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POWER INEQUALITIES AND THE POLITICAL ECONOMY
OF ENVIRONMENTAL PROTECTION
James K. Boyce[(]
ABSTRACT
Inequalities in the distribution of power help to explain both the extent of environmental protection and its incidence, that is, the distribution of the resulting benefits and costs. When those who benefit from environmentally degrading economic activities are powerful relative to those who bear net costs, environmental protection is less likely than in the reverse case. Furthermore, theoretical reasoning and empirical evidence indicate that wider power inequalities generally result in weaker environmental protection and higher total levels of environmental degradation. This implies that democratization – here taken to mean movement toward a more egalitarian distribution of power – is crucial to advance the goal of environmental protection.
CONTENTS
1. Introduction ……………………………………………………...………. 2
2. Power and Environmental Degradation …………………………………. 2
Dimensions of power ………………………………………………. 3
The power-weighted social decision rule ………………………….. 4
Two hypotheses …………………………………………………...… 6
3. The effluents of affluence: Revisiting the environmental Kuznets curve …. 8
Income distribution and environmental degradation………………. 8
Other proxies for power inequality ………………………………….. 13
4. Evidence from the United States ………………………………………….. 14
Environmental injustice ……………………………………………... 15
Power inequality and the magnitude of environmental degradation … 18
5. Conclusion ……………………………………………………………….. 19
1. Introduction
Political economy is about the allocation of scarce resources, not only among competing ends but also among competing individuals, groups, and classes. This paper examines the political economy of environmental protection, analyzing the impact of inequalities of power on the extent of environmental degradation and environmental protection, and on the distribution of the associated costs and benefits.
The paper is organized as follows. Section 2 offers theoretical reasons to expect power inequalities to affect the magnitude as well as the distribution of environmental degradation. Section 3 reviews international evidence on links between power inequalities and environmental quality, drawing on the recent literature on the “environmental Kuznets curve,” and section 4 discusses evidence from the United States. Section 5 concludes and suggests some avenues for further research.
2. Power and environmental degradation
Environmentally degrading economic activities yield “winners” who derive net benefits from these activities, and “losers” who bear net costs. If there were no winners, or at least people who expect to be winners, the activities would not occur. If there were no losers, there would be no need to worry about their environmental impacts from the standpoint of human well-being.
Hence in analyzing environmental degradation, we can pose three core questions. First, who are the winners? Second, who are the losers? And third, why are the winners able to impose environmental costs on the losers?
There are three possible answers to the final question. The first is that the losers do not yet exist; that is, they belong to future generations who are not present to defend their interests. The second possibility is that although the losers already exist, they are not aware that the winners are imposing costs on them; for example, they may see that their children are ill, but lack the information to link this to pollution from a nearby source. The third possibility is that despite the fact that the losers already exist and are well aware of their circumstances, they lack the power to prevail in contests with the winners. This last scenario is the main focus of this paper. First, however, a few remarks about the other two scenarios.
When the costs of environmental degradation will fall mainly or entirely on future generations, any equitable solution requires that the present generation accept an ethics of responsibility toward those who will follow. This does not mean, however, that power inequalities within the present generation are wholly irrelevant to the well-being of future generations. On the contrary, there are several reasons to expect that intra-generational equity will tend to foster inter-generational equity. First, the well-being of future generations is to a large extent a public good, dependent not only on my actions but also on the actions of everyone else, and hence subject to the free-rider problem.[1] Insofar as equity facilitates collective action, smaller inequalities of power and wealth make it easier to resolve this problem.[2] Second, poverty caused or exacerbated by present-day inequalities may compress the time horizons of the poor, forcing them to engage in environmentally degrading economic activities in order to survive. Third, political insecurity caused or exacerbated by present-day inequalities may compress the time horizons of the rich and powerful, prompting them to convert natural resources into more liquid financial assets as quickly as possible, so as to move them to safer havens. The conversion of Southeast Asia’s tropical hardwood forests into cash is an example of this phenomenon (Boyce 1993). Finally, many environmentally degrading activities impose costs on present as well as future generations, in which case environmental protection intended to safeguard the well-being of the present generation can benefit future generations as a side effect. I will argue below this is facilitated by an equitable distribution of power.
When the ability of the winners to impose environmental costs the losers is attributable to imperfect information, this can be due to either a lack of knowledge about the effects of pollution and natural resource depletion, or to a lack of knowledge about their causes. Environmental education can help to address the first problem, and right-to-know legislation can help to address the second; both can increase public demand for environmental protection.[3] Here too inequalities of power are relevant, insofar as they affect access to information.
Dimensions of power
In many cases, the losers from environmentally degradation are alive today, and they know that the winners are imposing environmental costs on them. Nevertheless they lack sufficient power to protect themselves and their environment. Social decisions regarding when and how much to protect the environment are an outcome of contests between winners and losers. Those who bear net costs from environmental degradation would benefit from environmental protection; those who benefit from environmentally degrading economic activities would bear net costs from environmental protection. Actual outcomes depend on the balance of power between the two sides. Four dimensions of power are relevant to this balance:
The first is decision power – the power to prevail in contests over policies when different people prefer different outcomes. For example, government decisions on pollution control typically are not based simply on calculations of its aggregate social costs and benefits, but also on the relative intensity of lobbying by proponents and opponents.
The second dimension is agenda power – the ability to determine which issues enter into the public policymaking arena at all. This is a subtler dimension of power, in that it can determine outcomes before overt decision power even comes into play. For example, Matthew Crenson, in his classic study The Un-Politics of Air Pollution (1971), recounts how corporate power in the steel town of Gary, Indiana, kept air pollution off the municipal government’s political agenda for many years.
