Gaia: Hedge Fund Manager
Consider the matter of when you'd want to retire. The default age in many rich countries is somewhere between 60 and 70, although the decision usually involves some combination of current and desired future income, pension management, as well as the type of work one is engaged in. Underpinning all of these matters is the more practical, albeit macabre, reality of one's mortality. Retirement in many ways is a modern luxury derived from our ability to push average life spans to 80 years and beyond.
Would you still want to retire at 65 if you knew you'd live to 100? How would you manage your financial and personal affairs if you had a reasonable expectation of living in good health to 200 years, 500 years, or indefinitely? The prospects for radical life extension aside this is a similar issue, writ large, faced by civilizations.
How long can a civilization last? Without written records it becomes a matter of inference, but hunter-gatherers can maintain their lifestyle for millenia. As we go up in social complexity and population size this lifespan seems to diminish. Earth is strewn with the monuments of large civilizations, from Angkor Wat to the Mayan city states, where enough people died and/or networks disintegrated that the complexity necessary for maintenance couldn't be kept up.
Is this the result of some Faustian bargain where the rewards of living in a complex society are traded for that society's longevity? The structure of a hunter-gatherer society may have fewer moving parts than an agricultural or industrial civilization, but this is no resilient idyll; most likely these societies too are vulnerable to shifts in local climate and natural disasters. The main difference probably lies in the relationship between social complexity and the rate of resource extraction.
All civilizations rely on one form or another of resource extraction. Some of these resources, such iron ore, are often found on privately held land. The extraction of these resources, in theory, are governed by a contract and a larger code of law. However, a large number of the resources our civilization relies upon are extracted from what is considered to be the commons. All too often this then leads to the tragedy of the commons, where communally held resources are treated as a free good. In all likelihood this then leads to the unsustainable extraction of resources, leaving the civilization more vulnerable to external shocks.
Is there a way around this problem? Consider the case of two resources, fish and water.
Most seafood, despite millenia of agriculture and aquaculture, is still caught in open water. As most open water is treated as a commons its resources are likely to be over-exploited. Those trying to make a living from fishing are then often in a version of the prisoners' dilemma: if you don't catch as much as possible today it can be caught by your rivals tomorrow. As a result we get the collapse of major fisheries, such as the cod fisheries off the coast of eastern Canada. Some attempts have been made to up fish production through fish farming, such as with salmon, but this often leads to a whole host of issues ranging from effluent and disease stemming from high densities of open water fish. Some seafood species, such as mussels and oysters, naturally live in dense colonies, but will probably not replace overall demand for finned fish such as tuna and cod.
To overcome the issues then of treating fish as part of the commons why not sell off the commons? Starting in the late 1970s a few fishing markets, such as Iceland's, started allocating the right to shares of a fish catch rather than the right to fish. This system, now known as an Individual Transferable Quota (ITQ), would designate an amount of fish which could be sustainably caught in a year and then give ships rights to a fraction of this potential catch. In such a system fishing crews have a greater incentive to manage their catch rate as they can hold a guaranteed right to a fraction of the fish stock. Crews that would overfish in such a system will decrease their potential future earnings as they would cause a drop in the size of the potential catch. As the ITQs themselves have value they are bought and sold, creating a market whose value depends on the sustainable extraction of resources.
Water is a resource so fundamental to life that it seems inherently wrong to treat it as a commodity to be bought and sold. Unfortunately this sentiment has often led to the treatment of potable water as being unlimited, or at least heavily subsidized. This has been the case with situations as varied as groundwater pumping in the central valley of California and the subsidization of water in China. In many of these cases water is being drawn from reservoirs faster than their replenishment rate; the very definition of unsustainable.
Australia until recently was similar to most of the world in its treatment of water resources. This status quo though became noticeably unsustainable due to both to Australia's relatively low precipitation, even its relatively verdant east, as well as periods of extreme drought. Given that agriculture, as in the rest of the world, is the primary consumer of water these factors would repeatedly threaten the viability of farming in Australia.
What Australia did in 2007 to cope with these stresses was to set up an agency, the Murray-Darling authority, to oversee the management of the largest watershed in the southeast of the country. Their management technique first involved the determination of what could be sustainably withdrawn from the watershed, then the allocation of shares of this total to the farmers of the Murray-Darling. The farmers own their shares, and have the right to buy and sell them in addition to simply withdrawing their annual water right.
In both cases, with Australian water shares and Icelandic ITQs, a system based on the extraction of resources from a commons was replaced by a system of shares. The shares being a right, but not an obligation, to use a designated fraction of a given resource. The term 'share' is being used deliberately in reference to the idea of shares in financial markets, where a share designates a part ownership in a larger entity. Both of these cases also suggest a way towards a more sustainable management of resources.
The idea of nature is of the world outside of human control. It is a romantic notion which feels counter to the tools of capitalism. However, just as the development of financial tools such as the joint-stock company gave individuals the ability to accumulate wealth through a vested long-term interest it may be in our best long-term interest as a species to define and manage a new share system with our relationship with the rest of nature. Capitalism is not without flaws, but it has allowed for billions of people to move out of material poverty. It should also be noted that the most complex modern systems are as reliant upon the natural world as the builders of Angkor Wat and Chichen Itza were in previous centuries. For the long haul our civilization should scrap the idea of the commons and move towards a system of shares based on sustainable extraction rights. If we really want to last perhaps we should consider Earth as a joint venture. One with, to quote Warren Buffett, a holding period of forever.
