Abracadabra …... or, the Art of Promoting Sustainability !

Abracadabra …... or, the Art of Promoting Sustainability !

GangaPrasad Rao

Energy, Environmental and Mineral Economist

gprasadrao@hotmail.com

gprao64.blogspot.com

gprasadrao.blogspot.com

Disclaimer: …..so I proclaim, and so shall the world be !¹

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Introduction

If the Nominal paradigm leverages, on one hand, technology and capital-owning investors, with political coordination of the middle-class pool of labor, to pursue a growth-based economy, the same is obtained at the price of growing an inequitable, per-capita society, generating diffused SESH externalities and exploiting the Commons globally. Such externalities are the outcome of market-coordinated flow of nominal capital as part of a globalization of nominal economic activity across competing nations. The political imperative to perpetually obtain employment opportunities, and economic growth, induces governments to out-compete each other in accommodating externality-generating nominal activities. The diffused nature of nominal externalities, however, implies that the internalization of such distributed local, public externalities is an essential to continued, sustainable expansion of the global nominal economy. SESH Cause Bonds that pursue a quantitatively-formulated objective through private financial market participants, obtain calibrated and focused progress toward their multi-objective goal. This post proposes a Real-Nominal market-compatible financial mechanism that is applicable generically to such contexts, and which has the potential to obtain a socially-funded, contextually-comprehensive, and geographically-integrated attenuation of nominal externalities globally, thus permitting a sustainable expansion of the human society.

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A Reflective Summary

Despite their non-standardized format, and demanding procedural diligences, Cause Bonds constitute a credible answer to the multifarious and distributed externalities from the Trillion$ global nominal economy. While it is true the Cause Bonds umbrella offers many a socially-conformable solution to geographically-diffused, and temporally-persistent nominal externalities, funding internalizing projects at a global scale through Bond-raised finances could pose resource issues, and even threaten their viability, particularly so when such Bonds must subsidize NAV-accretive programs and operations perennially. This is particularly true of externalities such as are global warming, the disposal of solid waste, or the control of pollution in the Water Commons – the first a global externality, the second a widespread, geographically-distributed local externality, and the third a ‘Dispose and forget’ media-stream – the first lacking a concentrated local, or regional social incentive due free-riding, and the impossibility of encapsulating benefits, the second exacerbated by the ‘Use and throw’ lifestyle and disadvantaged by the NIMBY syndrome that distances the externality from those who cause it, and the third due poorly-enforced property rights regime. Designing an over-arching Cause Bond that anticipates the breadth and scale of such externalities is difficult for reasons the potential interaction of global, national and regional factors that make a globally-applicable design difficult to implement. Anticipating these hurdles, and differences in preferences and technology across precincts, this post offers a design that could be devolved to individual political precincts – each acting independently, yet cognizant of other similar precincts - whether cooperative or inimical, and with opportunities to participate externally, in a manner that obtains a globally-integrated, albeit quasi-optimal resolution of open-cycle externalities. The design proposed in this manuscript leverages the Precinct-level Bond design further, with a multiple-goal NAV-generating expression that incentivizes equal attention to local, national and globally-beneficial activities, thus enabling diversification of activities at home and beyond. Such design offers the flexibility to shift resources (and activities) across geographic components and Precincts to minimize private costs, optimize Precinct gains, and maximize externality internalization at a global scale, thus obtaining geographically-integrated and contextually-comprehensive progress toward Bond objectives. The facility to stake FV-generating projects in the mirror of PV Bond trades,obtains a means to score and rank them toward a quasi-supply curve, which in turn, eases Bond administrative decisions and increments the efficiency of its operations. The design enables a Bond Administrator to leverage his inter-temporally-optimized Cause Bond and its mirrored, Local-RoW, PV-FV streams to credibly monetize resources necessary through RoW Real Gold (Aadhar)-CC Global Sustainability pot and the FX market, and obtain PV resources to fund its Bond-priorities. These attributes, along with the facility to monitor and influence the Administrator’s decisions through Bets and Hedges, augment the efficiency of Cause Bond operations, and obtain tighter probabilities around its long-term outcomes.

The effort necessary to get the Bond fully scoped out, up and running across Precincts and Nations might seem insurmountable. However, one must weigh it in the context of an ever-expanding, globalized, externality-generating Trillion$ nominal paradigm, that absent internalizing instruments, would turn the world unsustainable for all. The finance-based, Government-minimizing, ‘GO’ design proposed here represents a very real strategy to internalize a large set of CC externalities simultaneously at the global, national and precinct levels – an essential pre-requisite for expanding the Nominal to an enlarging global, per capita-subscribed society.

Non habemus arbitrium?

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