Value of environmental activists: WWF vs Greenpeace

Ramon Casadesus-Masanell of HBS discusses findings of his case study on the topic. It is an amazing history of both the organisations and the role they play in our daily lives. As they deliver public goods, it is a struggle for both.

They have an interesting history:

Greenpeace was born in Canada out of an initiative to stop U.S. nuclear testing in Alaska in the early 1970s. The idea was to campaign for peace using an ecological platform; that is, nuclear tests are not only bad for warfare and human death, but testing does irreparable damage to species and landmass. From 1971 to 1974, Greenpeace’s main push was on nuclear disarmament. Many early Greenpeace members were journalists and knew how to get across a compelling story. They used the media as their weapon against powerful governments in an attempt to drive policy changes. The Greenpeace methods of “bearing witness,” “direct action,” and creating a “media mindbomb” became their trademarks as the organization expanded into fights for other environmental causes such as the Save the Whales and the Seal Pup campaigns.

WWF was founded in response to the destruction of Africa’s natural habitat when British biologist Sir Julian Huxley wrote articles in an English newspaper warning that large portions of wildlife would become extinct if no action was taken. The articles attracted attention from scientists, businesspeople, and nongovernmental organizations such as the International Union for Conservation of Nature (IUCN). The IUCN had been set up in neutral Switzerland in 1948 by 18 governments and 100 NGOs with the objective of coordinating activities to preserve wildlife. As of the early 1960s, however, the IUCN did not have sufficient resources to carry out its projects, which led to the idea to form a new organization focused on fundraising and conservation in coordination with the IUCN. The WWF was constituted in Switzerland in 1961 with the purpose of conserving natural resources by acquiring and managing land while coordinating and communicating the necessity of conservation to a wide number of stakeholders.

So Greenpeace is like a campaigner where as WWF actually works on projects

In the organizations’ histories, some differences are clear: Greenpeace has primarily been a campaigner while WWF presides over conservation projects. In class, we talk about Greenpeace trying to convince others to deliver the public good while WWF works directly on providing the public good.

Other key differences include the composition of the founding members and the methods in which the organizations gained public support. Greenpeace’s early membership was made up of journalists, scientists, and activists, whereas WWF attracted the attention of scientists, businesspeople, and government officials. Greenpeace’s beginnings were loosely knit and highly autonomous, since it started more as a movement than as a charity. It wasn’t until nearly 10 years after the first campaign that consistent rules were developed on the use of the Greenpeace name and the opening of new offices. In contrast, WWF began as a centralized organization and closely controlled the growth of international sites.

Both have looked at using high-profile individuals and used media to highlight their actions. Now both have shifted to broader range of environmental issues.

How does one value their activities? They are in public good delivery and are based on non-profit. Interestingly, even in case of non-profit, the idea is to generate more value than the cost:

However, looking at value from an economic point of view, we need to shift to the idea of comparing willingness-to-pay (WTP) to cost. In class, we work through a hypothetical example by asking students, How much are each one of you willing to contribute each year to protect the earth against degradation? While figures range, students are asked to imagine that every human being puts $1 toward the protection of the earth, which equates to approximately $6 billion per year. On top of that we hypothesize the WTP of major corporations. If we take the top 5,000 global corporations, we could ask how much each would be willing to pay. It would take $200,000 per company to come up with another $1 billion. For the sake of class discussion, we can say that governments will contribute another $1 billion to bring the total up to $8 billion.

Now, we can move to the cost side. If we take the expenses of the campaigns of WWF and Greenpeace in their last fiscal years, the total would come to about $677 million. Therefore, there is a very large hypothetical wedge between WTP and cost of about $7.2 billion. The point is not to argue on an exact figure for WTP, but rather to highlight that even though neither organization has a profit objective, both still strive to drive a wedge between WTP and cost.

The discussion then moves on to how they are acting as both complements (working for a common cause like Save Whales) to substitutes (as donors might select one for funds).

Then there are issues of free riding as governments might just ride on other government’s proposal to improve environment. He explains the issue using game theory:

We can use the prisoner’s dilemma problem to understand the choice that a government must make between lax and stringent environmental policies. By forming a hypothetical 2×2 matrix comparing the benefits and costs of two countries, both countries would be better off by moving to stringent environmental policies. However, if one country moves to stringent policies, the other is better off by staying with lax policies because it will incur less cost and accrue more benefit. There are some generic strategies to change the equilibrium from lax to stringent policies:

  1. Increase the cost of current policies. In the example, if the cost of current policies increases, the dominant strategy switches to stringent policies.
  2. Increase the benefit of astringent policy. Firms can perhaps get customers to pay for the stringent policies. There is evidence of this with Fairtrade and premium electricity programs based on renewable energy. If the benefit increases by a certain amount, the dominant strategy becomes a stringent policy.
  3. Encourage governments and companies to move away from maximizing their own benefit and make them look to the greater good. In the game, this corresponds to playing stringent policies, no matter what.

The under-provision of public goods is an important problem societies face. Greenpeace and other similar NGOs have been formed to make sure that the public good is supplied by changing the payoffs of those who can supply it. Although it may seem obvious, it is important to point out that no one firm, organization, or government can “produce and distribute” the public good, since the natural environment cannot be owned outright.

He ends the discussion pointing to challenges for both the organisations. Though there is more awareness with respect to environment, both have to keep finding ways to fund themselves. And ensure the governments/organisations deliver on their promises and raise new issues.

Useful insights on the operations of these 2 major activist organisations. Assigning value to activism activities is as crucial. We have many such movements in India. Wondering what their value is??

Advertisements

2 Responses to “Value of environmental activists: WWF vs Greenpeace”

  1. Insulin Says:

    Thanks for this nice read.

  2. Ian Robinson Says:

    Thanks for the read. It’s good to read solid economic thought that is focused on conservation groups.

    I’m really interested in finding out which organization (Greenpeace vs. WWF) has a stronger record of successful projects. Have you seen any data related to this? Would you recommend a different lens to examine the marginal value of each organization?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: