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Tragedy Of The Commons And Other Ethics Topics

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Tragedy Of The Commons And Other Ethics Topics

  1. 1. Ethical Concepts and Issues in Tourism
  2. 2. Objectives Describe common pool resources Appreciate the value of good corporate governance Understand the importance of the accreditation process Appreciate the significance of the best practice and bench marking of tourism businesses Be aware of the precautionary principles
  3. 3. Content          1. Introduction                             2. Common Pool Resources          3.   Social Traps          4. Governance          5. Accreditation          6. Best Practice and Bench Marking          7. The Precautionary Principle          8. Conclusion
  4. 4. Common Pool Resources for tourism Wild life Water
  5. 6. What are the countries that share this common pool resource?
  6. 7. Cambodia China (Yunnan / Guangxi) Lao PDR Myanmar Thailand Vietnam
  7. 8. A Golden Piece of Tourism Real Estate
  8. 9. Do you remember… The Law of Diminishing Returns?
  9. 11. Social Trap Theory One person trap-short-term benefit for the individual and long-term costs Missing Hero trap-someone is required to act for the betterment of the group Collective traps-example…The tragedy of the commons
  10. 12. <ul><li>What is the “tragedy of the commons?” </li></ul><ul><li>Costanza’s Poker Game </li></ul><ul><li>Education: Pros and Cons </li></ul><ul><li>Government Regulation: A Tax. </li></ul><ul><li>Alternatives? </li></ul>Put on your cow hats everyone!!
  11. 13. What is the “Tragedy of the Commons”? <ul><li>ARTICLE: published in 1968 by Garrett Hardin. </li></ul><ul><li>CONCEPT: a shared resource in which any given user reaps the full benefit of his/her personal use, while the losses are distributed amongst all users. </li></ul><ul><li>Result? Tragedy all around. </li></ul>
  12. 14. What is the “Tragedy of the Commons”? <ul><li>CLASSIC EXAMPLE: cows on shared pasture. </li></ul><ul><li>What are other examples of commons? </li></ul><ul><ul><li>Air </li></ul></ul><ul><ul><li>Water </li></ul></ul><ul><ul><li>Scenery </li></ul></ul>
  13. 15. The Tragedy of the Commons Or: the challenge of common-pool resources Or: why the sum total of individual “rational” choices can lead to perverse (and socially sub-optimal) outcomes Credits: cow images from http://www.woodyjackson.com/
  14. 16. Imagine a field of grass shared by 6 farmers, each with one cow…
  15. 17. A few facts: Each cow currently produces 20 liters of milk per day The carrying capacity of the commons is 8 cows . For each cow above 8, the milk production declines by 2 liters (due to overgrazing, there is less grass for each cow: less grass, less milk!). 20 liters 20 liters 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 120 liters
  16. 18. Do the farmers sit back and stay at 6 cows? Not if they are individual profit maximizers (here simplified as milk production maximizers) 20 liters 20 liters 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 120 liters (6 cows)
  17. 19. Do the farmers sit back and stay at 6 cows? Not if they are individual profit maximizers (here simplified as milk production maximizers) 20 liters 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 140 liters (7 cows) 40 liters “ I’ll get another cow”
  18. 20. We are now at the carrying capacity -- do they stop? No. 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 160 liters (8 cows) 40 liters 40 liters “ Then I’ll get another cow too”
  19. 21. They are now at the maximum total milk production. But do they stop? No… 18 liters 18 liters 18 liters Total daily milk production for the commons: 162 liters (9 cows) 36 liters 36 liters “ I’ll get another cow” 36 liters
  20. 22. 32 liters 16 liters 16 liters Total daily milk production for the commons: 160 liters (10 cows) 32 liters 32 liters 32 liters “ My cow is now less productive, but 2 will improve my situation”
  21. 23. 28 liters 14 liters Total daily milk production for the commons: 154 liters (11 cows) 28 liters 28 liters 28 liters “ I’ll get another cow” 28 liters
  22. 24. 24 liters Total daily milk production for the commons: 144 liters (12 cows) 24 liters 24 liters 24 liters 24 liters “ Well, everyone else is getting one, so me too!” 24 liters
  23. 25. 20 liters Total daily milk production for the commons: 130 liters (10 cows) 30 liters 20 liters “ Well, I can still increase milk production if I get a third cow” 20 liters 20 liters 20 liters
  24. 26. This could go on for a while in a vicious downward cycle… And I am getting very hungry!
  25. 27. Current situation Social maximum Outcome based on ind. Max.
