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Paul Collier: saying 'nature has to be preserved' condemns the poor to poverty

Matilda Lee

14th May, 2010

Oxford Economics Professor and former head of Development Research at the World Bank, Paul Collier on reconciling romantic environmentalism and mainstream economics to help poor countries

Matilda Lee: How do environmentalists and economists reconcile vastly differing views about the value of nature?

Paul Collier: The distinction is whether our duty to nature is preservation or stewardship. The romantic wing of environmentalism is uncomfortable with modern life. This view is utterly antipathetic to the fight against global poverty. Romantic environmentalists think the modern economy is the problem. It's not, it's the solution. The challenge is to take it to the parts it hasn't reached.

At the same time, nature is special in the sense that we've got fewer rights over how we use natural assets than over how we use man-made assets. This distinction has not been made so far in economics. The ethical framework that economists use is utilitarianism, which I think is very ill equipped to deal with the problem.

I'm trying to build a simple ethics of nature - different from the conventional economic ethics of the future and also different from the romantic environmentalist position.

What economics has missed - and what I think environmentalists spot immediately - is that natural assets and liabilities are different from other assets and liabilities. What's different is our limited rights over them.

ML: How do you build an ethics of nature in economics?

PC: I'm trying to insert the concept of rights into economics. The future has rights over natural assets. Utilitarianism is very uncomfortable with rights; it's focused on how much happiness I get from consuming in the present - which means that the idea of the future climate is seen as a bit of a nuisance.

If you take a rights-based view, we don't have the right to plunder our natural assets and not leave anything to the future or plunder our natural liabilities and leave a huge load for the future.

The question is: what is the nature of these rights? This depends upon how much value is created when we burn down nature.

Sometimes, in poor societies, it is very important to burn down nature and convert it into more productive assets and hand these on. This is the ethical imperative - that's what stewardship is. Using natural assets productively, creating more value and passing them on is how we will reduce poverty.

But in other cases, the same thought experiment will come up with a different answer - the future may say you are proposing to leave us a nasty climate and we will be awash in man-made assets. The answer is - once you've done that thought experiment - depending on which natural assets, at that stage you have to be pragmatic. There is no substitute for saying, well, what can we convert these natural assets into, and would that be more or less valuable to the future than the natural assets themselves?

Once you come from a doctrinal, ideological position that ‘nature has to be preserved', it will condemn poor societies to poverty.

ML: Over the next ten to 20 years, you argue, by hook or by crook the natural assets in poor countries that are still yet undiscovered will be found and exploited. Wouldn't the future be better off leaving these natural assets untouched?

PC: The amount of money that could come into poor countries is staggering - it dwarfs aid and everything else. One of my nightmares is the idea that the world uses its power over these poor countries to inflict on them solutions that we are not prepared to take ourselves.

If future carbon is going to be a problem then the right answer is to reduce our emissions, but we should do that by taxing the activities which use carbon. That would make coal much less valuable. A lot of the coal in low-income countries would be left in the ground. Oil, no - it's too valuable.

ML: In your book The Plundered Planet, you paint a very grim picture of how the extractive industry functions - with more power, knowledge and resources than most poor country governments, its negotiations over resource rights are very unfair. If these countries are going to exploit these natural assets, how do you propose to ensure the financial benefits go to the countries themselves?

PC: Despite what the Guardian may say, I'm not a utilitarian and I'm not in favour of the extractive industries plundering countries. What I'm trying to advocate is how these poor societies can capture the value of these assets for themselves, and use them well.

Resource extraction companies know the true value of these things much better than governments. The attraction of auctions is that, through competition and bidding, they reveal value.

In the UK, the auction for mobile phone rights earned the Government £20 billion when the Treasury had initially valued the rights as £2 billion.

I also favour aid donations being used to perform geological surveys and prospect for resources. This idea was floated 30-40 years ago in the World Bank and do you know what killed it? A mixture of two interest groups - one the romantic environmentalists and the other the Reagan administration, because of all its links to extractive companies that didn't want to lose these revenues. It was a worst case scenario.

ML: You have an innovative idea of assigning the rights to fish in international waters to the United Nations - do you have any support for this view?

PC: From the UN, sure. 'Think of a better idea' is my challenge. We need to create what economists call rents - it's the intrinsic value of that natural asset. Policing the oceans is not feasible, but you could impose a tax point on the docks at the wholesale fish market, where the large amounts of fish are priced and sold. That would discourage consumption and you could fine tune the tax according to how threatened the fish is, and generate revenues/rents. These could pay for the UN's World Food Program.

ML: You talk about reaching a critical mass of ordinary citizens realising the importance of nature. What are you asking people to do?

PC: One big hole in the governance of natural assets is in the countries of the bottom billion - where governance is weak and there is an intense pressure on governments.

In Ghana, which discovered oil in 2006, and which is a democratic society with decent economic policies, they didn't have a critical mass of understanding of the decision chain and harnessing assets for the benefit of society - so they blew it. Within three years they managed to spend 2/3 of the entire value of the oil, before it was even out of the ground. The oil was plundered by the present generation.

Then we need a critical mass in the more developed countries on transnational issues. It's easy for Russia and Norway to reach a deal on the Arctic, because what they agreed to do is both plunder what is international territory. Why should the countries that border on the Arctic just be able to extend their territories?

Paul Collier is the author of The Plundered Planet: How to Reconcile Prosperity with Nature (Allen Lane, £20)

Matilda Lee is the Ecologist's Community Affairs Editor

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