IMPACTO DE LAS MEDIDAS APLICADAS

Whilst the fifth chapter of the NEM:BA provides for a permitting system to facilitate utilisation of alien or invasive species, it creates quite substantial uncertainty about the regulatory regime that would be employed. Section 91 specifies additional requirements regarding alien or invasive species.

“An issuing authority may issue a permit for a restricted activity involving a specimen of an alien species or an invasive species only if … (b) the relevant specimen has been found to have negligible or no invasive potential; (c) the benefits of allowing the activity are significantly greater than the costs associated with preventing or remedying any resultant damage to the environment or biodiversity…” (emphasis added).

Again, alien species, a category that seems to have been created for those species that cause no/negligible harm to ecosystems, habitats and other species, are included in the restrictions. Thus, an investor whose business is going to utilise an alien species or a listed invasive species can obtain a permit if and only if the concerned species has negligible or no invasive potential. In most cases, the net benefits of allowing the alien species-based activity might be ambiguous (De Moor and Bruton 1988) because of inaccuracies in valuation techniques.

The paradox is that most economically useful alien species have been identified in policy and scientific circles as highly invasive (Biodiversity Policy 1997, Ellender and Weyl 2014, Moran et al. 2013, Richardson 2011, Richardson and Van Wilgen 2004, Skelton 2000, Van

148 | P a g e Wilgen et al. 2001). For example, “Up to 60% of the threatened endemic freshwater fish of South Africa may be threatened by introduced fish species such as trout, carp and bass,”

(Biodiversity Policy 1997, p.37). It follows, therefore, that a permit would be impossible to obtain in such a situation since a species must have negligible or no invasive potential for a competent authority to grant a permit. The unperceived effect of this provision is that it amounts to prohibition or shutting down of economic activities that utilise alien and invasive species for which scientists claim evidence of non-negligible invasiveness.

In Christopher Lance Mercer v State 2003, a governmental agency turned down a permit application because “the caracals [which Christopher Lance Mercer kept in the Kalahari Raptor Centre] were earmarked as potential problem animals to farmers” (emphasis added), that is, they were declared economically invasive. Evidently, the listing of a species as invasive or potentially so has drastic implications for the possibility of obtaining a permit, and understandably so, with potentially ruinous social and economic consequences. This case suggests that the test of invasiveness has to consist of biological and socio-economic criteria jointly.

The concept of sustainable utilisation as envisaged in the NEM:BA seems to be narrow because it only focuses on indigenous resources. Sustainable funding for biodiversity conservation could be secured through sustainable utilisation of alien and/or invasive species. Figure 5-1illustrates the argument. Conservationists (C) and economic sectors that utilise alien and invasive species (E) have irreconcilable interests. The bundle of environmental services for environmentalists includes goods (indigenous species) and bads (alien/invasive species). Thus, their welfare increases as indigenous species diversity increases and the propagule pressure as well as the spread of alien and invasive species decreases.

Economic sectors that utilise both alien species and invasive species, on the other hand, have a bundle of environmental services that has two goods (indigenous and economically useful alien/invasive species). Their welfare increases as both goods increase. There exist two alternative institutional arrangements NAIS (no-AIS, that is eradicate or manage with a view to gradually eliminating alien and invasive species) and AIS (allow use of alien and invasive species). The former is what the fifth chapter of the NEM:BA envisages and the

149 | P a g e latter is the pre-NEM:BA scenario. The indifference curves for economic sectors are labelled (E1 and E2) and those for conservationists including the DEA are labelled (C1 and C2). The contract curve is the line NAIS-AIS.

Figure 5-1: Sustainable use of species and financing of biodiversity conservation Source: Author’s analysis

Figure 5-1 can be interpreted as an arrangement for payment for ecosystem goods and services. Since the NEM:BA came into effect when it was legitimate to utilise alien/invasive species in South Africa, the starting position is AIS on the contract curve. Thus, a

“grandfathering or first possession” approach is assumed (Libecap 2009, p.133), whereby AIS-based sectors are protected by a property rule by virtue of having prior-use over the

150 | P a g e resources before the NEM:BA came into force (Bromley 1978b). The task is to reform institutions in such a way that the final institutional arrangement is one at NAIS where AIS at worst are to be eradicated and at best utilised within a payment for ecosystem goods and services framework. At NAIS, conservationists can be protected by a liability rule. While a property rule ensures that conservationists will not eradicate alien and invasive species without the consent of economic sectors, protecting conservationists with a liability rule imposes duty on economic sectors to utilise invasive species for as long as they compensate the conservationists for the biodiversity losses induced by the species they utilise (Bromley 1978b). Thus, at NAIS, a redistributive policy that imposes liability on economic sectors is envisaged. At NAIS, there is efficiency in exchange since the marginal rate of substitution (MRS) is equal for conservationists and economic sectors.

Equation 5-1

In this setting, conservationists will have to extort payment from AIS-based economic sectors because they are the ones now protected by a liability rule at NAIS. Daly and Giertz (1975, p.998) define extortion as

“the act of obtaining payments from some entity in return for not imposing upon that entity some harmful effect, where the generator of the external effect receives no direct net internal benefit from the act.”

The harmful effect in the present analysis is the eradication of the alien and invasive species upon which some sectors’ economic activities rely. Extortion is a process of economic coercion, conditioned on the relative degree of bargaining power (or liberty, as Commons (1942) would say), to obtain payment from another party that is not protected by a property or liability rule (Bromley 1978a; 1978b). It is possible to interpret extortion, from a monetary perspective, as a strategy for enjoining parties to internalise negative externalities caused by their activities. However, Samuels (1972b) argues that monetary prices are surrogates of the structure of rights and the distribution of power in society and, as such, extortion is essentially assenting to the reality that the party whose economic activities are imposing a social burden is the one whose rights count in public policy. Even after extortion, the real cost, which is the material flow in the form of an externality still occurs, thus it is an

151 | P a g e issue of interdependence rather than externality (Samuels 1972b). That one’s right is permitted to be a cost factor in others’ decision processes is the real cost (Samuels 1972a;

1972b).

