woensdag 21 oktober 2015

What Back To The Future Day says about scenario development

As many, many websites show, Back To The Future II got a few things right - and many things wrong. What I find most intriguing is not so much the stuff the movie projected into 2015 but failed to materialize (hoverboards, flying cars), as what the movie did not see coming (notably, the replacement of fax machines by the Internet). But it's easy to ridicule such projections with what we know now - and let's not forget it was an entertainment movie, not an academic study in futurology.

What's more, if only Elsevier had waited one day, our VECTORS scenario paper would have been made available online exactly on the day Marty McFly arrives in the future! Actually, Back To The Future II is a perfect illustration of the merits and limits of scenario studies. When we developed the VECTORS scenarios I heard many responses like "it's science fiction", "we don't know what the future will be like", and so on. And it's true: we don't know what the future will be like, which is why you want to develop several scenarios in order to explore the bandwidth of possible outcomes. The variation in scenarios is more important than any (misguided) notion of accuracy or likelihood. In fact, it is better to ditch likelihood altogether and settle for 'plausibility'. As we describe in the paper, this turned out to be a difficult thing for academics as you need to get out of your ivory comfort zone and speculate.

The reason I find the fax machines in the movie intriguing is that it shows how we tend to extrapolate current trends into the future: fax machines were becoming ubiquitous around 1980, just when the movie was made. So we can't blame the movie makers for extrapolating that trend into a future where just about every street corner would have a fax machine. But then, what else can we do? Of course there are dangers to extrapolation, especially if you have good reasons to assume that a given trend will not hold outside your range of observations. Nevertheless, no matter how plausible (and probable) your extrapolation, the probability that it comes true exactly as you estimated is precisely zero. Again: it is the variation around that extrapolation that is much more interesting than the extrapolation itself.

zondag 18 oktober 2015

Meet my new band

I've joined a new band: we're called Tobermore, we're mostly Dutch (our uillean piper is half Irish, half Flemish, and makes great chocolates), and we play Irish traditional music with the occasional Americana song.

Although I joined them only a few months ago, this actually started somewhere in 2009-2010 when I stood in for the guitarist of another group, Harmony Glen. I got along quite well with their then box player, Vincent, and Vincent and I formed a duo playing Dutch music, Hete Bliksem (yes I know the link is broken - the website is still under construction - as is the band). After a couple of years, Vincent left Harmony Glen, and joined Tobermore; when they asked me to join them as fiddler I did not need long to consider their invitation. They're great musicians and, most importantly, great company.

My interest in folk music started with, as for so many people, The Pogues. There was a time when I would go to Ireland every year, first with my guitar, then with my bódhran, then with my mandolin. Visiting the Saint Chartier Festival in 2000 changed many things in my life, not least of all my musical focus: I bought a fiddle and immersed myself in bal folk music. I still play bal folk, mostly with old Dutch tunes, but I'm also happy to be back in Irish music again.

maandag 5 oktober 2015

Why (not) price nature?

A few remarks on today's debate on economic valuation of ecosystem services, here in Wageningen:
  • Having two non-economists as the only speakers in a debate on economic valuation of ecosystem services led to the usual misconceptions of economics, some if which I will explain below.
  • I have written most of what I can say about the issue in this post.
  • In my three-species typology in that post, Dolf de Groot is a typical pragmatic ecologist: he literally called valuation "a necessary evil."
  • The same typology might label Bram Büscher (a sociologist) a hardcore ecologist, but actually his arguments were more of a Marxist critique of economics and capitalism than of a moral nature (intrinsic value 'n all). In short his argument is that ecosystem degradation is caused by the logic of capitalism; pricing nature perpetuates that logic rather than abolishing it.
  • De Groot claimed that "conventional economists ignore most externalities, like ecosystem degradation." As a conventional environmental economist, who has been working on nothing else for the past ten years than externalities and other market failures, and who meets hundreds of similar economists every year at the meetings of EAERE, AERE, IIFET, BIOECON, and so on, I found this very strange to hear, to put it mildly.
  • Another statement by De Groot was that unlike pricing, valuing "is not about substitution." Economic valuation is ALWAYS about substitution. If you don't like the idea that people can be compensated for ecological degradation, don't do valuation. De Groot wants to have his cake and eat it too.
  • It is a more general problem I have with the so-called 'ecological economists': a lot of their valuation work is poorly thought through, poorly executed, and done from a political agenda rather than out of scientific curiosity.
  • Common mistakes by ecological economists are (1) not properly defining what they measure (like doing a stated preference survey among tourists to measure indirect use values); (2) aggregating values to such a scale that prices are bound to change (the most fundamental critique of Costanza et al.'s 1997 paper); (3) treating economic values like they would treat biophysical variables such as temperature or density (which are not context-dependent while economic value depends on what question you are asking).
  • Büscher repeated the Suzuki fallacy that "externality" means "not part of the economic system"
  • Büscher "did not have time" to propose an alternative to the capitalist system. Perhaps he should have a look at the historical alternatives to capitalism and their wonderful impact on the environment.
  • Büscher quoted a Chinese philosopher (probably Sun Tzu) that "if you can get your enemy to speak your language you have won the battle" or something in that spirit. I don't agree. Economists study the rules of market allocation (property rights, taxation, and so on) to understand where such rules work and where they don't. This would suggest that our advice would always favour big business. But being market-friendly is not the same as being business-friendly.
  • I'm in favour of pricing ecosystem services, but only in the context of concrete policy decisions, in a proper cost-benefit analysis that is part of a wider policy-making process that also takes into account other considerations besides economic value (such as intrinsic value, distribution of effects, and so on). Don't try to estimate the total value of the planet, as Costanza did.