Short-term Politics vs. Long-term Growth: Agricultural Regulation Edition

By Matthew Cameron

The primary policy lesson of yesterday’s USAID seminar about sustainable agriculture was simple enough: Good governance is crucial for setting and enforcing standards that promote responsible food production. The politics of achieving this objective, however, are rather tricky.

This is because politicians and citizens typically view such regulatory decisions as involving trade-offs between environmental protection and economic growth. It’s tough for the environment to win that battle, especially in developing countries where people desperately want higher living standards. In fact, even in advanced economies such as the U.S., politicians often use a reductionist approach to conclude that anyone who is pro-environment is anti-growth (the ongoing controversy surrounding commerce secretary nominee John Bryson is a perfect example).

In reality, decisions regarding agricultural regulations revolve around the even more complicated axis of short-term political benefits versus long-term economic growth. Consider the situation faced by a Communist Party politician in a coastal province of China. He must decide whether to set and enforce catch limits on various types of fish that live in his territory’s waters. Knowing that his chances at career advancement depend upon the economic performance of his province as well as his popularity among the local population, the politician is likely to enact policies that will maximize his constituents’ incomes. Since he also knows that fish can fetch a high price on the global market because of rising demand, he will be loathe to mandate that the fishermen of his province limit their catch to protect species’ population levels. This is particularly true since he knows that if he does so, a rival politician in a neighboring province is likely to take advantage of the situation by encouraging his citizens to fill in the supply gap by fishing even more.

Now, letting his citizens fish without limit may be great for the politician’s career, but it’s terrible for the long-term growth prospects of his province. Eventually, overfishing or ecosystem damage will cause the local fishery to collapse. With an appropriate time horizon, there’s no real trade-off between maximizing fish-related income and responsible management of the fishery.