouse gas emissions from the production of various materials reveal that recycling is always greener than using virgin resources Throwaway culture: the truth about recycling, Bob Holmes, 'New Scientist', 22 July

This is problematic for two reasons. First: I think it's a mistake to define 'greener' as 'generating a lower level of greenhouse gas emissions'. Why? Because production inevitably entails numerous other environmental impacts. Second: because 'always' is anyway too definitive.

Life Cycle Analyses (LCAs) are not a simple exercise, but one conducted by the UK's Environment Agency compared the environmental impacts of disposable nappies (diapers) against home- and commercially-laundered cloth nappies. The conclusion:

For the three nappy systems studied, there was no significant difference between any of the environmental impacts – that is, overall no system clearly had a better or worse environmental performance, although the life cycle stages that are the main source for these impacts are different for each system. Life Cycle Assessment of Disposable and Reusable Nappies in the UK (pdf), Environment Agency, 2005

This LCA considered a wide array of environmental impacts: 'resource depletion; climate change; ozone depletion; human toxicity; acidification; fresh-water aquatic toxicity; terrestrial toxicity; photochemical oxidant formation (low level smog) and nutrification of fresh water (eutrophication).' Climate change, note, is just one of these impacts. This study was published 12 years ago, and its conclusion might have changed since then - which is my second point: that even if we can say now that recycling aluminium, say, is currently 'greener' than producing from the virgin resource, it might not always be so. Weighting environmental impacts, apart from being largely subjective, can never be definitive: our scientific knowledge about these impacts changes, as do the technologies of extraction and recycling and numerous other relevant variables. Our current policymaking system, as applied most spectacularly to climate change, relies on our trying to identify the source of a problem and then basing policy instruments for decades ahead on that - ossified - knowledge of scientific relationships. As well as failing to account for our rapidly expanding scientific knowledge, it necessarily ignores potentially massive changes in social, financial or biological variables.

My suggestion is that policymakers or environmental campaigners stop focusing on how things are done and instead target environmental outcomes, measured in terms of human, animal and plant health. Environmental Policy Bonds could target quite ambitious goals at the national or even global level. Just choosing their target could force policymakers and the rest of us into clarifying what we really want to achieve. For example: do we primarily want to influence the climate, or are we more concerned about the adverse effects of the climate on human, animal and plant life? The difference is subtle, but it might be that doing the former is not the most efficient, nor even a feasible, way of mitigating the latter.

Clarification of goals is one crucial advantage of the Environmental Policy Bond concept. Another is that the bonds, being tradeable, could target ambitious, long-term goals that will probably require the lifetime of multiple democratic government administrations to achieve. A bond regime would not dictate how our goals shall be achieved, nor who shall achieve them. At any one time the bonds will be held by that coalition of interests who are - or who think they are - the people who will be most efficient at achieving the next step on way to the bonds' redemption.

In all, then, the Social Policy Bond concept, as applied to the environment, would motivate bondholders to explore and implement diverse, adaptive initiatives that will efficiently achieve our environmental goals. This is something that our current policymaking system, based as it is on the use of fossilised science and heavily influenced by vested interests, simply cannot do.

The environment: what do we want?

John Michael Greer writes: 

A huge fraction of the energy consumed by a modern industrial society is used indirectly to produce, supply, and transport goods and services; an allegedly “green” technological device that’s made from petroleum-based plastics and exotic metals taken from an open-pit mine in a Third World country, then shipped halfway around the planet to the air-conditioned shopping mall where you bought it, can easily have a carbon footprint substantially bigger than some simpler item that does the same thing in a less immediately efficient way. Dark Age America, John Michael Greer, 2016

The sort of life-cycle analysis required to establish the environmental benefits or otherwise of shifts in our behaviour are bedevilled by boundary issues, measurement difficulties and the difficulty of weighting one type of environmental impact against another. They are better than blandly assuming that rail is ‘better’ than air travel, or that solar power is better than coal-fired power stations but, for the making of robust policy, they would need to be continually reassessed in the light of improving technology, our ever-expanding knowledge of the environment, and our ever-changing environmental priorities. Government policy cannot be so responsive: if government did use life-cycle analysis with the aim of altering our behaviour, it would probably do so on the basis of a one-time, one-size-fits-all, and possibly quite subjective assessment of environmental costs and benefits. It’s not good enough, but even worse would be what we largely have now: government environmental policy based on corporate interests, regulatory wrinkles, and 'feels-good' media stories and the launching of visually appealing initiatives that attract air time but otherwise achieve nothing.

Social Policy Bonds would take a different approach. They would subordinate environmental policy to targeted environmental outcomes. It might be, for instance, that society wishes to reduce its use of fossil fuels. A Social Policy Bond issue that rewarded achievement of such a reduction would generate incentives for bondholders to bring it about at least cost. They might well carry out life-cycle analyses in their attempt to do so. But there is an important difference between the way do they would conduct their research and the way government would do so: bondholders have incentives to achieve their goal efficiently. This is likely to mean responding to and stimulating: increased knowledge of scientific relationships, and technical advances.

More important, though, is that a Social Policy Bond regime would compel clarity over society's real goals. In this case, we'd have to answer the question: is reducing fossil fuel use an end in itself, or a means to other ends? And if the latter, what are those ends? Let's say those ends include, inter alia, improving air quality. Now, is improving air quality an end in itself, or is it the effects that air pollution has on human, plant and animal life that we really want to be targeting? And, if the latter, why not target these ends directly? There might be good reasons, involving the costs of monitoring, for targeting indirect means of achieving our goals, but we do need to keep these goals clearly in mind.

A Social Policy Bond regime would necessarily entail asking ourselves what are the real goals of, say, environmental policy. It would then contract out the achievement of these goals to those people or bodies - public- or private-sector - who, at any one time, will form that coalition that can most efficiently take us along the route towards achieving our goals. Even a perfect life-cycle analysis cannot do this: technology and our knowledge are changing constantly. Policy should therefore limit itself to articulating our environmental goals, and raising the revenue for their achievement.

Most of our important environmental goals will require diverse, adaptive responses. These are precisely the sort of responses that government does very badly. Government can and should articulate society’s environmental goals, and can help pay for their achievement: in the democratic countries it performs these functions quite well and, indeed, it is the only body that can do so. But actually achieving these goals requires continuous, well-informed and impartial decisions to be made about the allocation of scarce resources. For that purpose, Social Policy Bonds, with their incentives to achieve targeted outcomes efficiently would, I believe, be far better than the current ways in which environmental policy is formulated. For more about how Social Policy Bonds could target improve the environmental goals, see here.

Fossil fuel subsidies

Two brief excerpts from the International Energy Agency's publication, World Energy Outlook 2016, highlight what happens when there's no guiding strategic vision for our planet's future:

The value of fossil-fuel consumption subsidies dropped in 2015 to $325 billion, from almost $500 billion the previous year. ... Subsidies to renewables are around $150 billion today. World Energy Outlook 2016, Executive Summary; link to pdf here

The drop owes something to what the publication calls a 'subsidy reform process' but also to lower fossil-fuel prices. As well as these billions, there are, of course, subsidies for the exploration, development and production of fossil fuels. These are difficult to assess because of the “lack of transparency in government and company accounts, and limited information on off-budget subsidies to producers" source. It's easy to see how these subsidies arose, and why they persist. What is more difficult to discern is how our policymaking systems can do anything to address them. Large corporations have immense political power, partly funded by the very subsidies whose withdrawal they can effectively resist. The multitude of smaller interests, those of ordinary people and the environment, have little weight in our policymaking system.

There's nothing new in such an analysis, but what I can offer is a means by which we can aggregate and represent the interests of the vast majority of human beings - now and in the future - who don't benefit from energy subsidies and who suffer from the environmental depredations they cause. We could issue Social Policy Bonds that target for improvement the health of humans, plants and animals. Backed by national governments, the bonds would channel the market's incentives and efficiencies into improving the environmental well-being of the entire planet. Large corporations could still make money doing what they do now, but they'd find it less profitable. They might instead re-focus their resources into more environmentally beneficial areas. The way the bonds work means that bondholders would pick the lowest-hanging fruit first. In other words, they would maximise the environmental improvement per dollar spent.

But perhaps most important of all, Social Policy Bonds would clarify what we, as a species, wish to see. The current arrangement, the one that subordinates mankind and the planet to the narrow, short-term interests of large corporations, came about without consulting the rest of us. It thrives because the policymaking process is opaque to ordinary people, concentrating as it does on legalisms, institutional structures and, as we see with energy subsidies, obscure funding arrangements. A Social Policy Bond regime would change that. Because the bonds' starting point would be social and environmental outcomes, the public could participate in the policymaking process. So, if we wanted to donate billions of our taxes to large energy corporations we could still do so under a bond regime. I doubt that we'd choose to do that, but if we did we'd be doing so with our eyes open.

For more about environmental applications of the Social Policy Bond principle see here.

Target environmental ends, not means

The current Economist looks at the the environmental cost of solar electricity generation and in particular at work done on quantifying the very big efficiency improvements in the production of solar cells since 1975. It appears that, over the lifetime of solar panels made today, there will be very significant cuts in emissions over those that would result from the consumption of fossil fuels in generating the same quantity of electricity. This is interesting but it doesn't actually tell us a great deal about the net environmental impact of substituting solar panels for fossil fuels. As one commenter puts it:

If you're going to measure the "clean" of solar power, why would you neglect the production of all of the minerals that are used in the process? These minerals include arsenic, bauxite, boron, cadmium, coal, copper, gallium, indium, iron ore, molybdenum, lead, phosphate, selenium, silica, tellurium, and titanium dioxide. Some of these minerals are difficult to source and mine, and almost always create a large degree of environmental damage in their wake. Source

There are also the environmental costs of providing backup (for when the sun isn't shining) in the form of batteries, or other storage, and the costs of disposing of the panels after their lifetime. As the Economist article says, "The consequence of all this number-crunching is not as clear-cut as environmentalists might hope."

This underlines what I have said in my previous post when it comes to making policy: rather than try government try to identify all the environmental implications of any policy with inescapably limited knowledge at fixed point in time, we should rather be identifying the outcomes we want to see and rewarding their achievement, however that is done. This would be more practical than attempting to conduct entire life-cycle analyses over all possible policy choices - which, even if it were possible, would be instantly made obsolete by new technology and our expanding scientific knowledge. It would also cohere more closely with goals that can be clearly articulated and that are meaningful to ordinary people: those that specify desirable levels of plant, animal and human health.

For more on applying the Social Policy Bond concept to the environment see here.

Fossilised science is no basis for policy

How do we weight different environmental impacts? Take diesel, lauded at one stage as a way of cutting back greenhouse gas emissions, but known to have lethal effects through emissions of particulates and other pollutants:

Volkswagen’s rigging of emissions tests for diesel cars comes after nearly 20 years of the technology being incentivised in Europe in the knowledge that its adoption would reduce global warming emissions but lead to thousands of extra deaths from increased levels of toxic gases. The rise of diesel in Europe, John Vidal, 'The Guardian', 22 September 2015

Or, take organic food. An organic field will certainly host more wildlife and biodiversity, and decrease or eliminate air and water pollutants. But the same field will most probably yield less than conventional farming. More land would then have to be devoted to supply the same volume of food. And it's likely too that organic food production results in higher greenhouse gas emissions than conventional farming. There are also questions about whether GM crops (foods genetically modified by modern techniques) are better for the environment because they could, for example, require less fertiliser, less land, less water and be more tolerant of salt.

What should policymakers do here? The difficulties of weighing environmental impacts are compounded by our imperfect, but ever-growing knowledge of, say, the effects of pollutants, and more and more research into how to reduce emissions from transport or agriculture. Fossilised science is no basis for sound policy, and getting it wrong, as did those who incentivised European diesel engines, can have disastrous effects.

This is where the Social Policy Bond idea could help. Instead of trying to work out whether, say, less petrol and more diesel is a good idea, or whether organic agriculture is better than conventional, we could instead target social and environmental outcomes, and let a motivated coalition of interested decide how best to achieve them.

How would this work? We first need clarity over what we are trying to achieve. Mostly, we'll be concerned about impacts on plant, animal and human health. Focusing just on human health, we would have broad, national, targets for an array of indicators, such as longevity, infant mortality, quality adjusted life years and others. These would be determined by government, articulating as it does society's goals. But the ways of achieving these goals, and who would achieve them, would be the function of a market in Health Bonds. It would be up to holders of these bonds to decide, on a continuing basis and in response to all new scientific knowledge, what will be the most efficient ways of achieving these goals. The most efficient ways will be those that maximise returns to the bondholders but also to society as a whole. Bondholders' interests will be exactly congruent with those of society, and they will remain so until the bonds are redeemed - which could be decades hence. 

Health Bonds would make it unnecessary for decision makers to try to anticipate new scientific knowledge, or to make decisions on trade-offs that can be, and have been, disastrous. They would stimulate the exploration and implementation of diverse, adaptive ways of improving the nation's health. It's unfortunate that we have very few people or institutions devoted to the healh of an entire country. We have instead organizations like Ministries of Agriculture, Transport, the Environment, and plenty of organizations advocating for solutions to specific health problems: cancer, heart disease, respiratory diseases, and so on. These organizations undoubtedly do good work and are staffed by well meaning, hard working individuals. But they cannot, in good conscience, make the trade-offs between, say carbon dioxide emissions and lung problems in ways that maximise the total health of an entire population. Sadly, that necessary policy perspective falls outside their remit and could even threaten their income and status.

For more about Health Bonds see here. For more about Social Policy Bonds, see here.

The EU: killing its citizens and destroying rainforests

Craig Sams writes, in a letter to the New Scientist:

... In 1993 my company Whole Earth Foods launched a trans-fat-free spread, branded Superspread. Other manufacturers objected to our advertising: the Advertising Standards Authority banned it, effectively killing our product. We presented the ASA with the medical evidence, which was abundant 23 years ago. They accepted its validity but said we violated their code because we were “appealing to fear” by suggesting trans fats could damage your heart health. When Denmark banned trans fats the food industry replaced them with coconut and palm fats, and the EU was faced with a rapeseed oil glut, as that was the oil that was mostly hydrogenated. So the Renewable Transport Fuels Obligation required rapeseed oil to be blended with diesel. That requirement overshot. So we are now deforesting Indonesia to grow palm oil to make up the quota for vegetable oil in diesel. If there is anything to be learned from this tragic fiasco that continues to cost tens of thousands of lives annually and blights many more with ill health, it is that agricultural policy should never trump health policy. The tragic fiasco of trans fats, letter to the 'New Scientist', 16 October

In short, the European Union couldn't care less about the health of its subjects, and helps destroy Indonesian rainforests. It keeps on doing it. And there are no mechanisms in place either to stop the insanity, nor to make the decision makers accountable, nor even to identify the decision makers, still less to get rid of them. That's why I voted for Brexit, and hope that this whole tragic experiment, which began so nobly, gets dragged behind the barn and killed with an ax.

Polluter Pays Principle: Social Policy Bonds as a meta-system

The Polluter Pays Principle (PPP) says simply that those who pollute the environment must pay for the damage they have caused. The idea originated in the 1970s when members of OECD countries sought a means by which pollution control costs would be financed by the polluters rather than the public in general. Its principal defect is that it does not guarantee efficiency of pollution control and environmental protection.

The PPP assigns environmental rights to those who benefit from environmental improvement, so polluters pay. The Beneficiary Pays Principle (BPP), on the other hand, says that whoever benefits from a cleaner environment should bear the costs of pollution control. 

Especially for diffuse sources of pollution, it's not always obvious who should pay: the polluter or the beneficiary. One of the virtues of a Social Policy Bond regime is that it would leave it to holders of Environmental Policy Bonds to decide how to allocate the costs of a cleanup. They would do so not according to the the subjective and possibly divisive criterion of 'fairness', but on the basis of which principle will be more efficient at ensuring the maximum reduction in pollution per dollar spent. 

 

Social Policy Bonds are versatile in that respect; they also scale up. So: assume that we want to target global levels of air pollutants, according to their lethality. A global fund, backed by contributions from governments and possibly non-governmental organization, could be set up to reward bondholders once a targeted reduction in global air pollution levels has been achieved and sustained. No single approach - PPP or BPP or any other - will work best over the entire planet for a period of (say) decades. Instead, a mosaic of approaches, varying with time and space, will maximise the pollution reduction per dollar spent by our global fund. There will be some circumstances, especially when polluters can be clearly identified, where the PPP will work best. But even under very similar circumstances, politics might make that approach unacceptable.

The crucial points are that the Social Policy Bond principle:

1. is versatile enough to encompass both the PPP and the BPP, or any combination; and
2. maximises efficiency, expressed as maximum reduction in pollution per dollar spent.

Social Policy Bonds are, then, a meta-system. They do not dictate how goals shall be achieved, nor who shall achieve them. They do require some source of funding, but raising funds for widely agreed environmental outcomes is likely to be less contentious than the current system, whereby contributors and beneficiaries have to be identified in advance of projects that for the most part reward activity rather than success.

More regulation, more gaming

The Economist, writing about new vehicle emission testing, is realistic rather than cynical: 

Changes to testing regimes are afoot. Japan is likely to review the way its tests are carried out. Europe’s system is also being readied for an overhaul. Plans are in place to replace its test cycle with a new one that more closely mimics real-world driving and imposes stricter rules over how cars may be prepared. A system for rechecking NOx emissions from production vehicles on the road is under discussion. That should ensure exhausts are cleaner. But the new test will only be harder, not impossible, to game. Exhaustive analysis, the 'Economist' 30, April

Incentives matter. The incentives faced by car manufacturers under any likely testing regime will, as the Economist says, encourage gaming. It's one chapter in an old and gloomy story: government sees a problem (air pollution in this instance), thinks it knows how best to solve it (by limiting certain vehicle emissions), and legislates its preferred solution. This can still work: where cause and effect are easily identifiable and when society's complexities are not overwhelming. But when it comes to air pollution it fails. It fails because vehicle manufacturers will game the system. And it's likely to fail for other reasons. The government doesn't and cannot know the type and impact on human health of the emissions vehicles produce when, necessarily, only some of the many emitted compounds can be identified and quantified. Regulating carbon dioxide, for instance has led to increases use of diesel engines, which generate different pollutants of unknown impact. Depending on how electricity is generated, even electric cars could have a more severe effect on health than petrol or diesel vehicles. Technology is changing fast, so is our knowledge of the relationships between emissions and health. Regulations cannot keep up with the pace of change. 

Here's another suggestion: use the Social Policy Bond principle to target air pollution. Issue bonds that become redeemable only when air pollution targets have been met and sustained. The bonds would then encourage exploration, experimentation and implementation of those ways of reducing air pollution that are most cost-effective. Being tradeable, they could target a long-term goal: investors could profit by making achievement of the goal more likely, then sell their bonds to new holders who would take the necessary next steps toward the goal's achievement. For links to papers on applying the Social Policy Bond principle to the environment see here.

Environmental policies that hurt the environment

As cities move beyond recycling paper and metals, and into glass, food scraps and assorted plastics, the costs rise sharply while the environmental benefits decline and sometimes vanish. “If you believe recycling is good for the planet and that we need to do more of it, then there’s a crisis to confront,” says David P. Steiner, the chief executive officer of Waste Management, the largest recycler of household trash in the United States. “Trying to turn garbage into gold costs a lot more than expected. We need to ask ourselves: What is the goal here?” The reign of recycling, John Tierney, 3 October

Say no more. Or rather, say it again and again: what is the goal? Recycling is not a goal: it is an alleged means to ends that remain unspecified. We'd do better to think about those ends, specify them, and then encourage people to achieve them. Recycling can and does play a role, but not always, as the article excerpted above shows.
We see something of the same lack of clarity about environmental goals in the recent Volkswagen debacle. A recent article title sums it up: The Volkswagen diesel scandal was driven by carbon obsession: 

From 2001, punitive rates of up to £500 were applied to cars [in the UK] which emit carbon emissions of more than 225g/km, while cars below 120 g/km were treated to token road-tax rates. As manufacturers quickly discovered, the only way to get many vehicles below these thresholds was to make them diesel.It was well known that diesel engines produced large amounts of tiny carcinogenic soot particles, but this was brushed over. Particulate emissions were meant to be dealt with by filters, yet these are known to become blocked if engines spend too much time idling, as they do on urban roads. Diesels also produce far higher levels of nitrogen oxides, the subject of the VW scandal. Ross Clark, 3 October

A Social Policy Bond regime would improve on this sort of  random policymaking. Certainly, the first steps would be difficult, but they are essential: defining the environmental goals we want to achieve. Most likely, we'd target for reduction pollutants that adversely affect human, animal and plant life. The bonds are sufficiently versatile that other objectives could be simultaneously targeted. The important thing is that, under a bond regime, we'd be targeting meaningful goals according to their lethality, rather than their media profile.

For more about application of the Social Policy Bond concept to the environment start here. There are also numerous posts about the environment on this blog.

Volkswagen: no surprise

[D]rivers of almost half a million cars in the US have now suddenly found that they are driving round vehicles which are a lot worse for the environment than they thought. The rigged tests masked the fact that these cars emit up to 40 times the legal limit of pollutants. And now VW has said that as many as 11 million cars worldwide could be affected. VW scandal threatens 'Made in Germany' brand, BBC, 22 September

Social Policy Bonds have big advantages over conventional policy when addressing a problem like air pollution caused by millions of point sources. Conventional policy cannot effectively measure the pollutants emitted by any more than a few major sources, and then reward or punish the emitters accordingly. What might work for power stations or cement factories won't work for cars or households. Corporations (like Volkswagen) have every incentive to cheat the system, and individuals have every incentive to go along such cheating. The bureaucratic burden of measuring the pollution generated by millions of machines or people is not just a misallocation of resources: it's likely to be intrusive and divisive. Plus, it's not a very exciting job.

