Environmental issues and the limits of democratic governance

Should we dam the Mokihinui River on New Zealand’s South Island?

The state-owned enterprise behind the plan, Meridian Energy, says we should build the  proposed NZ$300million 85m high dam because it will generate around 310-360GWh per year of zero-emission electricity, and provide security of electricity supply to the South Island’s west coast. Surely that has got to be better than another generating plant running on fossil fuels.

There are, of course, other ecological issues to consider, such as biodiversity. Opponents of the scheme, such as the Green Party, argue that “The Mokihinui River is NZ’s seventh most significant river for its biodiversity values. It is home to 12 species of native fish including the chronically endangered Longfin eel. Hundreds of thousands of longfin live in this river and they will be disastrously affected by the planned construction of a 85m high dam and the drowning of 330 hectares of native podocarp rain forest.”

The Royal Forest and Bird Society notes that, because Meridian is a state-owned enterprise, “with political will” other energy options can be pursued. However, last year the Environment Minister (in the previous government) decided not to intervene because the Economic Development Ministry and the Energy Efficiency and Conservation Authority both support the project. The Greens have urged the current Conservation Minister to take action, given his own department opposes the project.

How can a decision be made on an issue such as this? Such decisions are difficult, undoubtedly. However, looking at such problems of environmental decision-making in broader terms, Tasmanian researcher Paul E Smith argues that the representative institutions of liberal democracy are set up to fail the environment.

Even more interestingly for us, Smith has drawn on the example of damming a river to illustrate his argument. Hydro projects have long been a controversial topic in Tasmania (see, eg, the Franklin dam project).

Smith suggests that institutional failings with respect to the environment are most clearly seen in:

— a bias towards private goods rather than public goods, and

— a bias towards supplying wants rather than disciplining them.

These biases generate policy, decisions and action (as well as ignorance, indecision and inaction) which have serious consequences for the environment. Let’s take a look at them in more detail.

The private goods bias

The purchase of private goods is the simple decisive choice of individuals on the basis of clear prices computed by a market. Thus the individual choice of private goods is easy, effective, often urgent and, naturally, highly attractive to the individual concerned.

Public goods, by contrast, are available for all members of a group or the public at large, and the government often has some role in the supply of these goods. The government’s choice to provide, protect or maintain public goods (or not) must somehow be made by aggregating the preferences of all the people concerned for goods whose value is unclear and whose price is incalculable. The decisions around public goods are, by their aggregate nature, far from easily made by representative institutions, and though they may often be urgent they are often delayed because they are difficult to make.

Furthermore, government decisions about public goods often come down to a choice between public and private goods. In terms of the damming of a river, the choice is between scenery, native species of plants and animals, and recreation along the river on the one hand, and water rights, hydroelectricity, employment and income on the other.

As providers or stewards of public goods, therefore, governments have to work against the tendency of many citizens to choose private goods. More to the point, perhaps, the pressure exerted by lobbyists and wealthy backers of political parties steers them towards special private interests.

Thus, Smith concludes, a bias towards private goods arises in government, and the general result is that public goods are underprovided.

The supply bias

We might naturally think that the government’s role is simply to ensure that the supply of public goods (eg of healthcare) is sufficient to meet the demand. Public issues often evolve on the basis of this basic assumption. Nonetheless, a government could equally choose to modify, discipline or manipulate the want (eg, for roads) instead, in order to match it with the limited supply available. But experience strongly suggests that governments in liberal democracies tend not to favour this route at all, as they fear it would put a large hole in their chances of re-election.

The state is involved modification of public attitudes on a wide variety of public policy issues (eg to reduce prejudice against people living with mental illness) but consumption of public goods is not one of them. Occasionally, the government does intervene to regulate want for private goods, eg through increased taxes on tobacco, but action on tobacco came only after decades of lobbying and pressure from health groups.

However, an attempt by a government to deliberately lower private consumption more generally – even of high status ‘positional’ goods such as six-bedroom beachfront second homes and SUVs or more ‘everyday’ luxuries such as Belgian chocolates and French cheeses – would be almost universally regarded as an insane and antidemocratic act of political suicide.

The result, therefore, is that want is undermanaged. The government endeavours to ensure supply meets the perceived wants of citizens.

Consequences for the environment

What, in all this, is of particular relevance to greens? Quite simply, the ever increasing exploitation and destruction of natural resources, habitat, species, and ecosystems goes largely unchecked because government decisions about protecting natural public goods are made in the context of biases towards private goods and towards supply.

Damming a river offers a supply of private goods (hydroelectricity leading to local economic development, growth, and jobs), from which follows tax revenues and public goods such as infrastructure. However, so does not damming the river (ie, attractive environment leading to tourism, local economic development, growth, and jobs with consequent tax revenues and infrastructure investment).

Nonetheless, the political decision about damming the river is made with a private goods bias and a supply bias: if damming the river seems to offer a greater or more certain supply of private goods, the river will be dammed.

Smith sees a downward spiral of further losses of public goods developing from this loaded decision making and so, as public goods become more and more scarce, the pressure for their privatisation and exploitation becomes more urgent. The ensuing and ever-escalating habitat loss and species extinction and the worsening environmental injustices of climate change thus seem intractable. But they only seem intractable because representative democracies are structurally unable to take the steps to address them on account of the inbuilt biases outlined above.

In New Zealand at the present time the right-wing National Party dominated government is working all out to strengthen the bias. Environment Court filing fees are being raised from NZ$55 to NZ$500. Environmental protection legislation, such as it is in New Zealand, is embodied in the Resource Management Act (RMA). The RMA is in the process of being gutted (or, in government newspeak, ‘simplified and streamlined’) to bias it even more strongly towards land developers (ie private goods). As a lawyer of my acquaintance said to me recently, the consequences of disembowelling the RMA will be more street protest – exactly what happens when representative institutions fail citizens.

Returning to the more immediate concern with the Mokihinui River, the local hearing commissioners, who have heard both the application for consent to build the dam and the opposition to it, have yet to publish their decision. Which way will they go? It’s unclear to me, but the environment might well win on this one.

In larger terms, when one thinks of global ecological issues as critical as climate change, the failure to respond adequately will be a massive diaster that will resonate for generations to come. And it is is still entirely unclear whether our governments will respond sufficiently and quickly enough. That’s deeply alarming. How can there be any doubt any longer about what we must do?


Paul E Smith (2009) How economic growth becomes a cost: the scarcity multiplier. Ecological Economics, 68, 710-718.


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