Our Balancing Act – The real value of ecosystems
A book revealing the economic and ecologic value of the planet’s forests and other ecosystems.
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Group Think

Wed, 10/28/2009

Awarding the 2009 Nobel Prize for economics to Elinor Ostrom is a special event. She is not only the first ever woman to receive this prize; she is also not a classical economist. Mrs. Ostrom describes her specialisation as the ‘study of the social dilemmas’.

The classical economists predict that common resources like forests, rivers, pastures or wildlife are in danger of being overused. Homo Economicus is said to take ‘rational decisions’, based on ‘perfect information’. In reality he is pretty short sighted and makes his choices with little regard for coming generations. Short term gains based on private ownership, lead to the exhaustion of natural resources. It is hard to prevent people from overusing these common goods, especially when they are free of charge.

A different view
However, Mrs. Ostrom proves that people want to work together when they are convinced of the harmful effects of their actions. Arguments, and not only prices, affect their behaviour. In her work Mrs. Ostrom demonstrates how common ownership of fishing grounds, pastureland, forests, lakes, and groundwater reserves can be managed successfully by a group of users. It is often thought that common ownership leads to excessive use, and that this can only be reduced by government regulation or privatisation. The idea is that users only have a keen eye for their own advantages to weigh against their expenses, not regarding the disadvantages their actions have for others. Mrs. Ostrom argues that common ownership is often very well managed without interference from the government. Groups of users often prove to be very capable in establishing a set of rules against over-exploitation.

A couple of years ago, Mrs. Ostrom used The Netherlands as an example of how a society can organise itself, without interference of a central state. “Not the State, but the self organising power of the Dutch are the wealth of the country ", she said in 2002 in an interview. Enterprising farmers, in co-operation with banks and wealthy individuals built dykes to defend and exploit the new land. The continuous threat of the sea forced all involved to co-operate in a very democratic way. How rich or powerful an individual might be; he was completely powerless against the forces of nature (in this case against the sea). Mrs. Ostrom found in numerous other cases that groups of people tend to have complex sets of rules, norms and penalties to ensure that such resources are used sustainably. This form of self-governance often works well.

The strength of this model is that the reason why co-operation is needed is clear for all participants. If you share a piece of land some 3-4 meters below sea-level in The Netherlands, it is quite obvious where your common interests lie: in building and maintaining dykes. If an individual is not willing to make his contribution the other inhabitants will force him to. So, safety from the sea is a clear and undeniable interest. Joint and co-ordinated efforts are more powerful than actions by individuals.

Clear picture needed
On the other hand, what happens if it becomes unclear what the common interest is? Or when people disagree on this issue? The Netherlands again proves to be a fine example. Along with industrialisation and urbanisation people aren’t confronted with the forces of nature on a daily base, i.e. with the sea. They don’t share the experience of the farmer who lives and works outdoors. Although still living below sea-level, the threats are far away and not acute. Besides this, maintenance of the dykes and other water-regulating installations are now a government-matter. This results in a fierce discussion, in which the structure and the high costs of water-defence are questioned. So, as the main goal (being safe from the water) disappeared behind the horizon, the common ideology which was the basis for a very effective set of actions disappeared too.

This teaches us an important lesson. When a common interest is clear and close to a group’s situation, it is not difficult to ignite common action. After all, the incentives are obvious and direct. But when the group doesn’t understand why and in what sense there is a common goal and how it can influence decision-making, the group will lose interest and individuals will pursue their own objectives and can even become counter-productive. The only solution is to put a lot of effort in communicating the threats to the group, and the incentives they gain from common action. Research done by Mrs. Ostrom supports this line of thinking. The principles of game theory, particularly the theory of repeated interactions, proves remarkably useful in formulating general principles of how common resources ought to be managed without necessarily resorting to private or state ownership.

What does this mean for our project? Why indeed would the hard-working Berliner, strolling on consumer-paradise Unter den Linden, care about the rainforest in Brazil? It is hard to convince him as the benefits of caring are very unclear and remote, and his possibilities for interacting are limited... If Payment for Ecosystem Services (PES) is to gain support it shouldn’t be a financial exercise in the first place, but the battle for the hearts and minds of people...a mental exercise.

Jos van Assendelft, The Forest Enterprise