Environmental policymaking has long focused on the need to internalise “externalities” and to manage shared natural resources in a sustainable fashion. Factories pumping emissions out of their smokestacks, or fishermen hauling too many fish from the sea, are just two classic challenges. Elaborate governmental regimes have been designed to redress these market failures and the economic inefficiency, lost social welfare and ecological degradation they bring. But our efforts often fall short. One reason is a lack of information. Not knowing who holds the environmental rights, what are the sources of harm, or the “fate and transport” of emissions, makes policymaking difficult. Information gaps also plague efforts to understand effects on health, and how to value those effects.
Pollution may also arise from “waste”, reflecting the use of unsophisticated technologies, ignorance, or mistakes. Polluters or resource users would often be willing to switch to less harmful production or consumption practices if they had information about better alternatives. People have now learned, for example, that they can replace their traditional incandescent bulbs with high-efficiency fluorescent lighting, reducing electricity use and cutting both pollution and costs.
Ignorance should not be a problem in the Information Age and indeed technological breakthroughs should help us to manage the environment better. The computer, with its extraordinary capacity to gather, sort, analyse, store and retrieve data represents a particularly important tool that has yet to be fully harnessed. And, beyond the extraordinary advances in information processing, progress is being made in related technologies such as sensors and telecommunications as well as in computer modelling and statistical analysis. These breakthroughs make it easier to spot environmental problems, assess their scope and seriousness, and understand their implications and effects; witness the fact that a significant portion of the air pollution in the north-eastern United States has now been traced to emissions from upwind mid-western states.
Technology and data also help to make the invisible visible, the intangible tangible, and the complex manageable. Advanced data analysis increasingly allows us, for instance, to understand cumulative impacts and to disentangle the interconnections among different environmental risks. It is thanks to advances like these that we now know that radon exposure represents a much greater threat to smokers than to those who do not smoke.
A more solid information base further promises to re-cast debates in the environmental realm, which has often been dismissed as “soft”. Rhetoric and emotion will increasingly be supplanted by a hard focus on key problems and the search for workable solutions. A heat wave does not make the case for global warming, but long-term temperature trends might. Facts, figures, and tracking data on key indicators can narrow the range of environmental disputes and reduce the polarisation that often marks policy debates today, whether about climate change or pollution of a local stream.
New technologies also make it easier to identify better response strategies. Both corporate and public decision-makers are today able to compare policy options quickly and cost-effectively, obtain detailed information on experiences from elsewhere, and determine which interventions have been most successful. In short, environmental decisions can now be made with moredata-driven and analytically rigorous underpinnings.
Information systems can transform our policy options as well. Just as property rights give farmers the incentive to manage their land on a sustainable basis, digital technologies can be deployed as “virtual barbed wire” to improve the management of shared resources and avoid their over-exploitation. Take fish stocks, for instance. The oceans were once seen as a limitless, open access resource, which any fisherman was free to exploit. But the result was inevitable:depletion of fish stocks (see article by Paul Wallis). Today’s tracking and monitoring devices, however, make it possible to avoid a “tragedy of the commons” by allocating fishery shares and managing yields responsibly.
More generally, the Internet makes markets work more efficiently. Where environmental property rights can be defined and defended, a more robust environmental marketplace can thus be erected, reducing the intrusiveness of regulation. In fact, one can imagine the day when citizens will be compensated directly by polluters, rather than having the government mandate investments in emission control or collect (and keep) pollution fees. Remote sensing, laser technologies, ion beam analysis, nano-technologies and other small-scale sensors will soon make it possible for virtually every pollutant to be tracked, measured, and even price tagged. Technologies are already available that permit easy analysis of factory emissions, and even the exhaust from the tailpipe of a passing car. Full internalisation of such costs has become a real possibility. Regulation more generally can be shifted towards more use of economic incentives and implementation of the Polluter Pays Principle. Can it be long before a monthly pollution invoice arrives with the electricity and phone bills?
