Australian Agribusiness Perspectives: 2008

Paper 78, 24th December 2008

The Bull Within

Bill Malcolm

Inside every good bull is a pen full of bulls, steers and heifers trying to get out. Some of these will be as good as their sire. Some will be better. Some will be worse. Observation of a bull tells little about how much genetic superiority he can pass on to his sons and daughters. Measurements are needed. Identifying the superior offspring – the bulls that have the capacity to produce better offspring - is a science.

Paper 77, 30th May 2008

Managing for Intergenerational Equity

Vic Wright

In an earlier paper (Wright 2006) it was argued that a concern by humanity for something like ‘intergenerational equity’ is plainly required and that democratically-elected governments serve this increasingly popular concern with appropriate rhetoric. In meaningful analysis of the issues environmental economics is thwarted by relevant uncertainty and ecological economics offers nothing more compelling than a set of ultimate outcomes from which one should work backwards to define current optimal action. Economic approaches are moving, and will inevitably move more, to inform analysis through time as the reality bites of the opportunity cost of various interventions in markets to pursue sustainability.

In this paper the core question to be addressed is how government should approach the management of intergenerational equity. The coexistence of very clear and present issues, such as global warming and depletion of world fish stocks, and the failure of any discipline to yet identify an optimising algorithm has a single, clear implication: empowered managers of the earth’s resources need to adopt an approach, or approaches, to managing the issue which is appropriate to the lack of knowledge which bedevils the disciplines.

The major approaches that have been adopted to date are the rapid and widespread adoption, nominally at least, of the Precautionary Principle (PP) and commitments to sustainability.

Paper 76, 30th May 2008

Intergenerational Equity as Market Failure

Vic Wright

Intergenerational equity is the most basic expression of the rationale for concern by one generation for the impacts of its behaviour on succeeding generations. It is not new to the world but the impact domains of interest are. This is because the scale of some impacts are now such that the closedness of the system composed of Earth and its Sun have become clear. A natural question that arises is whether the novelty surrounding the concern implies a need for changes to behaviour and, if so, what changes to whose behaviour? Market failure is a characteristic that free markets can be identified to possess and which may warrant some form of government intervention. The possibility that intergenerational equity may intrinsically suffer market failure may imply a systemic need for government intervention in resource allocation. There are two main issues: is there systemic market failure; and, if so, what human responses are appropriate? This review goes to the first of these.