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Box 4.1 1Environmental Solution? The Montreal Protocol

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Chlorofluorocarbons (or CFCs) are artificial chemical compounds that have a range of industrial uses, including applications in refrigeration and fire-fighting and uses ranging from solvents to propellants in spray cans. Part of the chemical revolution of the 1920s and 1930s, CFCs were viewed as a flexible, cheap, and efficient set of chemicals and they were widely used throughout the twentieth century. The most exciting thing about these chemicals, from an economic point of view, was that they are highly non-reactive; they break down only very, very slowly.

This blessing proved to be a curse, as soon as it was discovered that the chlorine in CFCs, when exposed to the atmosphere, broke down ozone, leaving behind more trace chlorine for hundreds more such reactions. Such ongoing reactions can lead to whole gaps in the ozone layer shrouding the Earth: an ozone hole. That hole in the stratosphere was observed by scientists in the 1970s and became a source of grave concern. Because atmospheric ozone keeps deadly radiation from reaching Earth, and because trace amounts of CFCs can destroy lots of ozone, and since CFCs are otherwise so non-reactive that they can survive in the atmosphere for more than a century before becoming inert, it was determined by the late 1980s that the world had an extremely serious problem on its hands. Worse still, by that time, CFCs were employed in an unimaginable range of economic activities, with many industries depending heavily on the chemicals; chemical companies in particular defended their product.

If this was not bad enough, the ozone crisis represented a classic common property problem and a Prisoner’s Dilemma. The cost for any firm or country to switch to alternatives was extremely high, so unless everyone stopped using CFCs at once, the opportunities and incentives to “free-ride” – by continuing to use CFCs and underselling other countries and companies with cheaper goods and services – were extremely high. While some individual countries and states (Oregon, for example) did create their own bans on CFC use, the problem could not be solved without collective action.

Remarkably, the world community overcame the cost and difficulty of coordinating their actions and sat down for an international meeting in Montreal in 1987. They signed a treaty in that year that resulted in a global reduction (indeed a near-total worldwide ban) on most CFCs. This Montreal Protocol was strengthened over the years with follow-up meetings and decisions, and the treaty represents perhaps the single most effective global environmental agreement in history. Many look to the successes of the Montreal Protocol as a model for future global agreements, especially surrounding the very different problem of climate change and greenhouse gas emissions.

What all of these cases appear to have in common is the presence of some form of institution, understood here as systems of recognized constraints on individual behavior, including formal laws, but also unofficial rules or even strong social norms that guide people’s expectations of one another’s behaviors, leading to orderly and constrained use of natural resources. Such institutions, even in their most informal manifestations, can be quickly recognized all around us. People typically queue at the box office of a movie theater rather than shove one another in a pack at the ticket window, for example. For more complex problems, sustaining a fishery, for example, the rules may be quite complex, and the mechanisms of self-governance and enforcement may be deeply rooted in traditional social systems. Nevertheless, the root principle applies; collective good and environmentally sustainable outcomes were achieved through cooperation.

Common Property A good or resource (e.g. bandwidth, pasture, oceans) whose characteristics make it difficult to fully enclose and partition, making it possible for non-owners to enjoy resource benefits and owners to sustain costs from the actions of others, typically necessitating some form of creative institutional management

Institutions Rules and norms governing collective action, especially referring to rules governing common property environmental resources, like rivers, oceans, or the atmosphere

Observers of these successfully cooperative systems needed to assemble new stories, metaphors, and theories, however, to better explain what they saw. All of these revisions of “Tragedy” thinking shared one thing: a need to explain how rules and norms were able to constrain behavior and achieve cooperative outcomes.

Chief among these reconsiderations is an effort to try to define the difference between these observed systems and the property imagined in the “Tragedy of the Commons.” Acknowledging that the total absence of rules would lead to tragic outcomes, it remains necessary to also acknowledge the existence of forms of property that function through customs, rules, and/or regulations, but not in the form of exclusive private ownership rights. “Common property” is a descriptor that includes all of these diverse forms. Different from wholly unowned resources (Latin: res nullius), common property (Latin: res communes) includes some form of group ownership, so that it is neither open to everyone in the world nor necessarily held exclusively by an individual (Ciriacy-Wantrup and Bishop 1975). Such a group or community of owners may take many forms, of course, to include people who know one another face-to-face in a village fishery or those more far-flung across a city, who together hold cooperative rights to urban garden plots.

But even where a right can be held by a community, this does not explain how and why members of that group might be able to achieve mutual understandings, agreements, and most importantly constraints. Rather, there must be an underlying logic that allows people to overcome, through collective action, the worst environmental case outcomes of the “Tragedy of the Commons.” Returning to the game-theoretical logic of the Prisoner’s Dilemma, a generation of “neo-institutionalist” scholars, led by Nobel Prize-winning political scientist Elinor Ostrom, began to critically analyze the assumptions of game theory. Specifically, they asked: What if our two hypothetical prisoners had been allowed to speak with one another prior to their interrogation and “get their stories straight?” Would that have changed the outcome? Logic holds that it might. Subsequent economic experiments – in which people played complex cooperation games for money incentives – bore this out as well. When the players of a game can collude together or negotiate, they are far more likely to cooperate (Ostrom 1990). Certain conditions seem to make communal management of natural resources quite possible, and indeed likely. In this way, the “neo-institutionalists” (adherents to a school of economics that stresses rules and social organization) do not deny the logical incentives that underpin Hardin’s tragedy, but do point to conditions where commons are not “free” but instead governed by rules that encourage cooperation.

Environment and Society

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