Social Policy Bonds can help. They're at once both more direct and more versatile. So instead of targeting the air pollution generated by millions of point sources, they can target an array of pollutants, weighted according to lethality, and let the market for the bonds work out, dynamically, the best ways of achieving our pollution reduction goal. I first wrote about this approach back in 1991. My views haven't changed since then, so I won't repeat them here.

Diversity and biodiversity

Jonathan Franzen writes about biodiversity and whether the emphasis on climate change is diverting worthwhile effort and resources away from conservation. He visits Costa Rica and looks at conservation efforts in the northern dry-forest region of Guanacaste:

The question that most foreign visitors to Guanacaste ask is how its model can be applied to other centers of biodiversity in the tropics. The answer is that it can’t be. Our economic system encourages monocultural thinking: there exists an optimal solution, a best conservation product, and once we identify it we can scale it up and sell it universally. As the contrast between Amazon Conservation and the A.C.G. [Área Conservación de Guanacaste] suggests, preserving biological diversity requires a corresponding diversity of approach. Carbon Capture:Has climate change made it harder for people to care about conservation?, Jonathan Franzen, 'New Yorker', dated 6 April

This is something I've been advocating for years: to solve our biggest, most complex social and environmental problems we urgently need diverse, adaptive approaches. Social Policy Bonds would encourage such approaches in ways that current policy cannot. Yes, we need some high-level direction as to which objectives we should pursue, and yes, we need some broad system of revenue raising to finance the achievement of some of these goals. But we do not need top-down, one-size-fits-all, programmes based on fossilised science that have been tried, tested and (for the most part) failed. The world is too complex for that.

A Social Policy Bond regime would reward those who achieve such long-term goals as maintaining or increasing biodiversity, without stipulating how these goals shall be achieved. Government, or a group of governments or non-governmental bodies or philanthropists could work together to articulate society's goals and raise revenue for their achievement. But the actual achieving would be done by bondholders (or people paid by bondholders) who would be motivated to form a coalition of interests entirely devoted to achieving society's goals with maximum efficiency. This coalition would probably vary in composition and structure over time, as would the projects it initiates. But at any one time, the market for the bonds would ensure that only the most efficient programmes will be implemented.

Anti road rage

George Monbiot writes about city planning in England, and the lack of playing space for children: "In the places built 10 or 20 years ago, there’s plenty of shared space, but almost all of it is allocated to cars." It's sad how little input ordinary people have into the layout of our towns and cities, and it's tragic that subordinating our entire way of living to motoring (as distinct from motorists) has had such negative consequences for our physical and mental health. People from the new world travel for thousands of miles to experience, for a week or two, vibrant, safe cities that invariably were developed before motoring became important. There's no reason people shouldn't live in the sort of suburbs or satellite towns against which Mr Monbiot inveighs if that is what they want to do, but there are good reasons why such lifestyles shouldn't be heavily subsidised; indeed, so heavily subsidised that any alternative has become forbiddingly expensive or dangerous for the middle classes. What are these subsidies? As well as subsidised to oil extraction and consumption, there is, essentially, free parking. And the costs of accidents, injuries and the damage done to mental health by roading are, of course, borne by the entire population.

Once a particular lifestyle has received subsidies for many years it's very difficult (though not impossible) to withdraw them. As well, cause and effect are difficult to identify and far more difficult to translate into meaningful political action. That is where Social Policy Bonds might offer a way forward. Under a bond regime we could target things that are not amenable to direct government action: things like the loneliness of the elderly, or the broader physical and mental health of an entire population. We cannot know in advance what are the best ways of achieving such targets. But a motivated coalition of investors holding bonds targeting these goals is far more likely to achieve them than a ruling political party beholden to its friends in big business and government. If holders of bonds targeting such goals decided that the best way of enabling people to live fulfilling, healthy lives is to make everyone dependent on cars, then that is what they will do. But they would only do so if that is what the evidence told them. For myself, I suspect that there is no such evidence, and it's a catastrophe that governments the world over are acting as though there were.