  26. 28. Viewed graphically Maximum total production for commons: 162 liters/day Yet individual farmers will continue to add cows until there are 15 cows on the commons Current level Gain (or Loss) to Individual Farmer for adding one cow Total Milk Production per Day for all the cows combined
  27. 29. Viewed graphically Maximum total production for commons: 162 liters/day Gain (or Loss) to Individual Farmer for adding one cow Total Milk Production per Day for all the cows combined GAP Socially Optimal Result of individual behavior loss in output
  28. 30. Costanza’s Poker Game <ul><li>Robert Costanza characterizes the “tragedy of the commons” as a “collective social trap.” </li></ul><ul><li>He compares it to an experiment done by Edney and Harper (1978) that uses poker chips to study resource use. </li></ul><ul><li>We recreated this game in our model to show the thinking behind a farmer’s decision to add additional cows. </li></ul>
  29. 31. Costanza’s Poker Game <ul><li>In the poker chip game, players can each take between 1 and 3 chips a turn. Each round, the pot is replenished in proportion to the amount of chips left. If there were 5 players and 15 chips, how many chips would you take? </li></ul>1? 3? 2? BLAST OFF!
  30. 32. Costanza’s Poker Game <ul><li>Totally rational players take 3 each, because they know that if everyone else takes 3, there will be no chips left for them in the future. </li></ul><ul><li>However, the best long-term solution is for all players to take 1 chip, because the pot will continue to be replenished. </li></ul><ul><li>The point? Our short-term incentives do not serve our long-term interests. To make good long-term choices, all players must cooperate. </li></ul>
  31. 33. And, the model: In this model, everyone contributes three chips except for the user, who can choose how many to contribute using a slider. What the user finds is that the best strategy is to take three chips. It is a dog eat dog poker chip world.
  32. 34. Would education help? <ul><li>Probably not. As Costanza writes: “If any one player consumes 3 chips per round, the other players will do individually worse by restricting their consumption to 1 chip per round.” (Costanza, 409). </li></ul>One solution might be education. If everyone knew the best long-term strategy, would they act accordingly and “take 1 chip”?
  33. 35. More Conscious Farmers Get Less: Farmer 3: 4.5 Cows Farmer 2: 8 Cows Farmer 4: 2 Cows Farmer 1: 12 Cows It’s just not fair!!!
  34. 36. And solutions?
  35. 37. <ul><li>Cooperative agreement between farmers (profit sharing of additional 2 cows) </li></ul><ul><li>Consolidation: one firm runs the entire set of farms (and thus becomes a single profit center) </li></ul><ul><li>Government regulation: sets an upper limit on cows on commons, or force redistribution </li></ul><ul><li>Government ownership of milk production </li></ul><ul><li>Build fences -- that is, transform the common pool resource into a private resource (but that would likely reduce carrying capacity of field) </li></ul><ul><li>-------------- </li></ul>
  36. 38. <ul><li>Extensions of the Commons Model -- adding principles of “complex systems” </li></ul><ul><li>Diversity (not all farmers -- or cows -- are the same. This could include unequal access to power and resources) </li></ul><ul><li>Non-randomness (alliances and conflicts are not random) </li></ul><ul><li>Learning and adaptation (farmers learn from past experiences with adding cows) </li></ul><ul><li>Dynamic (the system is not static, but instead changes over time) </li></ul><ul><li>Emergence (properties and patterns emerge over time that are not easily predictable from the starting conditions) </li></ul>
  37. 39. Hardin’s Suggestion: Mutual Coercion, Mutually Agreed Upon <ul><li>A regulation accepted by the majority of those affected and imposed upon all involved. </li></ul><ul><li>Examples? </li></ul><ul><ul><li>Speed limits </li></ul></ul><ul><ul><li>Income tax </li></ul></ul><ul><ul><li>Aesthetic standards in a gated community </li></ul></ul><ul><ul><li>“ shotgun!” </li></ul></ul>
  38. 40. Hardin’s Suggestion: Mutual Coercion, Mutually Agreed Upon <ul><li>Hardin admits there are drawbacks to strict legislation, but believes: </li></ul><ul><ul><li>There is no perfect solution. </li></ul></ul><ul><ul><li>Status quo is worse than a regulated situation </li></ul></ul><ul><ul><li>He writes: “Who enjoys taxes? We all grumble about them. But we accept compulsory taxes because we recognize that voluntary taxes would favor the conscienceless .” (Hardin, 338) </li></ul></ul>
  39. 41. The Model With Tax
