Toward Optimal Provision of Regional Public Goods in Asia and the Pacific

Conference Highlights

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• Publisher: Asian Development Bank
• Year: 2018
• Print ISBN: 9789292613563
• eBook ISBN: 9789292613570
• Topic: Politik & Internationale Beziehungen
• Subtopic: Öffentliche Raumordnung auf lokaler & regionaler Ebene

This publication presents highlights of a conference that gathered leading academics, policymakers, and international organizations to discuss the theory, practice, and policy considerations of regional public goods. Jointly organized by the Asian Development Bank Economic Research and Regional Cooperation Department and the Asian Development Bank Institute, the conference brought together Asia's policymakers in order to consider and develop new ways of regional policy cooperation to deal with the region's common challenges.

Opening Session

WELCOME REMARKS

Naoyuki Yoshino

Dean, Asian Development Bank Institute (ADBI)

OPENING REMARKS

Bambang Susantono

Vice-President for Knowledge Management and Sustainable Development, Asian Development Bank (ADB)

KEYNOTE PRESENTATION

Scott Barrett

Columbia University

In his keynote presentation, Scott Barrett revisited the concepts of regional public goods (RPGs) and game theories of public goods provision and reviewed cases of RPGs in Asia, highlighting the importance of understanding their properties and characteristics. He emphasized the need to improve coordination among regional partners to promote the most efficient provision of RPGs instead of relying on voluntary, uncoordinated national efforts.

It is important to understand how public goods fit the broader context of a variety of goods, noted Mr. Barrett. Private and public goods can be coupled as extremes depending on the two major characteristics of public goods: their “non-rivalry” and “non-excludability”.¹ Many policy analyses are based on private goods, which have opposite qualities to public goods. Meanwhile, other goods (club and common goods) have a mix of the two properties. For club goods, a group of people provide a good and access is exclusive to members. Normally, club goods do not have rivalry, but in the case of road-building, congestion can create it among members of the club. The usual example of a common good is roads connecting countries for use by all. However, when access is free, they can be subject to the tragedy of the commons, where individual users act according to their own self-interest. In that case, congestion charges or tolls may be introduced.

Classifications of public and private goods can be modified by government policy. One example is a published book. The book, in itself, is a private good. The words, as they are arranged in that particular book, are private only because governments have established copyright. As such, governments have made something that otherwise would be a public good (the arrangement of words) into something private. Jurisdiction is also an important topic. Public goods are available at different levels—local, national, regional (where spatial aspects are important), international (affecting many countries, not necessarily in the same region), and global (where all nations are affected). Mr. Barrett gave examples of RPGs:

Function	Regional Public Goods
Peace and security	Preventing state failure, peacekeeping and conflict prevention, non-proliferation.
Health	Surveillance of infectious diseases, when coupled with reporting; outbreak response; disease elimination/eradication.
Regional commons	Air and marine pollution control, river basin and marine fisheries management.
Knowledge	Research and development, leading to new knowledge; funding of “big science.”
Finance and trade	Trade agreements promote dispute settlement and may promote peace indirectly.
Other	Technical standards, tsunami warnings.

Independent actions from each nation with different interests may not generate the adequate supply of regional public goods.

Citing experiments of a simple public goods game, Mr. Barrett pointed out that most countries continue to want control over which public goods they provide, but they and the region would be better off collectively if countries were to cede this and work toward a fully cooperative and coordinated regional outcome. He indicated that this is the ideal and it is what ADB should be aiming for. However, the big challenge comes in achieving the ideal. Indeed, game theory shows that, in a similar setting with multiple rounds, in succeeding rounds, less people decide to hand in their “red cards”² (that represent a nation’s voluntary provision of public goods) until ultimately no one does so. This type of pattern has been seen in the broad literature of what is called the linear public goods game.

A nation state plays a key role in the provision of RPGs because it can provide what individuals cannot when they interact voluntarily. For example, the government can offer different ways of enforcing public goods, such as national laws, regulations, and executive orders. Although it is easy to take the view that international public goods are difficult to supply because of sovereignty, the opposite is true. Lack of sovereign control in the provision of RPGs has produced some of the biggest problems. In addition, institutions are a key factor in the success of regional public goods provision and can play a bigger role than geography.

