Misreading Ostrom

Peter Foster in today's Financial Post seems to misread Elinor Ostrom. He argues that her work provides compelling evidence that collective voluntary management of the commons can work out, that top-down imposition of solutions tends to be worse than bottom-up approaches, and then insinuates that Ostrom's work argues against top-down Kyoto-type solutions. I'm not sure he's right on the last part.

Nevertheless, the media immediately leapt on Ms. Ostrom’s insights and suggested they might be useful in the “fight” against Mr. Gore’s climate nemesis. And Ms. Ostrom seemed reluctant to pour cold water on grand Kyoto-type schemes, merely suggesting that “solutions” might be found at “multiple levels.” She was quoted as saying that “governments should encourage and aid people where they are trying to solve the problem, such as finding ways to make it easier for them to use solar energy or to bicycle to work.” Elsewhere, she reportedly said, “It is important that there is international agreement, but we can be taking steps at family level, community level, civic and national level . . . There are many steps that can be taken that will not solve it on their own but cumulatively will make a big difference.”

It’s hard to believe that such a sophisticated analyst would really believe that subsidizing solar panels or encouraging bike lanes could help address the threat of Armageddon.

The basic reason her theory doesn’t apply to “the world’s greatest market failure” is that — and this will cause environmentalists to have conniptions — the atmosphere may be a common resource but it is not a scarce one except at the level of local pollution. Carbon dioxide is a trace gas and not a pollutant. Moreover, it may have much less influence on climate than suggested by UN-approved science. Certainly the recent flatlining of global temperatures is a problem that alarmists are trying hard to ignore.

The last paragraph is the important one: it's because no effects are felt locally that we should expect that local collective action won't solve the problem. Ostrom's work shows when local voluntary action works and when it fails. Fresh-water fisheries where problems are local and management can be local -- works. Salt-water fisheries where there's no way of excluding folks who don't want to abide by local agreements -- fails. Now, we may well remain skeptical about the desirability of Kyoto-type arrangements. But I don't think that we can hang an anti-Kyoto argument on Ostrom's work. Fortunately, there are plenty of other hooks that suffice.