Alberto Mingardi  

Will autarchy save the Galapagos biodiversity?

In Case of Revolution, Climb I... The Silence of the Bets...

In the Galapagos, the authorities understandably exhort the population to conserve the amazing natural legacy of the islands. But I notice that they also stress the need to move towards agricultural self sufficiency, establishing a priority lane for local products. This is at least in part due to the memory of the eco-disaster of tanker Jessica in 2001.

This desire for self-sufficiency fits badly with other policy goals. On the one hand, there are great efforts to promote "eco-tourism" in Galapagos; this grand label includes teaching fishermen that some fish are actually worth more for picture-taking than on the dinner table. On the other hand, the Ecuadorian government restricts property rights on the islands very severely, to the point that selling real estate to anybody but your neighbor is quite a challenge. Permanent immigration--even from Ecuador itself--is also discouraged.

The Galapagos are a natural paradise, but they aren't an Indian reservation. Its population came itself out of a series of experiments in social engineering. The islands are marvelous--but the very ambition to conserve biodiversity entails a series of restrictions to personal liberty that call for compensation, particularly if you do not allow people to freely sell and buy their land.

The vision for the future of the islands appears clear and attractive: tourism and organic farming promises to be a sustainable and yet economically rewarding activity.

However, both "eco-tourism" and organic farming require more than good intentions and a deep-rooted environmental sensibility. They require entrepreneurship. While I am sure the Galapagos will produce good entrepreneurs, the very lesson we learn there about finches and boobies is that variations in the species are casually generated and then sorted out, "selected", by the environment.

The problem is that entrepreneurs can't be "grown" in a greenhouse, free of external competition. The Ecuadorian government seems to believe that "confining" people is the best way to let entrepreneurial talents emerge--making sure the locals, and not foreigners, grab the value. However, autarchy is a rather bold bet.

Even if entrepreneurial talents are produced "according to schedule," their learning process won't benefit from lack of competition--rather the opposite. Plus, the de facto impossibility of selling the hotel they developed or the property they renovated to anybody but their neighbor doesn't make for a good incentive to invest into their potential. Unless the state steps in again, of course. Species aren't immutable, but government in a sense is: intervention regularly breeds intervention, no matter what object is being pursued.

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CATEGORIES: Property Rights

COMMENTS (5 to date)
Wojtek Grabski writes:

Fascinating to think about the entrepreneurial potential of such a place. Especially considering the immense value and clear destruction coincident with poor execution.

I wonder whether a single owner wouldn't eventually emerge.

Another important benefit of opening the market is that it invites people who actually know how to judge value. Poland, for example, is full of farmers who burn their fertilizer in the mistaken superstitious belief that its helps release it's nutrients. I have no doubt that if big agribusiness bought their land, the burning would immediately stop.

Closing markets does nothing more than keep unimaginative people, born into their trade, in charge of its advancement.

Mark V Anderson writes:

Yes, it does sound like the Ecuadorian government doesn't understand the free market. They obviously don't trust the free market, so they won't let it work. Presumably they will try this method of having very limited private markets do the eco-tourism, and then when it doesn't work, the government will take over. They will then of course point to this as an example of failure of the private markets.

REN writes:

Don't ignore the role of the IMF and world bank. The world bank especially makes dollar loans that must be paid back.

This means that world bank specialists survey the world for industry to insert, all in the name of globalism and good markets.

For example, many regions of South America are good for growing coffee. This means that loans will be made for coffee, and a single resource type economy will develop.

A single resource economy will be extractive by nature, and the economic actors will look outward toward where their loans originated.

The other modes such as public commons will evolve to meet the extractive economy, and not serve an independent economy. By independent, I mean that the higher modes, such as internal distribution and diverse efficient modes will never develop.

Bangladeshi Grameen Bank is a good example, where microcredit allowed small industry to come into being, and local actors improved their economic life by bootstrapping themselves. The local economy became MORE diverse, not less so, as in the world bank model.

The world bank model and dollar hegemony is a from of neo colonialism, and to blame the recipients, is to blame the victim.

The first order of business is to shrug off dollar hegemony, otherwise any emerging economy will have difficulty evolving past colonialism. Today's BRICS are busy shrugging off this economic lock, and in our American past, the revolution was very much about throwing off the Bank of England's debt based hegemony (1694).

There is no entrepreneurial potential unless it is predicated by other economic conditions already on the ground.

Tom West writes:

I suspect the fear of letting the market do its business unfettered is that there's a decent chance that the unfettered decision for the inhabitants might be to eliminate the eco-system.

Evolution, doesn't have a goal. It doesn't "design" the best species. It is simply the outcome of millions of individual mutations.

Like evolution, the market doesn't have a goal, it's simply what results from millions of individuals making transactions. The market doesn't "guarantee" any outcome. It just is.

If you have already decided that any specific goal *must* be met, then it's foolish to depend on the market to fulfill it. It may be *likely* to (for example it's highly likely to increase people's standard of living), but if you *require* an outcome, then the unfettered market is not your tool.

Mark V Anderson writes:

You're absolutely right, Tom, that the unfettered market would likely destroy the eco-system. But I don't think that is the issue here.

The problem with Ecuador's methods isn't that they require the entrepreneurs to respect the eco-system as it is. The problem is due to the requirements of islander involvement and difficulties of transferring property. Those requirements will make the over-all goal of maintaining the eco-system harder. If the government maintained their very strict eco-system rules but allowed entrepreneurship to be free otherwise, I suspect some smart entrepreneur would make a lot of money while meeting these goals of the country.

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