Would you still want to retire at 65 if you knew you'd live to 100? How would you manage your financial and personal affairs if you had a reasonable expectation of living in good health to 200 years, 500 years, or indefinitely? The prospects for radical life extension aside this is a similar issue, writ large, faced by civilizations.
How long can a civilization last? Without written records it becomes a matter of inference, but hunter-gatherers can maintain their lifestyle for millenia. As we go up in social complexity and population size this lifespan seems to diminish. Earth is strewn with the monuments of large civilizations, from Angkor Wat to the Mayan city states, where enough people died and/or networks disintegrated that the complexity necessary for maintenance couldn't be kept up.
Is this the result of some Faustian bargain where the rewards of living in a complex society are traded for that society's longevity? The structure of a hunter-gatherer society may have fewer moving parts than an agricultural or industrial civilization, but this is no resilient idyll; most likely these societies too are vulnerable to shifts in local climate and natural disasters. The main difference probably lies in the relationship between social complexity and the rate of resource extraction.
All civilizations rely on one form or another of resource extraction. Some of these resources, such iron ore, are often found on privately held land. The extraction of these resources, in theory, are governed by a contract and a larger code of law. However, a large number of the resources our civilization relies upon are extracted from what is considered to be the commons. All too often this then leads to the tragedy of the commons, where communally held resources are treated as a free good. In all likelihood this then leads to the unsustainable extraction of resources, leaving the civilization more vulnerable to external shocks.
Is there a way around this problem? Consider the case of two resources, fish and water.
Most seafood, despite millenia of agriculture and aquaculture, is still caught in open water. As most open water is treated as a commons its resources are likely to be over-exploited. Those trying to make a living from fishing are then often in a version of the prisoners' dilemma: if you don't catch as much as possible today it can be caught by your rivals tomorrow. As a result we get the collapse of major fisheries, such as the cod fisheries off the coast of eastern Canada. Some attempts have been made to up fish production through fish farming, such as with salmon, but this often leads to a whole host of issues ranging from effluent and disease stemming from high densities of open water fish. Some seafood species, such as mussels and oysters, naturally live in dense colonies, but will probably not replace overall demand for finned fish such as tuna and cod.
To overcome the issues then of treating fish as part of the commons why not sell off the commons? Starting in the late 1970s a few fishing markets, such as Iceland's, started allocating the right to shares of a fish catch rather than the right to fish. This system, now known as an Individual Transferable Quota (ITQ), would designate an amount of fish which could be sustainably caught in a year and then give ships rights to a fraction of this potential catch. In such a system fishing crews have a greater incentive to manage their catch rate as they can hold a guaranteed right to a fraction of the fish stock. Crews that would overfish in such a system will decrease their potential future earnings as they would cause a drop in the size of the potential catch. As the ITQs themselves have value they are bought and sold, creating a market whose value depends on the sustainable extraction of resources.
Water is a resource so fundamental to life that it seems inherently wrong to treat it as a commodity to be bought and sold. Unfortunately this sentiment has often led to the treatment of potable water as being unlimited, or at least heavily subsidized. This has been the case with situations as varied as groundwater pumping in the central valley of California and the subsidization of water in China. In many of these cases water is being drawn from reservoirs faster than their replenishment rate; the very definition of unsustainable.
Australia until recently was similar to most of the world in its treatment of water resources. This status quo though became noticeably unsustainable due to both to Australia's relatively low precipitation, even its relatively verdant east, as well as periods of extreme drought. Given that agriculture, as in the rest of the world, is the primary consumer of water these factors would repeatedly threaten the viability of farming in Australia.
What Australia did in 2007 to cope with these stresses was to set up an agency, the Murray-Darling authority, to oversee the management of the largest watershed in the southeast of the country. Their management technique first involved the determination of what could be sustainably withdrawn from the watershed, then the allocation of shares of this total to the farmers of the Murray-Darling. The farmers own their shares, and have the right to buy and sell them in addition to simply withdrawing their annual water right.
In both cases, with Australian water shares and Icelandic ITQs, a system based on the extraction of resources from a commons was replaced by a system of shares. The shares being a right, but not an obligation, to use a designated fraction of a given resource. The term 'share' is being used deliberately in reference to the idea of shares in financial markets, where a share designates a part ownership in a larger entity. Both of these cases also suggest a way towards a more sustainable management of resources.
The idea of nature is of the world outside of human control. It is a romantic notion which feels counter to the tools of capitalism. However, just as the development of financial tools such as the joint-stock company gave individuals the ability to accumulate wealth through a vested long-term interest it may be in our best long-term interest as a species to define and manage a new share system with our relationship with the rest of nature. Capitalism is not without flaws, but it has allowed for billions of people to move out of material poverty. It should also be noted that the most complex modern systems are as reliant upon the natural world as the builders of Angkor Wat and Chichen Itza were in previous centuries. For the long haul our civilization should scrap the idea of the commons and move towards a system of shares based on sustainable extraction rights. If we really want to last perhaps we should consider Earth as a joint venture. One with, to quote Warren Buffett, a holding period of forever.
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