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Tim Gieseke BOOK ... The 'Strategy of the Commons' 2016 
The economic 'opposite' of the Tragedy of the Commons* (c) from Shared Governance for Sustainable Working Landscape (2016) Taylor & Francis/CRC Press Original article: https://www.linkedin.com/pulse/strategy-commons-tim-gieseke Peter Burgess COMMENTARY Message to Tim Geiseke Thank you Tim. The idea you articulate with respect to the state and use of land and a strategy about the commons has much in common with my own thinking about a comprehensive system of value accounting. In TVA, there is numbering for everything using many of the concepts that exist in conventional double entry accounting that records state and flow for money, profit and wealth in a coherent systematic way. Thank you everyone else for your feedback on the Strategy for the Commons which also helps me better to understand how a value accounting system needs to function in order to be universal, easy and effective. Peter Burgess ... http://truevaluemetrics.orgUpdate ... added commentary December 2023 I am in the middle of a massive review of the material ... papers, documents and electronic archives ... I have accumulated over many years. It is an interesting trip down memory lane ... albeit a nasty reminder of how much I have forgotten! One of the themes that is emerging is how many people have tried to address the issue of modernising management metrics over the past several decades ... including myself. Bottom line, so far, we have pretty much failed to achieve much 'change', rather the 'same old ... same old' corporate profit management metric continues to dominate the corporate and investment world, and the 'same old ... same old' GDP growth dominates the media's analysis of the economy. Worse ... very little has been done in the past 40 years to make modern management metrics fit for purpose ... rather it has gone in a highly undesirable direction in support of company investors / owners at the expense of everyone else and at the expense of the natural world ... the environment. Socio-Enviro-Economic System (S-E-E-S) misinformation is moving around faster than ever, with almost no constraints and with a surprising amount of legal cover thanks to some very questionable legal precedents. Peter Burgess | ||
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The 'Strategy of the Commons'
A modern 'Strategy for the Commons' is able to address the enduring and seemingly unsolvable 'Tragedy of the Commons' The tragedy of the commons is first and foremost an economics issue that emerges when the environmental values of the landscape are too low or diffuse and/or the transaction costs are multiple or too high for legitimate trades to occur. The sustainability trick is to balance this economic equation by combining the values and reducing the costs. For review: In 1968 Garret Hardin introduced the 'tragedy of the commons' using the story of a pasture used in common by many grazers. The story goes like this: A grazer recognizes that by adding additional cattle to the pasture commons, he will solely receive the economic gain, while sharing the ecological costs of a degraded resource with the rest of the grazers. The 'hidden' market signal is to overgraze.In 2016, the issue is no longer a pastoral setting, but the entire landscape with its water systems that are recognized as the commons. And so, if was it deemed impossible to address the pasture commons issue in 1968, it must be wildly impossible to address the 'tragedy' of global commons of today.... It is far bigger than an elephant in the room. To achieve the sustainability objectives sought by corporations, drinking water utilities, accounting standards boards and government agencies, the economic scenarios within the 'tragedy of the commons' must be understood and reversed.It appears that reversing the 'tragedy of the commons' will remain an impossibility unless there is an opposite lever to pull. To create an opposite lever, one would need to understand what are the invisible and involuntary transactions that are occurring due to this hidden market signal. To reverse one must create visible and voluntary transactions for a transparent market signal. The first step is to recognize that the 'tragedy of the commons' begins, not within a corporation's product supply chain, a government program or a utility's project, but at the 'point of service' at the landscape. It begins at the acre or hectare of pasture...and all the outputs and outcomes from that parcel of landscape, visible and invisible, voluntary and involuntary that contribute to the whole economic picture. Ultimately, achieving sustainability is based on how the natural capital (soil, vegetation, biodiversity, water, etc.) for each hectare or acre is managed....the product, program or project is a related, but secondary issue. Secondly, a means to account for the management of natural capital must be created so that those involved in a corporation's product supply chain, a government program or a utility's project can interdependently interact to account for and/or influence the management of those parcels of landscape. This is accomplished by creating natural capital units (NCU) on a GIS-grid of the landscape. The NCU becomes the common interaction [denominator] enabling the many 'low and diffuse environmental values' to be combined. From the perspective of the landscape manager (farmer, forester, etc.) this represents a shift from 'several doors of opportunity worth $1 a piece' to 'one door of opportunity worth several $'. The same costs results in significantly more value. Thirdly, the many entities (Corp, Gov, NGO, etc) must be able to retrieve the sustainability data that will enable them to substantiate their sustainability claims or to procure the information needed to achieve their objectives. A multi-sided platform (MSP), similar to the business model used by Uber, Airbnb, Alibaba and hundreds of others, is interfaced with the NCU platform. MSPs