The third dimension is value power – the ability to influence what others want, that is, what they themselves will choose if given the opportunity to decide. This is an even subtler aspect of power, raising the possibility that a person’s wants are not entirely exogenous but rather can be shaped by others so as to work against her own interests (Lukes 1974). As John Kenneth Galbraith (1973, p. 9) observed in his presidential address to the American Economic Association, power can be deployed to persuade people that pollution is “palatable or worth the cost.”
Finally, there is event power – the power to affect the circumstances in which people make choices, rather than directly determining the choices. Environmental “externalities” are an example. Randall Bartlett (1989, p. 43) offers a hypothetical illustration: “Suppose I dig a deep pit, fill it with poisonous snakes, and throw you in. I then stand on the edge of the pit and offer to sell you a ladder. To buy or not to buy is not the only question. What prior events made you need to buy, and my influence over them, are also relevant.”
All four dimensions of power can influence a society’s decisions on the degree of environmental protection. When the winners from environmentally degrading economic activities wield greater decision power, agenda power, value power, and/or event power than the losers, we can expect less environmental protection than if the power balance were reversed.
The power-weighted social decision rule
More formally, we can analyze the impact of power by comparing actual social decisions to those that would be prescribed by the normative rule of benefit-cost analysis (BCA). The BCA rule is:
max bi,
i
where bi = the net benefit to the ith individual, and costs are counted as negative benefits. The outcome of this rule is “efficient” in the sense that total net benefits, conventionally measured in monetary terms, are maximized. Of course, this does not mean that the result is efficient in the strict sense of Pareto optimality: in practice, some people usually would be made worse off by decisions based on the BCA rule, notwithstanding the “potential Pareto improvement” represented by a larger economic pie.[4]
Elsewhere (Boyce 1994) I have suggested that social decisions can be better described by a power-weighted social decision rule (PWSDR), in which benefits and costs are weighed by the power of those to whom they accrue:
max pibi,
i
where pi = the power of the ith individual. Whereas the benefit-cost rule addresses the normative question of what a society should do, the PWSDR addresses the positive question of what a society does. The two rules correspond only in the special case where all individuals have equal power (that is, pi = pj for all i, j).
In the same way that microeconomic theory infers utility from preferences revealed by individual choice, so we can infer power from the preferences revealed by social choice. Like the utility-maximization model of individual behavior, the PWSDR yields testable predictions.
Both rules are defined in terms of social benefits and costs. In BCA the level of an environmentally degrading economic activity (and conversely, the level of environmental protection) is chosen so as to maximize net social benefits. Maintaining the usual assumptions regarding the marginal benefits and costs of an activity – that the former diminish and the latter rise as the level of the activity increases – BCA yields the standard efficiency condition: the activity should be pursued to the point where marginal benefits equal marginal costs. This rule yields the “optimal” level of environmental degradation and protection depicted in environmental economics textbooks. The PWSDR predicts that actual social decisions will systematically diverge from this optimum whenever power disparities exist between the winners (those for whom bi > 0) and the losers (those for whom bi < 0).
Power here plays a role akin to that of “influence” in Becker’s (1983) model of the determination of fiscal policy. The remedy Becker proposes for the inefficiencies that follow from disparities in influence is simply to downsize the state, so as to reduce the scope for the powerful to pursue their private advantage at the expense of the public good. When we turn to environmental policy, the inadequacy of this remedy is evident. For in the presence of externalities, inefficiencies can result not only from government action, but also from government inaction. Once we recognize the necessity of government, it becomes clear that the only remedy for the inefficiencies caused by power inequalities is democratization, defined here as movement toward a more equal distribution of power.
Two hypotheses
Two hypotheses follow from the PWSDR. The first concerns the identities of winners and losers, that is, the direction of environmental degradation: the PWSDR predicts that social choices will systematically favor some people over others, and that this pattern will reflect their relative power. If power is correlated with income, race, or ethnicity, for example, we can expect the winners and losers to be differentiated along these lines.
Government policy is not the only arena where the distribution of power affects environmental protection. Informal social norms and rules also play a role, and here too relative power can affect outcomes. Consider, for example, an office that is shared by a smoker and a non-smoker. The likelihood of smoking in the office is greater if the smoker is the boss and the non-smoker a secretary than in the reverse situation. A formal rule – represented, for example, by a ‘No Smoking’ sign posted on the wall – may reduce the likelihood of smoking, but the efficacy of this rule may depend on informal norms. Again, the direction of the “negative externality” depends on the relative power of the individuals involved.
The second hypothesis concerns the total magnitude of environmental degradation. The PWSDR leads to the prediction that the more unequal the distribution of power, the greater will be the extent of environmental degradation. The rationale for this hypothesis requires some elaboration. In principle, the PWSDR can result in either “too much” environmental degradation or “too little,” when compared to the normative BCA rule. When the winners from environmentally degrading economic activities are powerful relative to the losers, the PWSDR predicts too much degradation; but when the losers are more powerful than the winners, it predicts too little. In Figure 1 these are labeled Type-I and Type-II inefficiencies, respectively.
[insert Figure 1 here]
The notion of “too little” environmental degradation is unsettling for many environmentalists. To be sure, there are good reasons for skepticism as to the optimality of the “optimal” environmental degradation prescribed by BCA (E* in Figure 1). In real markets and the shadow markets of benefit-cost analysis, value is measured in terms of willingness to pay. Willingness to pay depends, in turn, on preferences and ability to pay. Once we acknowledge the possibility of value power, preferences can no longer be taken as an unproblematic guide to valuation. Moreover, since ability to pay is a function of the distribution of wealth, willingness to pay can serve as a guide to optimality only if we consider the underlying distribution of purchasing power to be optimal, too. In the presence of substantial inequalities of wealth and power, both considerations imply that the level of environmental degradation prescribed by BCA may be “too much.”