Customisation and optimal specificity
Environmental decision-making has traditionally been marked by deep uncertainties. Identifying individual sources of harm and connecting specific emissions to particular victims is expensive and hard to do. But the errors that arise from relying on gross averages and other over-generalisations also entail costs. Just ask an asthmatic who lives in a place where air pollution standards are set according to the needs of those with healthy lungs.
Low-cost and easily accessible data make it easier to improve the “optimal specificity” of regulation and permit customised emissions control. The potential to individually tailor pollution requirements and to respect diversity is already evident. Under the US acid rain control programme, for instance, “real-time” SO 2 smokestack monitors have been installed at power plants. These facilitate a strict allocation of pollution allowances and a trading regime that induces those best able to reduce their emissions to do so, while lowering overall costs on society.
Perhaps the greatest gains from the Digital Age will come from substituting bytes for atoms and advanced information systems for polluting activities. Computers have helped to refine product design and manufacturing, and in combination with progress in metallurgy and polymers, have reduced the material requirements for all kinds of products, from cars to soft-drink containers. In fact, a mid-sized car today weighs about 300 kilos (660 pounds) less than it did 25 years ago. New “smart” appliances, like computerised thermostats that turn down the heat when people are out of the house or asleep, are already helping to reduce environmental pressures. Biotechnology also holds great promise. Crops that do not require pesticides or fertilisers would be a boon to efforts to address water pollution and soil degradation. And the mapping of the human genome may make it possible to understand human susceptibility to various pollutants on an individualised basis.
A data-rich world is also a more transparent one where comparisons are easy to make. No-one likes to be seen as a poor environmental performer. The recent outrage in Belgium at being ranked 79th in the World Economic Forum’s Environmental Sustainability Index shows the power of comparative analysis and peer pressure. Having pollution levels and natural resource stocks tracked and reported highlights for environmental laggards – countries, communities, companies, and individuals – the opportunities that exist to adopt better practices and technologies. With data readily at hand, environmental groups, community organisations and the media can more easily prod governments and businesses into doing better. And greater transparency helps to smoke out cases where special interests are distorting policy choices.
Technological advances and information-driven innovation present challenges as well as opportunities. Productivity advances and economic growth from digital technologies may fuel more consumption, resulting in more pollution. Whether emissions per car will fall fast enough to keep up with the growing number of cars is a serious question.
The Internet can facilitate the dissemination of bad ideas, as well as good ones. Moreover, the availability of information does not guarantee its proper use, and public choice distortions can still occur. Finding ways to diffuse information on best practices and technologies, while limiting information overload and disinformation, are important challenges. Overcoming inertia and the institutional obstacles to change will also require creativity. In particular, even if it is technologically possible to charge polluters, will the public support this internalisation of costs?
Another key issue is whether environmental information is a public good or a private (and strategic) one. Will new technologies and advances in processes be brought in more quickly if companies can profit from them? Or should we subsidise investments in environmental knowledge so as to maximise the dissemination of the benefits as quickly as possible?
Despite the downsides, the potential for environmental gains in the Information Age remains great. The process of applying digital power to the challenges of pollution control and natural resource management has just begun. Technology may not bring an end to environmental problems, but the advances that lie ahead could improve the chances of good policies actually working.
• Information and Communication Technologies: Environmental Impacts and Policy Implications, OECD Workshop, March 2001. For more, e-mail Env.Contact@oecd.org
• Esty, D., Toward Data-Driven Environmentalism, in Environmental Law Review (May 2001).
• Esty, D. and Porter, M., “Measuring National Environmental Performance and its Determinants”, in Global Competitiveness Report 2000, Porter, M., Sachs, J. et al., eds., New York: Oxford University Press, 2000.
• Matthews, H., Hendrickson, C., and Lave, L., How much did Harry Potter cost? in OECD Observer, No. 224 2001, available at http://www.oecdobserver.org/news/fullstory.php/aid/415. Visit Carnegie Mellon’s Green Design Initiative website at http://gdi.ce.cmu.edu/
• World Economic Forum Global Leaders for Tomorrow Environment Task Force, 2001 Environmental Sustainability Index Report, World Economic Forum, Geneva 2001.
©OECD Observer No 226/227, Summer 2001