3rd Assignment

1. SES

1.1

This week’s assignment consists on thinking of a social-ecological system in which we are an active part and in which private firms play a role.

When thinking about a resource that I exploit daily, what first came to mind was water. As a Socio-ecological system water distribution is a system in which individuals, industries, farms, and almost any other human discipline take part on.

It is Ostrom’s view that in order to understand any system, and to be able to assess the level of sustainability of the same, it is important to be able to analyze the relationship between multiple levels of these complex systems.

Under Ostrom’s framework, the complex social-ecological system of water distribution could be depicted as follows:

First level core subsystems:

Resource System: i.e. Oceans, seas, ponds, rivers and any other form of water reservoir.

Resource Units: i.e. fresh water, waste water, farming water, water for industrial use.

Governance System: Here I’m more familiar with the regulatory institutions of my own country (i.e. National Water Commission), but such private and governmental associations exist within every country or system, enforcing policies towards the consumption, distribution, regulation of use, treatment and management of water resources.

Users: Individual consumption (i.e. households), Industry  (water used for industrial processes i.e. oil extraction), Industry i.e. bottling companies, Farmers (i.e. water used for farmlands)

These first level subsystems are interconnected within this SES, and the actions of any single one of them, will affect the ability of this system to sustain itself.

In her paper, Elinor Ostrom identifies 10 subsystem variables that affect the likelihood of a self-organization in efforts to achieve a sustainable SES.

She argues that changes in these variables may increase or diminish the transaction cost, reducing or increasing the likelihood of self-organization.

1.2  How can Friedman's principle be put to constructive use in the sustainable management of this SES?

'The business of business is to increase profit’

Water is a public good and in general governmental institutions manage it, however, some examples of self-organization come to mind in the case of my home country.

In three Mexican cities, private companies provide water and sanitation services. In these cities, the government gave concessions to three different private entities for the water sanitation.

Mexican government subsidizes the cost of running water for every household, and costs have remained very low with the passing of time.

If these private companies seek to make profit from water sanitation and distribution, it is to their best interest to improve wastewater treatment technology and processing. By maximizing process capacity, making them more energy efficient, increasing the yield of the processes, and thus providing better water quality at a higher rate, they would be reducing their transaction costs and increasing their profit.

In this way the system would be benefited, clean water more readily available and developed of treatment technologies through private investment, adding up to making this system more sustainable.

As such, by living under Friedman’s principle and making their business to increase profit, these private entities would be helping make this water system more sustainable.