4.1 The need for a long-term global perspective
4.2 Harmonizing general and sectoral policies
4.3 Integrating action within the agricultural sector
4.4 Building an appropriate legal and institutional structure
4.5 Policy making that accounts for imperfect knowledge
4.6 The need for a systems approach to policy making
There needs to be an appropriate framework in place for the formulation and implementation of policies for SARD. Moreover, policy making for SARD needs to be approached accounting for some important features of the task. Elements that are likely to be important include:
· Taking a long-term, global perspective.
· Implementing complementary sectoral and macro-economic policies.
· Developing coordinated and consistent policies within the agricultural sector.
· Having an appropriate legal and institutional structure in place.
· Following an approach in which the inherent uncertainties of planning for SARD are recognized and accommodated.
Taking an adaptive, inter-disciplinary and multi-disciplinary 'systems approach' to policy planning. Each of these aspects is discussed further below.
The need to take a long-term view in considering sustainability should not need emphasizing, yet there appears to have been a tendency in recent policy work to concentrate on the short term, perhaps driven by political expediency or short-term difficulties in macroeconomic management. A focus on SARD requires decision makers to take a more far-sighted view of their responsibilities.
The case for a global perspective rests on the point noted earlier that sustainability needs to be assessed at the highest level, and that sustainability of the global system does not require that every sub-system be sustainable. Technological changes in transport, communications and information science are creating a global economy in which goods, services and resources are widely traded. Countries, districts within countries, and even individual businesses and households, are increasingly able to benefit from trading in the progressively more integrated global market, and so need to give less attention to self-sufficiency. The principle of comparative advantage suggests that freer trade should facilitate increased and sustainable production from the available resources. It implies that countries can import resources that are in short supply, or can export resources that are in relatively abundant supply. There have even been suggestions that countries can export 'pollution' to where it can be better dealt with - a proposition that, not surprisingly, can excite considerable opposition!
The increasingly integrated global market should also mean that prices better reflect the relative global scarcities of resources, goods and services, sending more appropriate signals about these relative scarcities to producers and consumers. This should promote more sustainable behaviour, provided only that governments do not excessively distort domestic prices through inappropriate protectionist or taxation measures. According to Schuh and Archibald (1996):
The significance of these developments to the sustainable development issue is that this increased integration through international markets creates the potential for large efficiency gains from the international division of labor, increased specialization in production, and the realization of comparative advantage. The efficiencies from these processes will release the resources essential for realizing sustainable economic development on a scale not realized in the past.
Extending this line of reasoning further, some argue that trade liberalization will in fact promote sustainable development only if other problems, such as other market failures and inequity, are tackled at the same time. These critics argue that, in a world of rich and poor, it is too easy for the rich to use their trading power to the disadvantage of the poor. Certainly, the process of structural adjustment in a country as trade barriers and other regulations are dismantled often appears to exacerbate rather than cure problems of poverty and inequality, at least in the short to medium term. It may therefore be important for policy makers to give careful thought to the appropriate pace of change and for them to put in place safety net measures for those who will be most disadvantaged.
A summary of some of the complex linkages between macroeconomic policies and the environment is provided in Figure 1, which is taken from Markandya (1994).
Macroeconomic policies can be as important, or more important, than sectoral policies in affecting resource use, income distribution and growth, and hence SARD. It is therefore vital that macro-level and sectoral policies are harmonized. In the less developed countries it has been common to put in place policies that in effect discriminate against agriculture; in the industrialized countries, the reverse is the case. Both types of policies tend to create serious inefficiencies in the use of resources, including agricultural resources, and therefore impede progress towards SARD.
It is similarly important to harmonize policies within the agricultural sector. This might not be as simple a task as it may seem, since policies affecting agriculture are not made solely within the agricultural ministry. So, improvements to rural transportation and infrastructure, and to rural health and education, are all vital components of efforts to progress towards SARD. Yet these areas usually fall within the responsibility of other ministries, not the ministry of agriculture. Unless systems are put in place to encourage harmonization of efforts, and to avoid conflicts between different groups and agencies, efforts may be dissipated.
Figure 1: Macroeconomic policies and environmental impacts
Source: Markandya (1994).
Market failure often occurs when the legal structure is too weak for people to enforce their property rights, or for governments to enforce regulations for the control of resource use.
Private property rights usually exist in resources or in commodities. Well-functioning markets can contribute to SARD by helping to direct resources into their most productive uses. Yet markets cannot function unless there are clear and transferable property rights and enforcement of contracts.
When property is held in common, institutions need to be developed, or even created, to encourage sustainable management. For instance, the allocation of irrigation water to competing users requires the establishment and operation of a competent authority. Responsible fisheries require a forum for cooperation among interested parties which has the power to enforce catch limits to prevent over-fishing.
In all such cases, the existence of an appropriate legal and institutional structure is clearly necessary for SARD.
4.5.1 Risk, risk aversion and downside risk
4.5.2 Precautionary principles and adaptive planning
The very long-term nature of SARD makes decision making difficult. Errors in policy making or resource management may not come to light until far into the future. Moreover, bad decisions (including 'decisions' to do nothing) may lead to very bad outcomes (Ludwig, Hilborn, and Walters 1993). Many resource management choices are characterized by irreversibilities. For instance, an inappropriate land management strategy in an upland area may lead to serious soil erosion and land-slips. Once the soil is lost, it may be impossible to restore the land at any reasonable cost. Similarly, once a plant or animal species becomes extinct, it is lost for ever, no matter how potentially valuable it might have been.
