Evaluation in the Context of Global Public Goods
by Rob D. van den Berg Evaluation 17(4) 405-417
October 2011
The focus in the discourse about global and national economies has for the past few decades been on how to strengthen and extend the role of markets, so let us go back to some fundamental principles and re-establish these issues. Public goods are defined in economic terms as "non-rival" and "non-excludable". In other words: these are goods that are almost impossible to trade. The air that you breathe is available for everybody, and the fact that you breathe does not make it impossible for anybody else to breathe. It is rather difficult to exclude anybody from breathing and put a price on it -- although I assume that part of the conference fee for IDEAS went into assuring that we would meet in a well-ventilated conference room.
Public goods are strongly related to another economic concept: that of externalities, which point to costs and benefits that are created in markets that are additional and external to product that was produced for and brought on the market. Of these externalities, the benefits usually do not pose a problem -- it is the costs that concern us. Many economists tend to speak of external costs in terms of "market failure". The most recent and famous example I can give concerns climate change. When Nicholas Stern, a former Chief Economist of the World Bank reported to the UK government on the costs of climate change, both on preventing it and adapting to its consequences, he noted that climate change is a result of "the greatest market failure the world has seen". His conclusion was that "those who damage others by emitting greenhouse gases generally do not pay". This is controversy over whether Stern and his team correctly calculated the damages and the costs of preventing them, but the point he raised concerning market failure was not disputed.