8.22.2011

The Lorax: did Dr. Seuss get sustainable development right?

Nature recently published a book review of Dr. Seuss's classic "The Lorax," so I figured that sharing my [coincidentally] recent thoughts on the book was fair game.

I recently bought the picture book for my 3-yr old cousin and read it to her when she visited New York. The next day while washing dishes, I started wondering to myself if I thought Seuss actually captured the challenge of sustainable development correctly.  I decided that he didn't.


The Lorax captures the canonical problem of resource economics: how fast should we extract natural resources for their use in the economy? The "Once-ler" character finds a forest and cuts down the trees to manufacture goods with the help of his family.  He is reprimanded by the "Lorax," who shows up to reprimand the industrialists in an effort to protect the birds, bears and fish who live in the forest.  The Once-ler doesn't stop and ends up transforming the entire forest into market goods, the wildlife go hungry and migrate away, and the Once-ler ends up a remorseful hermit.  The moral of the story is clear: unabated resource extraction is morally wrong since it has large welfare impacts for the individuals that utilize the resources "sustainably" (here the wildlife).  [If you want to know more of the story, you can read the synopsis, buy it or watch the cartoon on youtube: pt. 1 & pt. 2].

Is this the right message to be teaching our kids?  Not if your kids are graduate students in sustainable development.

Something about the book was bothering me, and I realized that Seuss completely disregards all the social gains from transforming the forest resource into welfare-enhancing goods.  From a public finance perspective, an optimal management policy for the Lorax's forest would balance the benefits from using the forest against the costs of losing it.  The social value of the Once-ler's manufactured products is clear in the book since he gets rich from selling his wares, but Seuss's model of the system (if we can call it that) basically throws out all of these gains.  In contrast, lots of attention is focused on the social losses incurred by the wildlife, so the implicit cost-benefit analysis of Seuss includes only costs and no benefits.

It is certainly true that "The Lorax" correctly identifies one market failure: the wildlife in the forest do not have property rights to the forest, so they are not properly compensated for its loss.  So the component of the book's moral that worries about the distributional consequences of resource use is correct.  But these distributional concerns may not affect the sustainability of development, per se, captured in the book. (As far as I know, research on the impact of the income distribution on sustainability remains unsettled).

In sustainable development, the crux of the challenge is captured by Hartwick's rule: in order for economic development to be sustainable, value earned by the extraction of natural resources must be re-invested in productive capital of greater or equal value.  If we extract resources and just consume them in unproductive ways (eg. we only use fossil fuels to drive around jet-skis because it's fun) then eventually our economy will screech to a halt. But if we take some of those resources and use them to build capital that will continue to produce value in the future (eg. we use fossil fuels to build solar panels) than development can continue even when the original resource base is depleted.  So long was we re-invest the gains from resource extraction faster than we extract resources, our total capital base will grow.

In "The Lorax," we don't know what happens to the resource base because the products manufactured using the trees vanish from the model (i.e pages).  They are used by someone for something, but we have no idea how productive that activity is. Further, we would need to know what the Once-ler did with his earnings: did he re-invest them in schools?  If we wanted to evaluate whether the Once-ler's approach was sustainable, we would need to know the social value of the forest when it was still standing and the value of the capital it helped generate when it was harvested.

Next week: lessons for biodiversity management from "One fish, two fish, red fish, blue fish."

5 comments:

  1. Does it matter if the resources are re-invested in the community from which the resource is harvested vs if they are re-invested in a far away land? Who is the "society" that ought to benefit?

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  2. A good point. As I mentioned, there are major distributional issues that are not addressed in traditional sustainability analysis. To date, I don't know of any strong body of work that indicates whether inequal societies are inherently less sustainable. In many cases they certainly feel distasteful and at odds with some of our moral sentiments. But that's a separate issue from whether the system is sustainable.

    Like I mentioned above, there are clear losers in Suess's story. The wildlife do not have property rights to the forest, so they have no legal recourse or compensation when it is harvested by someone else. This kind of "expropriation" is an issue that's widely discussed in environment and development economics, and it is certainly an issue worth thinking about more.

    But in my discussion above, I was pooling the entire Seussian world into my model. "Society" includes the Onceler's family and all the wildlife and all the people who purchased the manufactured goods of the Onceler. In a formal analysis of the situation, we would want to consider all these individuals. My concern with Suess's presentation is that he doesn't really consider the benefits to the last group.

    But if one were only trying to analyze the welfare of a specific subgroup, say the wildlife, then your point would be well taken that re-investment far away doesn't make the local system seem very sustainable.

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  3. I loved this book as a kid, and the messages I took from it were pretty simple:

    1) Did everybody really 'need' a Thneed? I would spend hours trying to work out exactly how a normal human being could wear a Thneed, without success. With the benefit of hindsight, is not the first moral that people are easily convinced to buy worthless junk that they don't, in fact, need at all? Are the Thneeds really a welfare enhancing good that yields gains to the end customer? Like so many consumer goods, I fear not. And is the accumulation of wealth by the Once-ler and his family's a societal benefit? We know that while initial Thneed profits are presumably reinvested in the Once-ler's factory or paid to his family, once raw materials have been utterly exhausted the family skedaddle and the factory falls to wrack and ruin, seemingly creating no long term value as required by Hartwick's Rule.

    2) I could never understand why, if the Once-ler had the last truffala seed all along, he did not simply plant new truffala forests before. The trees are not non-renewable, and therefore should be renewed (and isn't Hartwick's rule based on the consumption of non-renewable resources like fossil fuels). In his pursuit of wealth, the Once-ler failed to realise that the source of said wealth were the natural resources which he made no effort to replace. Rationalising with hindsight again, the message I heard was not that the pursuit of profit through industrial production was bad, but that capitalist producers are prone to forget the long-term impact of their short-termist behaviour.

    I'm no resources economist or expert environmentalist, but common sense dictates that what the Once-ler did was avoidable with consideration of the consequences, and that's not a bad message to teach our children.

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  4. Agree with John Hughman. Also recommend the book "Collapse: How Societies Choose to Fail or Succeed" by Jared Diamond.

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  5. In other news:

    http://gawker.com/5888838/stephen-colbert-uses-verse-to-express-his-disappointment-with-the-loraxs-many-product-tie+ins

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