Torre de Manila in context

Not only the tragedy of the commons but also the Coase Theorem appear to be applicable to the controversy involving the Rizal Monument at Luneta Park in Manila and DMCI Homes’ Torre de Manila condominium project.

Classic examples of the tragedy of the commons are overgrazing that results in the deterioration of the land and overfishing that leads to crashes in fish populations. These examples involve taking something from common resources, like a pastureland or the ocean.

In an article published in Science magazine in 1968, American ecologist Garret Hardin wrote: “In a reverse way, the tragedy of the commons reappears in problems of pollution. Here it is not a question of taking something out of the commons, but of putting something in—sewage, or chemical, radioactive, and heat wastes into water; noxious and dangerous fumes into the air; and distracting and unpleasant advertising signs into the line of sight.”

Hardin added that the calculations of utility were much the same as before. “The rational man finds that his share of the cost of the wastes he discharges into the commons is less than the cost of purifying his wastes before releasing them. Since this is true for everyone, we are locked into a system of ‘fouling our own nest,’ so long as we behave only as independent, rational, free enterprises.”

Cultural heritage is part of the commons, which refers not only to natural resources like air and water that are accessible to all but also to the cultural sphere, like heritage sites, literature, language and music. These are considered gifts and shared by all.

Thus, the “destruction” of the vista of a national heritage, like the monument to our national hero, is a tragedy. A “picture-perfect” view of an unmarred Rizal Monument in Manila is a cultural heritage, a national patrimony.

The Torre de Manila, which rises behind the monument, is a clear case of visual pollution, a negative externality.

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The controversy may also be viewed in the context of the Coase Theorem. The theorem attributed to the 1991 winner of the Nobel Prize in Economics, Ronald Coase, comes in when finding a solution acceptable to the parties involved—the one who causes the negative externality and the one who is adversely affected by the externality.

It works when the transaction costs of bringing together all the people involved are low and property rights are defined.

Here’s an example: Pete, who likes dogs, gets value equivalent to P500 in taking his dog to the office. But Pete’s dog imposes a cost equivalent to P400 on Ed, who suffers an allergic reaction in the presence of dogs.

If Ed has the right to prevent Pete from taking his dog to the office, a possible solution to the externality is for Pete to pay Ed P450. The amount more than covers the cost borne by Ed, but is less than the value Pete gets from taking his dog to the office.

(This example is adopted from the one given by Prof. Jose J. Vasquez-Cognet of the University of Illinois at Urbana-Champaign in his online course microeconomics principles.)

The externality problem was fixed and the total welfare of the two men was maximized by assigning the property rights.

When property rights are established, the persons involved can negotiate and solve the externality on their own.

In the case of the controversy involving the Rizal Monument and the Torre de Manila, bringing the parties to the negotiating table would pose a problem. Why? Because there are more than 100 million Filipinos who have the right to enjoy the unmarred vista of the national hero’s monument. The transaction costs of bringing all the people involved to the negotiating table are simply too high.

There are also the future generations to consider.

For Manila City Hall, allowing the developer to build beyond the seven-floor height restriction in the area was negotiable. It took a number of months for DMCI Homes to secure an exemption from the restriction. It is not farfetched to think that it paid more than the amount required for the usual building permits and other fees to be able to be given the go-signal to build the high-rise.

Somehow, the Coasian bargaining worked between Manila City Hall and DMCI. It wouldn’t work when the entire Filipino nation is involved. The transaction costs would be too high.

Moreover, various groups like the Knights of Rizal want the construction stopped and the structure demolished.

Juan V. Sarmiento Jr., senior desk editor of the Inquirer, is a resident of Barangay Putatan in Muntinlupa City.