are modern business models in that they enable disparate entities to interact for the first time to create new values. MSP are also able to significantly reduce and/or share transaction costs. Fourthly, transactions must occur that represent the multiple benefits that flow from each NCU to the multiple entities that seek those benefits in different forms. Unlike traditional commodities (e,g, wheat) these NCU data commodities can take on two different forms of economic goods: club goods and private goods. If there is one piece to finish the sustainability puzzle, it is the capacity to recognize there is a demand for both club goods and private goods in this emerging eco-commerce arena.The sustainability industry understands trading carbon and water quality credits as private goods, but it yet to embrace that the majority of sustainability demand is for club goods. Sidebar:Private goods are those goods that are exclusive and rival, meaning only one entity can own and use it (e.g. a bushel of wheat) as it is diminished in value in use. Club goods are those goods that are exclusive and non-rival, meaning multiple entities can use it without diminishing its value (e.g. viewing a movie).So what is a sustainability club good? Let's revisit the NCU and identify the supply and the demand of sustainability benefits. From that NCU comes a supply; a quality and quantity of water, carbon sequestration, nutrient cycling, biodiversity, groundwater recharge and other environmental benefits. The demand from most all corporate supply chains, government programs, drinking water utility watershed projects, and NGO efforts is not the sustainability credits (private goods), but the sustainability data (club good) that represents how each of the entities may or have achieved their objectives. This data is from the same NCU - the same parcel of land - but it represents different objectives and achievements and so it must be shared among the several demanders. To meet the demand from these multiple entities, a farmer must provide the data to each of the entities for each of landscapes NCUs. The corporation must know the 'sustainability index' for their food product. The government program must know the 'soil health index' for their national resource objectives. The utility must know the 'water quality index' to manage their drinking water supply. Or each of these entities may demand all these same indices (NCU commodity club goods) from the very same parcel of land. In all cases, the use of the same data and/or index from the same NCU does not diminish the value of the index and so, it acts as a club good. There may be limitations set by the platform managers, but essentially the index can use sold and used by multiple entities to represent the sustainability objective within the context of place and time. The 'Strategy of the Commons' begins with addressing the sustainability demand based on NCU club goods. This will build a foundation for the supply-and-demand component (an economic and market necessity) so the sustainability credit market of private goods can be structured. In nearly every case, eco-service markets (carbon, water, biodiversity) lose their footing quickly, or never get started. I believe this occurs because the market has tried to step beyond the club good market without a proper foundation. The result is the chronic 'Tragedy of the Commons' condition of low and diffuse values with high and multiple transaction costs. Tim Gieseke has career experience as an environmental scientist, government conservationists, farm policy analyst, agriculture producer, business owner and author. He describes a 'Strategy of the Commons' in the recently released Taylor & Francis/CRC Press book, Shared Governance for Sustainable Working Landscapes (2016). A book summary and reviews can be read at Taylor & Francis and on Amazon. *The figure is from Shared Governance for Sustainable Working Landscapes and represents the GIS-grid platform consisting of NCUs. A cache of indices is available to quantify the supply of NCU values depending on the sustainability demands. The arrows represent transactions for both club goods and private goods. Values flow from the sectors benefiting from natural capital improvement to those that manage the landscape. Free-ridership is reduced or eliminated as those without the data cannot legitimately claim sustainability. Tim Gieseke President, Ag Resource Strategies, LLC 19 posts Comments 18h Klaus Mager Independent Food & Beverage Professional what you are missing is the aggregator. No individual farmer is scalable unless you have markets, and they need traders. That profession has been systematically wiped out, and without markets that mediate between supply and demand, the retail industry if forced to rely on centralized sources which, you guessed it, are part of a vertically integrated business structure under common ownership. In other words; we need food hubs: https://www.ams.usda.gov/services/local-regional/food-hubs LikeReply31 11h Tim Gieseke President, Ag Resource Strategies, LLC Klaus Mager - thanks for the comment. The aggregators engage within the multi-sided platform. If you are the water supplier for the Toledo area, you design the aggregation model. If you are the local restaurant, food hub, or Walmart - you design the aggregation model. That is the efficiency of this market model - any entity can create an aggregation model and if they overlap, then the land manager has more incentives to deliver. Perhaps were we are not seeing eye-to-eye is that this is not a food market, but a natural capital market for sustainable landscapes. Since so many industries, sectors, and organizations depend on the landscape, we cannot afford to look at them separately. Separating out every type of product, food, fiber, etc. actually creates the scenario for the tragedy of the commons - low and diffuse values and high and multiple transaction costs. LikeReply 16h leslie dean brown freelance illustrator If you want to start putting a price on nature, well okay, but then this is what would happen... here's an extract from an article I wrote: 'I recently calculated that if we had to generate our own oxygen [without trees] by the electrolysis of water, we would each need to generate a consistent 80W supply of electricity per person just to keep us alive and breathing*. Over a human lifetime this adds up to about twenty or thirty thousand dollars! It’s actually a lot cheaper than I thought. Unfortunately though, I don’t see many people giving that much money back to Mother Earth. In fact, if we had to reimburse nature for all the past work that was done in creating and maintaining our present atmosphere, we as a human species would be TOTALLY BANKRUPT. It is said that 107 billion people have lived on planet Earth at one time or another. 