Columbia University’s Scott Barrett gave a keynote presentation at the conference.

Regional public goods are supplied in different ways: through states acting unilaterally, through self-enforcing international institutions (such as customary international law and international agreements), or through multilateral organizations (usually to facilitate provision). Being free to choose whether to join international agreements is one way that countries exercise their sovereignty.

He also noted that coordination can be quite easy, illustrating his point through a bargaining game where the rules and outcome are clear.³ It is an amazing thing, he said, that when people know the rules of the game, most can agree on the best strategy to win without needing to communicate. The main point of the experiment is that it may not be hard for countries to negotiate and it is astonishing how many countries can agree. The United Nations is one example, with its 193 countries as member states.

Mr. Barrett also provided case studies of the benefits of cooperation and coordination in RPGs.

• Tsunami in Sri Lanka. If an early warning system had been in place at the national level when the 2004 tsunami hit Sri Lanka, the number of fatalities may have been reduced. Detection is a regional public good, but only if the information is shared. How can the integrated tsunami warning system be supplied at the regional level? These can be supplied unilaterally, that is, each country would have their own warning system, but this would be costly. To top it off, when countries cooperate, more information is available and duplication of effort may be avoided.

• Malaria eradication. The elimination of malaria is also a good example.⁴ The Greater Mekong Subregion (GMS) is of interest in this topic, since many cases of resistance to the main anti-malaria drug started there. Malaria is not as big a problem in the GMS as it is in Africa (342 deaths from malaria were recorded in the region in 2013, as opposed to hundreds of thousands in Africa). As such, when the resistant strain moved to Africa, this posed a big challenge. The World Health Organization has endorsed an elimination effort, believing it will remove a risk to sub-Saharan Africa. However, elimination will require intensifying the use of interventions, making the emergence of resistance more likely.

• Cooperative management of the Mekong River Basin. Authorities have tried to manage the Mekong River Basin cohesively, as one of the most important river basins in the world. However, the countries of the basin have different interests and settings, and there is no agreement on preexisting rights on property allocation.⁵ Moreover, collective management of the river basin is difficult because the People’s Republic of China and Myanmar, both upstream countries, are not members of the Mekong River Commission. The region would gain more by acting as a group and sharing the benefits of collective management.

Concluding his remarks, Mr. Barrett emphasized that development depends utterly on the provision of national public goods (specifically basic ones such as contract enforcement, rule of law, and peace and security). A state’s ability to provide these national public goods depends on its ability to exercise domestic sovereignty. Without basic public goods, it will be difficult for a country to develop.

Regional public goods are supplied in different ways: through states acting unilaterally... or through multilateral organizations (usually to facilitate provision).

Conversely, the provision of regional, international, and global public goods can give a tremendous boost to the national development. However, the tendency is to neglect such opportunities. Cooperative international arrangements must be self-enforcing. This is very different from the public goods a nation supplies for domestic use.

In addition, not all transnational public goods are alike. Some are more difficult for the international system to supply than others. Mr. Barrett observed that countries tend to be better at coordination than voluntary cooperation. It is therefore good to look at a public goods problem or scenario from the perspectives of coordination and voluntary cooperation.

During the Q&A, Mr. Barrett, questioned about research quantifying the optimal benefits of collective management, replied that quantifying the benefits is indeed a crucial step. If parties do not know what their collective interests are, and they do not see what they stand to gain through negotiation and cooperation, then they are never going to do it. It is very important that benefits are demonstrated. This is a role that ADB can fill.

On how to use the insights gained from game theory or illustrations with policy makers, Mr. Barrett said the significant point is that if one wants to understand something like climate change negotiations or a regional fisheries agreement, one only gets a single observation, and it is very hard to infer information from that alone. It is important to use the tools available, however limited, to try to get more information, whether through theory, experiments, or other methods. At the same time, it is not possible for any of the methods to replicate what countr...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Message from the Asian Development Bank
• Message from the Asian Development Bank Institute
• Day 1: Opening Session
• Day 2: Keynote Presentation: Regional Public Goods and Their Technologies of Aggregation
• Footnotes
• Back Cover