Since the conservationists have to extort payment from AIS-based sectors, they bear positive transaction costs in the process. They would demand a payment that although off the contract curve, will leave them just as well off as they would be on the contract curve.

This means that they will demand HJ as payment. Notice, the price offer curve J is tangential to C2 at V. Being at V or at NAIS makes no difference to conservationists because they are equally well off at either position. However, AIS-based sectors are prepared to pay HK where the price offer curve K is tangential to their indifference curve at W.

The final equilibrium can be one in a range of potential outcomes, one of which is NAIS and many of which are off the contract and bounded by the price offer curves J and K. Since HK >

HJ, it follows that a bargainable surplus exists equivalent to HK less HJ. Negotiation, therefore, centres on the control of the bargainable surplus. The magnitude of transaction costs determines the distribution of this surplus. The magnitude of transaction costs is a function of economic power (property and liberty) as well as tastes and preferences of the parties involved (Bromley 1978a, Commons 1942). At the limit, the transaction costs can only be as large as the bargainable surplus in which case extorting payment becomes unattractive. The smaller the transaction costs of extorting payment, the greater is the incentive to negotiate for as much of a share of the bargainable surplus as possible. This way, financing resources for biodiversity conservation are raised through sustainable utilisation of alien and invasive species. This leaves aggregate welfare higher because everyone is better off – the conservationists and the AIS-based sectors as well as society in general.

In effect, this conclusion resembles the conservation levies that Provincial Nature Conservation Authorities in South Africa collect from the hunting industry. In SA Predator Breeders Association and Others v Minister of Environmental Affairs and Tourism, 2009, Justice Van Der Merwe stated the “the financial benefits of the hunting industry comprised direct financial benefits such as … revenue for provincial conservation authorities and conservation levies,” (emphasis added).

152 | P a g e The conservation levies could then be used to finance conservation programmes, such as Working for Water and Working for Indigenous Biodiversity, among others. It must be remarked at this stage that the financing implications emanating from this analysis do not pass the neoclassical efficiency test. Petrick and Pies (2007, p.256) describe such an outcome as “the establishment of an (attainable) institutional arrangement that allows the realisation of mutual gains” to the extent that “policy is no longer guided by the desire to attain the ideal of a perfect market” (italics in original). The extorted amount is not the optimal one consistent with NAIS, which lies on the contract curve. Rather, it is a reasonable amount arrived at through deliberative valuation. It is here that the role of economic power comes into play. Conservationists have the environmental right (liberty) enshrined in the Constitution, section 24, and, therefore, could bargain with AIS-based sectors. AIS-based sectors have property rights and privileges to portions of the environment where they engage in their economic activities. They also have the environmental right (liberty). They can withhold their property interest from conservationists.

Because both parties have liberty, they enter into bargaining using the negotiational psychology of economic coercion or persuasion to arrive at a reasonable extortion (Albert and Ramstad 1998, Commons 1931, Hiedanpää and Bromley 2012). This is the concept of reasonable value/ just price (Dugger 1996a; 1996b). “Reasonable Value itself is nothing other than a coherent and pragmatic, albeit secularized, solution to the problem of just price,” (Ramstad 2001, p.254). Ramstad further characterises reasonable value “as a desideratum of public policy..., an imperfect compromise to be reached through an administrative process” (Ramstad 2001, p.272, emphasis added). He argues that it is “not a metaphysical entity discoverable through abstract logic, as is the case with the “optimal”

or “efficient” outcomes serving as desiderata in mainstream practice” (Ramstad 2001, p.272).

The point to note here is that the conclusion reached in the analysis above resulted in a non-efficient compromise solution that, nevertheless, was a “workable consensus”

(Commons 2009, p.743), which left all parties concerned satisfied. Reasonable value/just price is a product of discursive valuation rather than deductive reasoning that, in the neoclassical sense, underpins Pareto optimality analysis (Norgaard 2007, Waller Jr and Robertson 1991). It is a pragmatist’s approach to fair compensation. Dugger (1996b, p.429)

153 | P a g e described the reasonable valuation outcomes that “all lay somewhere within the gap between what the conflicting interests in transactions actually wanted.” Similarly, conflicting interests in biodiversity conservation fall within the confines of reasonable valuation.

The Coasean approach, where the party without the property right has to bribe the party vested with the right in property to reduce the scale of a harmful activity or stop it completely (Coase 1960), would produce a stalemate. Bribe is the obverse of extortion.

Conservationists pay the sectors utilising alien and invasive species to reduce their scale of operation. No institutional change would take place. Notice, in the Coasean approach, conservationists would offer to pay economic sectors a compensating variation (HJ) for them to reduce the utilisation scale of alien and invasive species. HJ is consistent with the conservationists’ welfare at V in order to move from the status quo institutional arrangement (AIS) to the desired institutional arrangement (NAIS) on the contract curve.

However, economic sectors would consider their own welfare to determine whether to accept or reject the offer. In this case, they would be willing to accept HK, which conservationists are not willing to pay. Hence, to accept the offer (HJ) would generate a negative net compensating variation (HJ – HK < 0).

The real issue that the reciprocity argument in the Coasean approach underplays is that optimality is a function of who first has the entitlement and, therefore, a function of the power structure and wealth distribution of society (Samuels 1972a; 1972b). The optimality just strengthens the status quo, which is to say no institutional change takes place, while the environmental problem still awaits redress.