  40. 42. <ul><li>Advantages? </li></ul><ul><li>“Conscienceless” farmers must participate </li></ul><ul><li>Trust Fund </li></ul><ul><li>Market Solution-y (as opposed to hard cap) </li></ul><ul><li>Disadvantages? </li></ul><ul><li>Enforcement Costs </li></ul><ul><li>Could be Abused by Big Business </li></ul>
  41. 43. Alternatives? <ul><li>Our model does not exhaust the possible management strategies for the tragedy of the commons. Others include: </li></ul><ul><li>Community Norms </li></ul><ul><li>Privatization </li></ul><ul><li>Hard Cap </li></ul>
  42. 44. Conclusions <ul><li>Sometimes individual maximizing activity leads to a socially optimal outcome, but sometimes it doesn’t, especially when there are public goods, externalities, common-pool resources, asymmetrical information, risk and uncertainty, etc. (many of these we label under the concept of “market failures”) </li></ul><ul><li>Just as the private sector can suffer from market failures, so too can the public sector suffer from “non-market failures”. </li></ul><ul><li>Collective action is one strategy to address shortcomings of aggregate individual action </li></ul><ul><li>Collective action might mean government intervention, but it might alternatively be strategic alliances, partnerships, coalitions, cooperative agreements, etc. </li></ul>
  43. 45. GOVERNANCE,SOCIAL THEORY and COWS A CHRISTIAN: You have two cows. You keep one and give one to your neighbor. A SOCIALIST: You have two cows. The government takes one and gives it to your neighbor. A REPUBLICAN: You have two cows. Your neighbor has none. So what? A DEMOCRAT: You have two cows. Your neighbor has none. You feel guilty for being successful. You vote people into office who tax your cows, forcing you to sell one to raise money to pay the tax. The people you voted for then take the tax money and buy a cow and give it to your neighbor. You feel righteous. A COMMUNIST: You have two cows. The government seizes both and provides you with milk. A FASCIST: You have two cows. The government seizes both and sells you the milk. You join the underground and start a campaign of sabotage. DEMOCRACY, AMERICAN STYLE: You have two cows. The government taxes you to the point you have to sell both to support a man in a foreign country who has only one cow, which was a gift from your government. CAPITALISM, AMERICAN STYLE: You have two cows. You sell one, buy a bull and build a herd of cows. BUREAUCRACY, AMERICAN STYLE: You have two cows. The government takes them both, shoots one, milks the other, pays you for the milk, then pour the milk down the drain.
  44. 46. AN AMERICAN CORPORATION: You have two cows. You sell one, and force the other to produce the milk of four cows. You are surprised when the cow drops dead. A FRENCH CORPORATION: You have two cows. You go on strike because you want three cows. A JAPANESE CORPORATION: You have two cows. You redesign them so they are an eleventh the size of an ordinary cow and produce twenty times the milk. A GERMAN CORPORATION: You have two cows. You reengineer them so they live for 100 years, eat once a month and milk themselves. AN ITALIAN CORPORATION: You have two cows but you don't know where they are. You break for lunch. A RUSSIAN CORPORATION: You have two cows. You count them and learn you have five cows. You count them again and learn you have 42 cows. You count them again and learn you have 12 cows. You stop counting cows and open another bottle of vodka. A SOUTH AFRICAN CORPORATION: You have two cows with Mad Cow Disease, but the President of the country denies the illness exists! A SWISS CORPORATION: You have 5000 cows, none of which belongs to you. You charge for storing them for others. A BRAZILIAN CORPORATION: You have two cows. You enter into a partnership with an American corporation. Soon you have 1000 cows and the American corporation declares bankruptcy.
  45. 47. And now, the &quot;ENRON STYLE&quot;: You have two cows. You borrow 80% of the forward value of the two cows from your bank, then buy another cow with 5%down and the rest financed by the seller on a note callable if your market cap goes below $20B at a rate 2 times prime. You now sell three cows to your publicly listed company, using Letters of Credit opened by your brother-in-law at a 2nd bank, then execute a debt/equity swap with an associated general offer so that you get four cows back, with a tax exemption for five cows. The milk rights of six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder, who sells the rights to seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more and this transaction process is upheld by your independent auditor. The Balance Sheet provided with the press release that announces that Enron, as a major owner of cows, will begin trading cows via the Internet site.
