What Exactly We’re Trying To Accomplish
Wednesday, October 31st, 2007The world embraces Adam Smith’s ideal of individualism, hoping that the Scottish philosopher is right and everyone will benefit in the end. Unfortunately, we have arrived at the Nash equilibrium in the matters of sustainable development. No one is willing to pay the price for preserving the environment, so it is degrading in negligence. Using Hurwicz’s ideas, we need to design a mechanism that will make preserving the environment economically advantageous.
UN has a committee on environment preservation, and holds annual international conferences. We have not seen much progress. The problem is in the soft and unequal requirements.
The best way to make the requirements hard is to bar the percentage of trade equal to the percentage of unmet financial obligations per country. This will make countries very much motivated to meet their contribution promises and possibly lower them.
To make the requirements fair, every country must contribute the same percentage of their gross domestic product to the cause of environmental improvement. This will be the resource for building renewable, non-polluting sources of energy like wind and solar panel farms.
Following these rules, the countries will strive to meet their contribution promises in order to keep trade uninterrupted. The incentive to grow the gross domestic product is also preserved.


