That common sense is anything but common is a truism. Professors of economics often invoke common sense to explain resource allocation. The fungibility problem is exemplary. This esoteric term comes from finance and is synonymous with “adverse selection”: an economic policy selects adversely whenever the beneficiaries would have taken the same action anyway, the action is fungible, and should not be undertaken. Common sense for billionaire philanthropists means identifying a public good that the state would not have otherwise financed: fungible proposals should not be candidates for private largesse. Non-fungible proposals in the eight-figures are far fewer than the number of multi-billionaires that now roam Planet Earth (some 1,623, according to Forbes). Aside from the crucial issue of economic rents, which was addressed in my previous commentary for Mongabay, the development of a $250 million “demonstration case” for Decision 15/9 of the UN Convention on Biological Diversity (CBD) would appear to meet the fungibility criterion. But appearances deceive. A great hornbill in Kaeng Krachan National Park. Image by tontantravel/Flickr. As an example unrelated to biodiversity, to make adverse selection and fungibility less abstract, compare the emissions from state-of-the-art cars with that of smoke-billowing jalopies. The U.S. federal policy of “Cash for Clunkers” (the CARS program, to get inefficient old automobiles off the road) seems commonsensical. Economists have shown, however, that half of the clunkers would have been junked by their owners anyway. “Cash for Clunkers” selected adversely and the retirement of the jalopies was fungible. The federal government would have…This article was originally published on Mongabay
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