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Wednesday, April 13, 2016

Environmental Sustainability: The menace of ‘Free-riding’

The long-term temperature averages, melting of glaciers, the ratio of record highs to record lows, etc., are all pointers to a continuously accelerating rise in global temperatures. Yet, there is no evidence of concerted effort from governments across the globe to initiate action against climate change. On the other hand, there are arguments galore against any effort to put a limit on emissions through legislation claiming that it would cripple the economy. There are even corporates that are said to be spending tons of money promoting denial of climate change, while many other companies fund politicians of all hues to vociferously oppose any proposed action by the governments against climate change.

Climate change—a change that is happening a lot faster than we all have grasped—is a unique global problem that calls for equally unique global response. Although every industry is eager to benefit from the environment, no one is willing to come forward to bear the cost associated with the arrest of environmental degradation. As a result, it is the public/government through taxpayers’ money that is fighting against the negative fallout of industrial exploitation of the environment—particularly by industries such as coal, oil, chemical and other mining industries. Obviously, such avoidance of fulfilling their obligations towards protection of environmental pollution is resulting in ‘free-riding’—a social phenomenon that is reaching increasingly menacing proportions.

This menace is not just confined to individuals or, business entities, even nations are resorting to the practice of free-riding. The chasm between the wealthier west and the developing countries of the east in reducing carbon emissions and sharing the burden of the underdeveloped countries by the rich to adopt green technologies is one such example.

Free-riding essentially emanates from individuals who tend to benefit from the collective goods but avoid bearing the cost. In economic terms, it refers to a situation where some individuals in a population either consume more than their fair share of a common resource, or pay less than fair share of the cost of a common resource.

When it comes to environmental free-riding, it refers to the tendency of individuals/businesses to benefit from what the environment offers while simply avoiding the costs meant for its protection. We all know that when each of us pollutes the river less by carefully diverting the drainage water away from the river by incurring a little cost, we all stand to benefit from the said reduced pollution in terms of availability of potable water. As against this, one individual’s polluting less may not matter enough—even the said individual himself may not notice the good that he is doing by polluting the river less. So, being carried away by a feeling that his polluting the river less hardly matters, he may not contribute his share toward not polluting the river. Thus, he becomes a free-rider on the beneficial actions of the others.   The worse is: even the governments are resorting to this unethical free-riding, all in the greed for maximisation of wealth with least cost as input.

It is needless to stress here that avoidance of costs associated with the environmental degradation by the economic agents engaged in its creation and fulfilling their obligations towards its resolution is sure to create long-term problems to the whole of the society. Which is why free-riding has become the greatest obstacle for accomplishing Pareto optimality in managing environmental problems. Indeed this phenomenon is playing havoc with market economy, warranting urgent corrective measures for maintaining optimal balance for public benefit.

As we all know, it is a basic tendency of human beings to care for individual interest rather than social interest and in the process crave for maximum benefit from social input sans costs. To curb the menace of free-riding, public institutions that are vested with powers to effectively manage environment must exercise their powers effectively by putting in operation such regulations which curb these practices and importantly, ensure that every related party complies with the regulations.

Contrary to this requirement, what we often find is: these institutions fail to perform their duties, primarily due to lack of technical expertise. Secondly, the institutions meant for governance often suffer from political interference, particularly in developing countries. Over it, these institutions are often found manned by such staff who are highly ignorant of their role even. And over it, politicians are not doing what they are expected to do. 

This myopic outlook obviously calls for a new mindset. It is time that the public authorities raise to the occasion by creating necessary regulatory framework  to arrest the menace of free-riding and thereby ensure environmental protection and its sustainability.  


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