There ain’t no way to ever snarl the ‘Commons Hydra’ Psst: There is!

Prasad Rao

Energy, Environmental and Mineral Economist

gprasadrao@hotmail.com; gprao64.blogspot.com

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Introduction

Externalities generated in the global Nominal economy transcend space, time and media, even spill over to social and economic contexts. These externalities are either immediate and acute such as are safety accidents – whether at or away from production centers, diffuse such as the global buildup of ambient CO2 concentrations over time, distributed and fugitive such as emissions from the transportation sector, inter-media and inter-jurisdictional as exemplified by criteria pollutants from point sources, and discharge of industrial effluents and household sewage in to rivers, or remotely cumulating as are NIMBY solid waste dumps. Initiatives such as SESH Bonds well-known externality-correcting instruments that accompany the political management of nominal economic growth. These instruments have, on one hand, concentrated on externalities that limit economic growth and cause social friction/monetary inflation, or, are immediately endangering, limiting of enjoyment, or unpleasant to the masses, and on the other, sought to assuage the social impacts of Nominal economic growth. The precinct/nation-limited focus of SESH Bonds, their focus on activities that are sovereign/privately-conducive and technically-viable, and the paucity of funding for global environmental pursuits, oftentimes imply externalities that are trace or diffused, that cumulate slowly whether in human habitats, or in the Commons, or are concentrated remotely, are politically- and nominally convenient to ignore. However, the global Nominal paradigm, facilitated by the international flow of liquidity, and in its quest for ever-enlarging, per-capita growth-sourced profits, causes a plethora of slow, diffused and remote externalities to aggravate in the environmental and social Commons. Whereas the former is evident in such phenomena as Global Warming and Climate Change, Bio-diversity losses, Marine Pollution, Sea level rise and Ocean Acidification, the latter expresses in various kinds of externalities such as artificially-stimulated, unsustainable Population growth and consequent impacts, sound and light pollution, ‘Nominal Capture’, and Habitat re-zoning-camouflaged encroachments of the Commons. Despite a dire need, a politically-acceptable and funded global policy solution aimed internalizing such diffused and remote externalities in the Commons yet eludes economists. This proposal is a stab at fixing a gaping loophole in the Commons. It leverages the power of Cause Bonds and FV Finance to suggest a fully-funded, flexible mechanism to obtain internalization of Slow, Diffuse and Remote Externalities (SDRE) in the environmental and social Commons.

Technological progress has brought many an impossible intent in to the realm of possibility. Technologies such as the algal sequestration of CO2 in to ethanol and other plastic (precursors), and further conversion to industrial diamonds, robotic marine waste collectors, plasma reduction of MSW, post extraction of Methane, in to ‘Beach Balls’, as well as smart, next-gen urban-, transport and construction planning, have drastically altered the technological possibility frontier – even if meant their application over a very long term. However, these frontier technologies yet lack scale, and must be supported with high prices to come in to existence, and thereafter expand, to bring about a discernible impact on externalities. The focus in this proposal is the design of such integrated trans-media, global-national strategy that is grounded in FV Finance, specifically, a Cause Bond, that is assured of necessary funds, and supports ‘prices’ at a level necessary for the introduction and enlargement of frontier internaliation technologies and strategies.

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To Conclude...

Commons SDRE Bonds are Cause Debt instruments that could, within the context of a global Nominal paradigm, be issued as an externality-resolving Public-Follow-Complement to Nominal SESH Bonds. Issued to entities deemed to have caused significant damage to the Environment and the Real society, (and with potential to further exacerbate them), they require those holding them to participate in internalizing slow, trace, diffuse and remote externalities, before those instruments turn redeemable, or eligible for market sale, or repurchase. This manuscript has proposed a funding mechanism sourced in FV Finance that draws upon Religion, Resource, MLOs, Innovation Bonds, Public Administration, (House&Nominal) Gold and CC markets to fund itself perenially. It suggests an ExitPrice-based allocation mechanism that ensures both, Cause Conformability and Cause Fidelity amongst bidding Cause stakeholders. By requiring a quantitative and formulaic determination of Bond NAV that links market-determined prices to Indicator-calibrated, Bond-computed Benchmark NAVs, and issuing Lines and Keys linked to Cause goals and objectives, the Cause Bond ensures profit-motivated trades obtain a functional purpose. The allocation of incremental Bond tranches, by a competitive criterion around the Portfolio Composite NAV, brings about a significant incentive to barter and trade Bond units both, to circumvent the trap of Indicator-irreversibility consequent high marginal cost, and to maximize incremental Bond allocations. Consequently, Administrators of SDRE Bonds are likely to be diligent concerning Cause Objectives at home, and cognizant of opportunities to rebalance portfolio with Bonds secured from other nations. Lines and Keys that are issued Technology Participants, as well as barters and trades at the GX Mirror of the IMF-WB around their successes and failures, ensure Commons SDRE Bonds obtain Cause goals avoiding the laborious and extensive inter-governmental consultations and agreements that’d otherwise be necessary to forge consensus and coordination around multi-lateral programs directed at resolving externalities in the global Commons.

The perennial nature of the funding source that offers a reliable funding source for scale-deficient, free-rider disadvantaged SDRE technologies, the choice of a Leontief-type form for the quantitative expression for the Indicator Variables that quantitatively determine the Bond NAV (a functional form that seeks equi-proportional incrementsacross Externality Indicators), the local monetization of positive externalities associated with Nominal hedges and the perpendicular monetization of Technology Firm Patent Potential toward Bond purposes, the administrative allocation of Cause Contracts to atomized Cause entities and the Schumpeterian Lumpsum offered Technology Long OC firms willing to share their technology with Social EO firms to create Cause-beneficial Competition, the Exit-Price/Lien Duration-based limitation on trading, combined with incentive to trade or barter Bonds across nations, together imply the Commons-SDRE Bond is likely to be successful at achieving its multiple goals comprehensively, efficiently, and politically astutely in a globally-coordinated design that internalizes the non-exclusivity and free rider phenomena. The SDRE Bond is likely to financially stimulate the introduction and adoption of incipient and novel technologies, and support policies that internalize carbon-sequestration, non-commercial solid-waste recycling, plastic-pollution of the oceans, habitat encroachment and destruction, species diversity and other Commons-remediation at a global scale; it’d also focus attention on, and resolve such nominal-consequent slow, regressive social processes that imperceptibly reduce long-run quality of life. The Real-augmenting Commons-SDRE Bonds as proposed here, publicly extends the Privately-beneficial SESH Bonds to the internalization of slow, trace, diffused and remote externalities before they turn an irreversible crisis upon humanity; it is expressly recommended for consideration in the higher circles of policy-making at Commons-focussed and Social Sustainability institutions.