Such a situation might seem to signal a need for very risk-averse policy making in resource management. Yet this is not necessarily the case. As Little and Mirrlees (1974) argue, in the context of project appraisal, the rejection of options just because they are risky could be a mistake. In so far as the consequences of policy decisions are spread widely and fairly evenly among the population of a country, many policy risks are not important. In many cases, though not in all, it is best to base the choice of policy, at least in principle, on what maximizes some measure of expected social value. 'Expected', in this context, means probability-weighted average computed across all possible outcomes, including any very bad outcomes that could occur.
There is an important distinction here between the notion of an expected value averaged across all possibilities, and a measure of social welfare calculated by assuming that 'average', 'best-guess' or 'typical' consequences follow from any policy decision. The former gives some weight to the risk of very bad outcomes which, as discussed, may be considerable when planning for SARD. By contrast, planning on the basis of 'normal' or 'most likely' outcomes means that the risk of such negative consequences is ignored.
The notion of planning to improve expected social welfare does require some judgements about the chances of occurrence of various kinds of consequences. The trouble is that the required probabilities are seldom known. Indeed, because of the long-term nature of planning for SARD, some actual outcomes may not even be conceivable at the time a decision has to be made. Planning in such an uncertain environment seems to call for extra caution. In addition, Little and Mirrlees note some special cases where risk aversion in policy making and planning is appropriate. A case in point is when the consequences of the decision are closely related to the overall performance of the economy. This may happen either because those consequences are large relative to the size of the economy, and/or they are strongly positively correlated with national income. For a small economy that is heavily dependent on income from fishing, such as some of the small Pacific island nations, for example, policy risks in the management of the fishery resources will obviously be more important than in larger, more diversified economies.
There may also be a case for risk aversion when a policy has the potential to have a substantial effect on the welfare of certain groups, especially when those groups may be particularly vulnerable. Clearly, such a situation may prevail quite often in policy making relating to SARD. If policy fails to secure the sustainability of some agricultural system or rural economy, the local inhabitants may be seriously disadvantaged, even impoverished. In such situations, therefore, there is again a case for a more precautionary approach than basing decisions on expected benefits and costs alone.
Finally, special consideration needs to be given to cases where there are serious irreversibilities. In these situations, basing policy choice on expected values may seriously under-estimate the costs of future opportunities forgone when those opportunities cannot be quantified, and perhaps not even identified, at the time when a decision is taken. The need for a precautionary approach to policy making in this case is discussed in the next subsection.
When any policy action or inaction carries with it the possibility of serious and perhaps irreversible resource or environmental degradation, with an associated risk of significant negative impacts on future welfare, actions to avoid or reduce that risk should be carefully considered. Such actions may include:
· postponing a decision to change the allocation or use of resources until more information is obtained about the possibility of serious negative results from the change;· in a situation where continuation or projection of present practices creates the threat of serious negative consequences, relatively strict resource and environmental protection measures, such as safe minimum standards, may be imposed, at least until more is known.
The first rule might be called the 'look before you leap' principle, and the second might be called the 'better safe than sorry' principle.
In advocating these precautionary principles, it is not being suggested that policy makers should adopt a very risk-averse stance. Many risks to SARD, at least at the level of individual agro-ecosystems, are so small as to be insignificant in the context of policy making and planning at the national level. (Of course, the same is not true for threats to sustainability that may affect a wide range of systems, such as global warming.) Precaution is, however, called for when the impact on expected costs and benefits of negative outcomes may be serious, in relation to the 'special cases' set out by Little or Mirrlees. It may also be appropriate when too little information is to hand to know whether the risks could be serious.
Operationally, the principles imply adding to the list of options usually considered by policy makers. Thus, the 'look before you leap' principle implies that, for example, instead of a choice between building a dam to generate electricity or not building it, the option is also explicitly considered of delaying any start to construction for a year or two. In that time, more data can be gathered on environmental impacts, and scope for energy saving that might eliminate the need to increase generating capacity can be explored. The 'better safe than sorry' principle means that, if there is uncertainty about the safety of a pesticide that is in common use, its use might be restricted until more conclusive evidence is available. Note that, in both cases, some actual or opportunity costs are incurred by acting cautiously, and these costs must be balanced against the achieved reduction in the chance of serious negative consequences. 1
1 For a formal treatment of the value of new information in dealing with irreversibility in resource management, see, e.g., Fisher and Hanemann (1990).
It might be argued that the very familiarity of the aphorisms used to characterize these precautionary principles shows that they are merely common sense, which indeed they are. Common sense, however, is not always applied in policy making, as many past policy mistakes reveal. Adding a requirement for caution to the agenda established for policy analysis may reduce the frequency of such mistakes.
Any strategy to address SARD requires a comprehensive perspective that accounts for the interrelationships among the technical, environmental, social, economic, and political aspects of development. It must also provide for explicit recognition of, and understanding of, the social, economic and ecological diversity and uniqueness of each country, region and district.
A systems approach, involving multi-disciplinary teams, offers the best possibility of attaining a broad perspective encompassing these various dimensions. Moreover, there is a need for the strategy, and the choice of specific policy instruments, to be evolutionary. That means that decisions are adjusted or changed as more is learned about the nature of the problems to be addressed and about which solutions work and which do not.
The merits of the systems approach also extend to micro-level analysis for SARD. Selecting appropriate interventions for agriculture often requires understanding the responses of farm households to changes in the external environment. This understanding needs to be built on an appreciation of farm-household decision making. Again, therefore, a systems approach (FAO 1989) provides a relevant conceptual basis for micro-level analysis for SARD. For example, technological packages for SARD are mostly site specific. They depend on the farming system (including fisheries or forestry systems), size of units, resource stocks and quality, availability of inputs, access to markets, and socio-economic factors. The development and testing of improved technologies to promote SARD need to be tailored to identified main farming systems and validated on farms (or other units) representative of those systems.