  46. 48. Governance <ul><li>4 Distinct forms of policy </li></ul><ul><li>Regulatory </li></ul><ul><li>Distributive </li></ul><ul><li>Self-Regulatory </li></ul><ul><li>Redistributive </li></ul>
  47. 49. Regulatory
  48. 50. Distributive
  49. 51. Self-Regulatory
  50. 52. Redistributive
  51. 55. Accreditation
  52. 57. Best Practices and Benchmarking
  53. 59. Certification
  54. 60. The precautionary principle was conceived in Germany ( Vorsorgeprinzip, meaning precautionary principle) during the 1970s for the purpose of exercising foresight in matters of environmental policy and resource protection. It was introduced internationally in 1984 at the First International Conference on the Protection of the North Sea. Since then, the principle has been extended into national and international environmental policy by more than 40 countries, and is now affirmed in many international treaties and laws
  55. 61. <ul><li>There are a number of core elements associated with the precautionary principle, including: </li></ul><ul><li>• a willingness to take action (or no action) in advance of formal scientific proof </li></ul><ul><li>• cost-effectiveness of action that is, some consideration of proportionality of costs providing ecological margins of error </li></ul><ul><li>• intrinsic value of non-human entities </li></ul><ul><li>• a shift in the onus of proof to those who propose change </li></ul><ul><li>• concern with future generations </li></ul><ul><li>• paying for ecological debts through strict/absolute liability regimes </li></ul>
  56. 62. More questions regarding the precautionary principle and tourism <ul><li>• What in the community will be sacrificed for this tourism development enterprise? </li></ul><ul><li>• What are the anticipated direct and indirect social, economic and ecological impacts? </li></ul><ul><li>• Who inside and outside the community has been consulted, over what period of time? </li></ul><ul><li>• Who will be compensated for loss (included here is the environment), and how? Is the possibility for loss built into the proposal? How? </li></ul><ul><li>• What legal or policy directives exist on precaution in the region as they apply </li></ul><ul><li>to the project? </li></ul><ul><li>• What is the political and industry receptivity to the precautionary principle? </li></ul><ul><li>• How does the precautionary principle interface with other regulatory or non-regulatory initiatives on tourism and development in the region? </li></ul><ul><li>• How can precaution be built into these existing structures or vice versa? </li></ul><ul><li>• What are the opportunities to implement the precautionary principle across different spatial, political and economic scales? </li></ul>
  57. 63. <ul><li>• How can the precautionary principle act as an agent to create a better relationship between natural and social scientists, different types of science, and multiple stakeholder groups? </li></ul><ul><li>• How can the precautionary principle ensure that these groups are allowed to </li></ul><ul><li>have more control through equal decision-making power as regards the </li></ul><ul><li>influences on their communities? </li></ul><ul><li>• How can the scientific data that drives decision-making be made more accessible </li></ul><ul><li>to the public? </li></ul><ul><li>• Have stakeholders taken into consideration the concept of reversibility? </li></ul><ul><li>Developments should not so damage the integrity of the natural environment </li></ul><ul><li>that it cannot, over time, be reinstated to its original condition. </li></ul>More questions regarding the precautionary principle and tourism
  58. 64. <ul><li>Conclusion </li></ul><ul><li>As global demands for space and resources continue to grow, the tourism industry continues to be criticized for failing to adopt practices aimed at achieving sustainability. This challenge must be met by a variety of means, including environmental regulations, codes of conduct and action plans, as well as by convincing tourists and tourism operators of the imperative to develop a commitment to sustainable management. </li></ul><ul><li>The increasing pressure of tourism-related activities on water and marine resources, on land and landscape, and on wildlife and habitat (UNESCO, 2000) dictates that the tourism industry adopt planning mechanisms guided by sustainability measures that control for and mitigate threats accruing from tourism development. </li></ul><ul><li>The precautionary principle may serve as a planning tool that actualizes the imperative of sustainability, effectively managing tourism in a more proactive, future-focused manner while acknowledging the uncertainty inherent in tourism-related development and activities. However, the inherent conservatism of the concept may also lead to negative effects, especially in a development-project-led industry. Nonetheless, the fear of conservatism is something to bear in mind, not a reason to disregard the concept. </li></ul>
  59. 65. <ul><li>Since tourism development is continuously encroaching onto less populated and more pristine environments, science is often unable to provide data or causal links connecting action to harm in these new, unique areas. Thus the precautionary principle can be employed as a decision-making tool within tourism development which safeguards environmental and human health. The proposed framework discussed earlier for incorporating the precautionary principle into better decision-making for the tourism industry illustrates the relevance and potential applicability of the principle. </li></ul><ul><li>The future prospects for the continued and increased use of the precautionary principle to protect the environment and human health appear to be excellent, especially when such issues alter dramatically as a result of new knowledge. Even with society’s increased thirst for scientific rationale and evidence, researchers feel that science will only reduce uncertainty, and never eliminate it, thus requiring tools and guidelines (e.g. the precautionary principle) for decisions in which science is inadequate or inconclusive. At the same time, humanity must anticipate and, in the words of O’Riordan and Cameron (1994), garner a precautionary sensitivity in individuals and their offspring as a manner of every day life. When it comes to the well-being of tourism destinations, and the people and natural resources that comprise these areas, the adage: ‘an ounce of prevention is worth a pound of cure’ has perhaps never been so meaningful. </li></ul><ul><li>Confucius said, ‘the cautious seldom err’ </li></ul>
  60. 66. the end

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