107 billion people x 20 thousand dollars each = 2.14 quadrillion dollars. And that is just the oxygen consumed by humanity since humanity began (at most I’d say the last hundred thousand years or so)! Yet our atmosphere has been billions of years in the making. How do you quantify that?' http://www.vidaenigmatica.org/circular-economy/ Janos Borbely LikeReply13 10h Tim Gieseke President, Ag Resource Strategies, LLC leslie dean brown It is very nice when people comment. Pricing nature, as typically thought of is difficult to do just due to logistics of measurement. But it is relatively easy to measure the human management of nature and if one understands behavioral economics and ecology, that is where the action happens. And it may be counter-intuitive, but it is most applicable where a lot of human activity occurs, such as in modern agricultural landscapes. The amount of human and financial resources converging on agriculture systems and sustainability makes an idea like this worth pursuing even if one wants to prove where it will fail. This is the first proposal of its kind, and I am well aware of the natural resistance that will emerge. Someone told me recently it was three years after the 1903 Wright Brothers' flight that mainstream media reported on it. Why would someone report on something that is impossible to occur? LikeReply 10h leslie dean brown freelance illustrator Tim Gieseke Ah, I see how that works now. I did read through your article, but even basic economic principles usually fly right over the top of my head, so I admit felt a bit lost, but wanted to contribute something here in the comments anyway. Because it's nice when people comment, isn't it? :) I'm not sure even putting a price on nature is the solution. I'm just trying to make more people, especially investors, think about the true *value* of nature before they rape it too much. LikeReply1 View previous replies (1) 17h Brady Girt Agrarianism—Indigenization—Agroecology Tim Gieseke, If you are serious about this as a goal, we need to talk. Thank you for the post, BTW. LikeReply11 11h Tim Gieseke President, Ag Resource Strategies, LLC Brady Girt - In 2004 I recognized this concept as a valid approach to address our sustainability issues. I was able to apply parts of it to various local, state and national projects. In 2011, I published EcoCommerce 101: Adding an ecological dimension to the economy to describe the effect of an 'environmental market signal'. By applying eco-commerce concepts I learned it was missing a sufficient business model to manage the governance and transactions. With this book and subsequent work, I am confident I have the logic and in talking to landscape and financial tech people, those resources are in order. So I am very serious and committed to applying this concept. A small pilot project would demonstrate its potential in a big way. LikeReply1 13h Eric H. Jackson Chief Rainmaker : Working with good people on important issues and big opportunities in global… Tim--Great stuff! The hitch in the giddyup is the third point. Existing data in the public domain (e.g. soil maps) are insufficient. Farmers in general are unwilling to capture and share data about their operation. And they view those NCUs as 'theirs'. If the proposition is that farmers will earn sufficient rents from 'their' NCUs that they will change their behavior and share data, that proposition needs to be put on the table first and fast. And those rents better be attention-getting $$$. Then we have twin challenge of who builds, owns, maintains and operates the NCU and MSP platforms. Is it a governmental undertaking or a corporate undertaking? Is it some new NGO...because none of the existing ones have the chops or the bucks to make this possible. I'm not arguing with your necessary conditions. I'm wondering how we pull this off within my lifetime? LikeReply23 10h Tim Gieseke President, Ag Resource Strategies, LLC There is landscape data - soils, topography, GIS, remotely sensed data,weather, climate etc. - embedded in the platform that you and I have access to today. With this data a significant amount of information can be generated. I call this S1.0 NCUs and the platform manager owns the interpretation of this data. This level of landscape intelligence has a range of accuracy for landscape indices to calculate the 'sustainability supply'. A good start worth something. The next level of accuracy is created with a farmer plugs in their management data - the 20% of landscape data not captured by S1.0 - I refer to this as S1.5. This is if corporate supply chains, utility watersheds, government programs, NGO efforts, etc. want more precision in calculating their sustainability supply and perhaps locate areas where they want to improve the natural capital. Let's say Walmart wants to address the Toledo drinking water supply.....and so do five other government, corporate and utility entities. How do they do that effectively today? - they don't. Here the deal - no one has bothered to think about the actual supply and demand in eco-markets because they think it is too hard to do. And therefore many projects occur and the knowledge, data and effort kind of evaporate with really no trace. S1.0 