I. Introduction

A. Economic perspective has considerable sway. May not agree with it but should understand it. Problem = natural resources are not priced right.

1. Natural resources usually don’t have a price

2. When they do, the price may often not reflect the total value to society.

3. For example, mining rights to land do not reflect total value of land including views destroyed, etc. and same for timber harvest rights

4. Problem is in the economic structure

II. Tragedy of commons (Garrett Hardin)

A. BASIC PROBLEM OF THE COMMONS: The incentives that the social structure of the situation provides to individuals lead them to take uncoordinated individual action that makes all of them worse off than if they coordinated their action. Or, each individual is always better off not cooperating regardless of what anyone else does, but if everyone doesn’t cooperate, than everyone is worse off than if they did.

B. "Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons."

1. Village common in England and colonial New England towns was common property and access for grazing of one’s cattle was unrestricted. The first few people who graze their sheep and cows there benefit by having cows

2. Activity is individually uninhibited and individually beneficial but collectively costly.

3. Recent battle between Canadian and Spaniards over fisheries is the current expression of this age-old problem. But also problem nationally - Oregon umi fishery.

C. Characteristic of commons:

1. Those who use common are affected by the overuse. Different than with externalities. Poetic justice: fishermen and fisherwomen drive themselves out of a job.

2. Assumes all actors are more or less equally capable of being consumers of the good being used, whether it be fish or clean air.

3. This not always true. Pollution problems not like this

D. The simulation

1. Optimal management of a farm

2. First round done slowly and explain results screen

3. Several rounds and then see where we are, what cause is, and how might resolve it

4. Try again and see what happens

E. Solution: "mutual coercion, mutually agreed upon." Works at domestic level with taxes or private property, but what about at international level where nobody to enforce

1. Elinor Ostrom of Indiana University has found numerous cases where this occurs in fishing villages in Indonesia, in farming areas in the Alps, in water distribution networks in Spain

2. Treaties. But still have incentives to use the commons, if you can avoid being caught and sanctioned for it. Indeed, often value to you goes up if everyone else shows restraint. If can fool everybody else into not grazing, then can make $40 per cow rather than $25.

3. Taxes: reduce incentives to overuse. But difficult internationally.

4. Privatization: give one actor exclusive rights to commons and they will not overexploit

III. Externalities

A. Externalities: harmful side effects from producing or consuming something felt by people not involved in the market transaction.

1. Now assume the common is used as a park by most people, but its use is completely unrestricted. Then, assume each of you realizes that it costs you $100 per ton to have your cow’s manure carted away and your cows are producing ten tons per week. Then you realize that you can dump this manure on the commons without being told not to. Now you are benefiting $1000 per week, the meat-buying consumer is benefiting by having cheaper steaks, but the people who like to use the park are worse off.

2. Pollution of various sorts, air pollution, water pollution, land fills and hazardous waste use are classic examples of externalities. The producers of products benefit by keeping costs down, the consumers of products benefit by paying cheaper prices (and being able to give more to their favorite environmental charity) but other members of society that value the given environmental resource are harmed.

3. Driving a car is classic example. Auto emissions has two kinds of externality effects. First, is that it causes smog locally, imposing an externality on non-drivers as well as drivers. Second, is that the NOx goes into atmosphere and contributes to acid rain. Now often the harmful effects of the first type may prove sufficiently large within the borders of a single nation that action will be taken as happened with banning leaded gas in the U.S. in the 1970s. But sometimes they may not be enough, the local harm may be largely in another country or there may only be the long range problems that occur largely in other countries. Then you have an international environmental problem.

a) Trail Smelter case and Murmansk case

b) LRTAP agreement

c) Any form of marine pollution

B. Solution: "internalize" costs. Tax polluters so pollute less, e.g., tax gasoline. No international taxation.

1. Goal is to establish values for goods so can tax appropriate amount to reflect them. How much is the "walk in the park" worth? How much social cost is not included?

IV. Legal approach: certain behaviors are simply wrong and should not be allowed. Efforts to prevent people from engaging in "wrong" practices and punish if disobey.

A. Hard vs. soft law

1. Rules and regulations = hard law

2. Guidelines, standards, principles and vague norms = soft law

3. Not necessarily clear which is better.

4. Customary international law - common practice becomes law over time. 200 mile EEZ is of this type.

B. Difficulties in international level are several

1. Only applies to those who consent to it.

a) May not reach agreement. Agreement may have to have double standards as with developed vs. developing states under Ozone and FCCC.

b) Even if reach agreement, can either officially opt out or fail to sign and ratify.

2. Few incentives for actors to enforce, and sometimes not even the power to do so.

3. International organizations facilitate formation of international law.

4. NGOs can facilitate both negotiation and monitoring and enforcement elements of implementation. E.g.: Traffic, Greenpeace, International Conference for Bird Preservation, WWF, IUCN.

C. Legal approaches

1. Liability and compensation. Trail Smelter case.

2. Regulatory measures

3. Dispute settlement - rarely used

4. Enforcement - rare internationally, and only slightly more at national level.

D. Basic question: Can international law make a difference or not? Do all the recent treaties matter, in the sense of increasing the chances for environmentally benign behavior?

V. Conclusion:

A. Economics: basic argument is that can increase economic well-being at same time as decreasing environmental impacts if can just get the prices of various commodities right.

1. Dynamics of the commons

2. Difference between a commons and an externality

B. Notice that Tragedy is linkage of economic and legal issues – the economic incentives are driven by the legal issue of making it a commons rather than private property.

1. Notice that values have less to do with it than structure of problem