Biodiversity

How much biodiversity do we want? It's unfortunate that we even have to ask this question, but until we answer it we're likely to see more and more extinctions, along the lines described by Elizabeth Kolbert. Biodiversity is difficult to measure but, again unfortunately, unless we do, and somehow set quantifiable targets, we shall lose it at a high rate as habitat loss and other mankind-induced environmental changes continue apace. Biodiversity, along with other unquantified but crucial contributions to quality of life is something else that is being be sacrificed by default in pursuit of an ever-higher Gross World Product; our de facto over-arching target.

How would a Social Policy Bond regime address biodiversity? We could target it quite directly, using a combination of proxies such indicator species, and areas (and contiguity) of land and sea set aside for conservation.We could also target for reduction the negative impacts of loss of biodiversity.


Myself, I'm no expert in these matters. But there are experts who, if we were motivated, could be brought into a discussion, culminating in biodiversity goals and priorities in ways that maximize society's well-being per dollar spent.

It's not being done, partly because our policymaking is stuck with a system that doesn't allow governments to set goals unless they also achieve them - something that, when it comes to complex, long-term, goals, requiring adaptive, diverse approaches, they cannot do well.

The Social Policy Bond principle is different. Under a bond regime governments - or any wealthy group of people, corporations, or non-governmental organizations - could set goals as lofty and long-term as a world of maximum biodiversity (however it's defined), and reward the people who achieve these goals. We need now, more than ever, diverse, adapative approaches to challenges such as biodiversity loss or, for that matter, violent political conflict; huge threats, but ones that are largely ignored in pursuit of goals whose only virtue is that they can be measured by accountants.

The moral case for tax avoidance

George Monbiot writes about Scotland's deer-stalking estates and grouse moors:

Though the estates pay next to nothing to the exchequer, and though they practise little that resembles farming, they receive millions in farm subsidies. The new basic payments system the Scottish government is introducing could worsen this injustice. [Andy] Wightman calculates that the ruler of Dubai could receive £439,000 for the estate in Wester Ross he owns; the Duke of Westminster could find himself enriched by £764,000 a year; and the Duke of Roxburgh by £950,000. I'd vote yes to rid Scotland of its feudal landowners, George Monbiot, 'the Guardian', 19 May

It's not so much the wastefulness of such subsidies, nor the environmental devastation they wreak, nor even the lunacy of taking money from ordinary people to subsidise wealthy aristocrats and monarchs. Rather, the issue is the persistence of such stupid, corrupt policies, which have hardly changed in the several decades since they were first exposed and their impacts quantified. We have no systems in place to act on the voluminous evidence of their disastrous (for more than 99 percent of the population) effects. This is one big disadvantage of making policy as if outcomes are irrelevant: nobody has incentives to terminate failed policies. Instead, the beneficiaries of lucrative-but-stupid policies, have every incentive to oppose their withdrawal, and the means by which to do so.

Mr Monbiot goes on to describe the visual impacts:

The hills in many parts look as if they have been camouflaged against military attack, as they have been burned in patches for grouse shooting. It is astonishing, in the 21st century, that people are still allowed to burn mountainsides – destroying their vegetation, roasting their wildlife, vaporising their carbon, creating a telluric eczema of sepia and grey blotches – for any purpose, let alone blasting highland chickens out of the air. Where the hills aren't burnt for grouse they are grazed to the roots by overstocked deer, maintained at vast densities to give the bankers waddling over the moors in tweed pantaloons a chance of shooting one.

Subsidising planetary destruction: et tu, Australia?

Divabat on metafilter summarises Australia's 2014-15 budget:

Amongst the casualties: television, young people (and the organisations that help them) and old people, tech startups, postgraduate students, people with disabilities and anyone seeking medical care, foreign aid, Indigenous people, the arts, renewable energy, and the environment. However, if you are in defence, mining, or Indonesian immigration, you should be fine.

Yes, the fuel tax credit scheme for heavy diesel vehicles will continue. This is worth about US$2bn in taxpayer subsidy to big mining corporations.

Betting against extinction?

George Monbiot writes:

The gambling company Ladbrokes has been offering odds on the conservation status of various fish species. Until last night it was taking bets on mackerel; recently it has encouraged people to punt on the survival prospects of stocks of yellow fin tuna, swordfish and haddock. You can, if you wish, gamble on extinction. Betting on extinction, 1 February

The article is upsetting to read, though hardly surprising, but I will point out one unlikely potential plus. Suppose a group of wealthy non-governmental organizations, philanthropists and concerned members of the public got together and gambled against extinction? If the odds were decent and they raised a large enough bet then...