and S1.5 NCU are club goods and will represent 85% of the eco-market trade. The remaining 15% are S2.0 credits (private goods) consisting on structural projects like water retention, etc. The sustainability market is a bigger deal than most people have grasped. It is currently designed as a 'million project' effort and it hopes that along they way we will achieve sustainability. Agriculture sustainability is a socio-economic wicked problem and a solution has to be as robust as the problem. I am not saying all the projects and programs to date are wasted - they have been absolutely necessary - but they are certainly not the endgame model. If one mentally extrapolates the current model....there really is no vision of resolution. Sure, the devil is in the details, but the savior is in the system. And I can't really even describe the system in use today. LikeReply 11h Eric H. Jackson Chief Rainmaker : Working with good people on important issues and big opportunities in… Tim Gieseke--But the sustainability data that creates the value, the sustainability data that gets captured in the NCU platform and shared in the MSP platform, where does that data come from? LikeReply View previous replies (1) 4h Tim Gieseke President, Ag Resource Strategies, LLC On the flip side there are several reasons why the 'Strategy of the Commons' will not address agriculture's sustainability issues. Ten of the more prominent reasons are: 1) Sectors are too diverse - corporations, government agencies, utilities and NGO have such different objectives, stakeholders and customers that organizing around a common goal becomes to complicated, confusing and generates conflicts. 2) Natural capital as a value is too new of a topic for entities to agree that it has economic worth, or if it does, no one will be able to agree to what the value is. 3)Dividing the earth's landscape into equal-sized units and having data and calculations for each unit takes too much computing power. 4) Not enough farmers will share or sell their management data needed to calculate environmental indices. 5) The cost to build and operate a multi-sided platform business model is prohibited for the scale of geography that is needed. 6) Club goods makes no sense as a eco-market good 7) Agro-environmental indices are not accurate enough for organizations to trust or value them 8) The 'tragedy of the commons' is unsolvable. 9) A multi-sided platform that incorporates a GIS-gridded landscape is just too complicated for almost everyone to use. 10) Sustainability will be achieved through a new social ethic and it cannot be achieved economically. LikeReply2 7h Klaus Mager Independent Food & Beverage Professional The food market dominates all markets in existential importance. What I am pointing out is the vertical integration of the food web that dominates and usurps local markets, forces practices into local Eco systems that cause the externalities we are all concerned with. This can only be solved at the local level, which requires a decentralization of the markets. LikeReply11 6h Tim Gieseke President, Ag Resource Strategies, LLC Yes, as a farmer I feel those forces. But local food systems do not inherently carry a sustainability value and I presume that large food growers and processors will continue to exist. The model I propose enables ecosystem values to be expressed in both centralized and decentralized markets. It views natural capital as a value onto itself. This value can be attached to food production and timber production, or other dominant or 'insignificant' uses of the landscape. The model takes the complex system of landscape sustainability and provides a common denominator unit of value and it expresses this value at the 'point of service' (landscape) rather than generating the value for a food product, government program or watershed project. These are uncommon denominators that do not enable the economic collaborations that are necessary to address the core issue of the 'tragedy of the commons'. I have applied this model in 2011 using far less technological sophistication than available today. It is then I recognized 'symbiotic demand' was the opposite of the opposing economic scenario of T of C. I appreciate your comments and challenges to the thesis. I spent a decade or more applying and refining the issue. After I realized its potential I tried to prove it wrong, but never any roadblocks that did not have a good detour. I am confident of its ability to apply behavioral economics as the lever needed to address landscape sustainability. It is essentially using the force of the 'invisible hand' by providing a new tool for the invisible hand to work with. Few are going to agree that an economic model for the tragedy of the commons is possible or has been developed. I'm patient...and welcome the input and questions to test this in an open forum. Believe, when I figured this out a few years ago...I did enough runs to ensure that such a proposal will stand up to any inquiry. Like most all things, it will require a full demonstration to prove its worth. One that is really serious about our planet's sustainability will look at this and pencil out what is lost and gained by it's failure...and what is lost and gained by its success. Very little lost and very much gained. LikeReply1 1d Harry Jones consultant One big Tupperware party for everyone! LikeReply11 1d Tim Gieseke President, Ag Resource Strategies, LLC Hmmm...good analogy. What would you call what we are doing now? LikeReply 1d Harry Jones consultant Lots of retailers are shooting for that kind of clubby enthusiasm, Tim (affinity credit cards and 'unions', 'membership' operators like Costco, geographic area service-sharing networks, traditional co-ops), but few go far beyond us-them business models, or have much market presence or clout. LikeReply1 1d Tim Gieseke President, Ag Resource Strategies, LLC Sure. This strategy is far more fundamental and scalable - designed by a farmer.
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