Preface for the reader: F.A. Hayek was an author and economist who wrote a critique of centralized fascist and communist governments in his famous book, "The Road to Serfdom," in 1944. His work was later celebrated as a call for free-market capitalism.

Say what you will about Friedrich Hayek and his merry band of economists, but he made a good point: that markets and access to information make for good choices in aggregate. Better than experts. Or perhaps: the more experts, the merrier.

This is not to say that free-market economics will necessarily lead to good environmental outcomes. Nor is this a call for more regulation - or deregulation. Hayek critiqued both fascist corporatism and socialist centralized planning. I’m suggesting that public analysis of free and open environmental information leads to optimized outcomes, just as it does with market prices and government policy. 

Hayek’s might argue, that achieving a sustainable future can’t happen by blindly accepting the green goodwill espoused by corporations. Nor could it be dictated by a centralized green government. Both scenarios in their extreme are implausible. Both scenarios rely on the opacity of information and the centrality of control. As Hayek says, both extremes of corporatism and centralized government "cannot be reconciled with the preservation of a free society" (Hayek, 1956). The remedy to one is not the other. The remedy to both is free and open access to environmental data.

One critique of Hayek’s work is the inability of markets to manage complex risks, which requires a degree of expert regulation. This was the subject of Nobel laureate Joseph E. Stiglitz’s recent book The Road to Freedom (2024) which was written in response to Hayek’s famous book “The Road to Surfdom (2024). But Stiglitz acknowledges the need for greater access to information and analysis of open data rather than private interests or government regulation. 

Similarly, Ulrich Beck's influential essay Risk Society (1992), describes the example of a nuclear power plant. The risks are so complex that no single expert, government, or company can fully manage or address them independently. Beck suggests that assessing such risks requires collaboration among scientists and engineers, along with democratic input from all those potentially affected - not simply experts, companies, or government. This approach doesn't mean making all nuclear documents public but calls for sharing critical statistics, reports, and operational aspects, similar to practices in public health data and infrastructure safety reports. Beck’s argument reinforces the idea that transparency, and broad consensus, like markets, are essential for deciding costs and values in complex environmental risks.

While free and open-source data may seem irrelevant or inaccessible to the average citizen, consider that until 1993, financial securities data, upon which all public stock trading is now based, was closely guarded by the U.S. Securities and Exchange Commission (SEC). It took the persistence of open-data enthusiast Carl Malamud, who was told there would be ‘little public interest’ in this dry  financial data(Malamud 2016). The subsequent boom in online securities trading has enabled the market to grow nearly ten fold from 1993 levels, to what is now $50 trillion annually in the U.S. alone. At the time, corporate executives and officials resisted publishing financial records, claiming it would hurt the bottom line. Ultimately, it did the opposite. Open financial data made a vastly larger, more efficient, and more robust market for public securities - one that millions of people now trust. Open data did the same for the justice system, medical research, and software.  

Perhaps environmental data has yet to have its moment. Just as open financial data revolutionized public stock markets, open environmental data could be the missing link in driving better, more informed environmental policies and practices.

 

Works Cited

Beck, U. (1992). Risk Society: Towards a New Modernity. Sage Publications.

Hayek, F. A. (1956). The Road to Serfdom (Preface). University of Chicago Press.

Stiglitz, J. E. (2024). The Road to Freedom: Economics and the Good Society. W. W. Norton & Company

Backchannel. (2016). The Internet’s Own Instigator: Carl Malamud’s epic crusade to make public information public has landed him in court. The Big Story.

 

This piece was originally published here

 

New Comment
4 comments, sorted by Click to highlight new comments since:

Perhaps environmental data has yet to have its moment. Just as open financial data revolutionized public stock markets, open environmental data could be the missing link in driving better, more informed environmental policies and practices.

What environmental data exists that's currently closed instead of open?

The one that really leaped out at us was the lack of openly available data regarding nature-based solutions - particularly planting trees. 

Ground Truth is a two-man operation of former Canadian reforestation/afforestation contractors. Our clients usually demanded precise breakdowns of exact number of trees going into each site, species breakdown, etc. Monitoring of survival is equally rigorous. 

A lot of projects around the world for carbon sequestration or habitat restoration are doing a great job of trying to be transparent, but for the most part we see no such evidence in planting projects. Mainly just grand claims. 

In our minds, what's needed for the world to take these kinds of solutions seriously is a demonstration of rigorous accounting, to avoid accusations of double-counting, greenwashing etc. 

The remedy to both is free and open access to environmental data.

Not sure what "environmental" data is supposed to mean in this statement. But I agree that more information for the customer is better -- there is often a huge asymmetry between the companies that sell stuff (and know what the stuff was made from) and customers who can only trust the information they get. In theory, there could be independent researchers that will try to figure out what the stuff was made from, and sell this information to curious customers. In practice, the companies would hire their fake experts, just like in the past their hired experts who said what smoking was great for your health.

And if your business model relies on the customer now knowing what they buy, I would call it a fraud, even if technically it is legal.

It seems to me many companies fight hard about disclosing the data about their products. It makes sense to have trade secrets you don't want your competitors to get, but that's now what I am talking about here. I mean the information you don't want your potential customers to get. For example, how much protein is exactly in your "protein bar", or how much sugar is exactly in your "healthy low-fat yogurt with fruit". Or whether your product contains ingredients that many people are allergic to. Here it is more profitable to let the customers guess, because they predictably guess wrong. It's technically not the same as lying to them, but the effect is the same. Actually, many companies plainly lie, for example by writing "no sugar" using big letters on the product, and then a note in small print explaining that they actually meant "no added sugar" (added to how much? no one knows, that's exactly the point).

At this moment, I don't know about any power other than governments that can make companies disclose such data. (In a reliable way. A company might disclose data voluntarily, but if there is no penalty for lying or being highly misleading, you have no reason to trust them. Such as with the "no sugar" products.)

But I think most people who quote Hayek would argue against government interventions in such situations.

Hey! Thanks for your reply. I agree, people who quote Hayek would not likely argue for more regulation (though for the record neither of us at Ground Truth are libertarians - we can see the merit of an idea outside of the context of who comes up with it). 

I have one idea for a power outside of government: the public. Consumers. Investors. What if there was a great popular movement to see concrete evidence of project activities and impacts?