Then ...we would have, in effect, a Social Policy Bond which would pay up the specified fish species did not become extinct. The bettors would have an incentive not just to wait passively and watch what happens to the fish, but actively to finance projects that would keep the species going. Such projects could tackle the problem of over-fishing with far more vigour and success than the current shambolic system. The bettors could lobby governments for more effective controls; they could bribe fishers to take early retirement, or train them to do something else. They could produce educational videos aimed at convincing consumers and children about the benefits of alternative sources of protein. Unlike the current system, the bettors would be strongly motivated not just to make reassuring but vapid gestures in the right direction, but actually to do something to combat species extinction.

Ends and means in energy policy

James Lovelock in The Revenge of Gaia:

I find it sad, but all too human, that there are vast bureaucracies concerned about nuclear waste, huge organizations devoted to decommissioning nuclear power stations, but nothing comparable to deal with that truly malign waste, carbon dioxide.

Energy policy is largely politicised; which means that people are less likely to engage in rational argument. But Lovelock's case for going nuclear should be debated. Unfortunately, like so many other facets of life in a complex world, nuclear technology is highly technical, which probably explains why most of us react emotionally to it. But Social Policy Bonds could bring about more public participation in the debate - essential if we are going to have the buy-in that will become increasingly necessary. Under a bond regime we would target broad environmental indicators and supply of energy. These are the outcomes of an energy policy, and much easier to understand than highly specialised technical data. Holders of bonds targeting such environmental and social goals would have incentives to achieve the specified goals, but it would be up to them to decide how. They would have powerful incentives to meet the agreed environmental criteria. And these criteria would be agreed by society in general, rather than a handful of politicians taking advice from a few scientists and industry lobbyists.

Nuclear or non-nuclear: that is not the question. Meeting agreed social and environmental goals: that is what is important, and that is what an outcome-based policy approach, such as Social Policy Bonds, would deliver.

Biodiversity or cheaper petrol?

How much is biodiversity worth? How is the avoidance of lost biodiversity to be weighed against people’s wish for cheaper fuel?

Social Policy Bonds cannot answer these questions, but they can help in two ways:

Bonds could be issued that target some index of biodiversity. The market prices of the bonds at flotation and thereafter generate estimates of the total and marginal costs of achieving targeted goals. The total cost estimates would be continuously refined and updated by a large pool of motivated observers. They would probably be better estimates than those calculated from the sort of estimates made nowadays: typically one-off calculations performed by a relatively small number of academics or government employees. The marginal costs derived from bond prices would also represent a big improvement over the information currently available to decision-makers, once they have decided which projects to support. So the cost of maintaining a given level of biodiversity can be calculated.

Ultimately, any decision as to whether it's worth maintaining that level against a few pennies off the price of petrol will have to be made on a political basis. But here again, a Social Policy Bond regime could help: a bond regime, because of its transparent targeting of meaningful outcomes would make it easier for more people to participate in policymaking generating more buy-in than current politics affords. If we want to trade off orang-utans, then, for biofuels, at we'd know whose responsibility it is - ours - rather than, as now, delude ourselves that it's the fault of corrupt third-world governments.

Reframing environmental issues

Grist has an interesting discussion about reframing environmental issues. I made this contribution:

Reframing in terms of agreed outcomes

One problem is that we are all the beneficiaries of a degraded environment. I don't just mean those of us who fly or drive or buy supermarket food. I mean everyone on the planet. By destroying the environment we have allowed a massive increase in the quantity of life, and we, ourselves, our lives, are the result. Without environmental destruction the earth would be supporting far fewer people. So any campaign, or reframing, must start with some humility. It's not us versus them. We are all 'us'.

To be more pragmatic, I suggest reframing the discussion in terms of explicit, agreed, meaningful, environmental goals. Not, as at present, about rights, processes, activities, or funding of institutions. Goals - so that instead of talking about cutting greenhouse gas emissions, we target climate stability. Instead of trying to monitor and pin down polluters of water, we agree on and target the quality of the water. My website goes into more detail, and discusses how we can use the market's incentives and efficiencies to achieve environmental goals. Efficiency is part of it, but it's also about having clear, agreed, targeted outcomes. There is more consensus over what we need than about how to get there. Talking about outcomes makes trade-offs clearer, and brings more participation and buy-in into environmental policy.