Friday, November 11, 2011

Gernot Wagner's "But Will the Planet Notice?"

Gernot Wagner is an economist at the Environmental Defense Fund. He teaches at Columbia and graduated from both Harvard and Stanford. He doesn’t eat meat, doesn’t drive, and knows full well the futility of his personal choices.

He applied the “Page 99 Test” to his new book, But Will the Planet Notice?: How Smart Economics Can Save the World, and reported the following:
But Will the Planet Notice? is about environmental policies that actually make a difference. It's not about you and I recycling -- although that's good, too. It's about putting a tiny fee on plastic bags that decreased their use in Ireland by 90% and one billion bags this past decade.

Page 99 is rather wonkish. It introduces one of the fundamental concepts: making sure someone owns the rights to a particular resource is the best way of protecting it. In this case, it's fish:
That simple step makes all the difference. It’s no longer a race. Much like with the Maine lobster, what you don’t catch today will still be there for you tomorrow. You own the right to a certain number of fish. Period. Your neighbor can’t take it away from you, just because you take the day off. The motivation to treat fishing as if it were a competitive free-for-all is gone.

Bigger engines enable you to haul in your catch earlier, but the reason to go overboard in the technological arms race is gone. [...] Fishermen no longer use larger and larger boats to chase fewer and fewer fish. It is now in their interest to decrease costs. Things generally get much more relaxed. Alaska's halibut fishing season has increased from two to over two hundred days, all without additional restrictions or regulations.

Sounds like socialist nirvana with the guiding hand of regulators replacing the invisible hand of the market. In fact, it’s anything but. This is much closer to the “privatism of free enterprise” Garrett Hardin described as the other solution to the commons problem, the exact opposite of socialism. Fishermen affected by the changes wax poetic, using terms like "liberty," "freedom," and "dignity." Increasing the fishing season from two to two hundred days doesn’t just make fishing more relaxed; it also means that fishermen no longer bring in half their entire annual catch in one day. That avoids flooding the market with halibut all at once, crashing the price in the process.

With higher prices, lower costs, and more sustainable catches, revenues doubled and profits quadrupled in the first five years of the program. It doesn't get more free market than that--except that it does.
Learn more about the book and author at Gernot Wagner's website and blog.

--Marshal Zeringue