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Environment

The unfortunate side effects of man’s activities over the last several decades can be clearly seen in the declining health of the natural world. Although measures have been introduced to stop and fix the damage, inadequate enforcement and accountability are issues.

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Environment

In recent decades, the extent of civilization’s impact on the environment has become both more prominent and better understood. With issues such as climate change, water quality and air pollution requiring global commitment to address, there has never been a greater need for a coordinating mechanism to focus our efforts. By improving accountability, transparency and data quality, Analog can further our progress towards ambitious environmental goals.

Problems

  • Rapid population growth combined with economic development has led to widespread environmental degradation over the last 50 years.
  • Resource allocation continues to be challenging.
  • Lack of incentives for all parties to account for or mitigate their environmental externalities.
  • Lack of corporate reporting, no verifiable public record.

Problem

Rapid population growth combined with economic development and greater consumption per capita has led to widespread environmental degradation over the last 50 years. Biodiversity on earth is declining at the rates comparable to Earth’s prior great extinction events, habit loss and urbanization are the norm and anthropogenic climate change presents an existential threat to human civilization.

While these issues are well researched and have achieved a scientific consensus as to their gravity, humanity has thus far struggled to make meaningful progress towards mitigating environmental decline. Complicating factors such as the need for a global response from numerous self-interested parties and the politicization of science continue to confound the efforts of environmentalists. Ambitious local and global targets are regularly set but there is a lack of accountability, while poor reporting standards mean there are often few penalties for failure.

Externalities and incentives

Central to the issue of pollution and other environmental issues is the concept of externalities. This is the economic principle outlining how the beneficiary of an economic action spreads the indirect cost of that action onto third parties. For example, running a factory produces economic benefits for its owners, yet the pollution the factory produces as a side product is endured by everyone.

To this extent, there is a misalignment of incentives with respect to environmental degradation. Financial or other forms of self-interest encourage us to pursue actions that benefit ourselves at the expense of environmental externalities which are borne by all. At the international level, major economic powers produce a disproportionate amount of carbon dioxide and other waste, the impacts of which are felt disproportionately by poorer nations.

In essence, the prevalence of environmental degradation results from a lack of incentive for individuals, businesses and nations to account for or mitigate their environmental externalities.

Visibility over climate change targets

There are numerous globally coordinated climate change protocols, such as those signed in Kyoto and Rio. Amongst other things, these aim to set time-bound milestones by which signatory nations commit to having reducing carbon output to specified levels. While crucial in motivating action, it is common for targets to be missed. While annual emissions inventories and policy updates are often required to be reported, detailed steps taken to work towards targets are often not made public.

Resource allocation

As competition for finite resources continues to grow, conflict and disagreement can often arise over ownership rights. This can result in resource depletion and political discord. Offshore fishing is a high-profile example, with cases such as the cod stock depletion in British waters which the British government partially blames on illegal fishing by Spanish and Icelandic fishermen.

Corporate reporting

With environmental issues becoming more high profile in the eyes of the public and media, there is greater pressure for businesses to incorporate green initiatives in their corporate social responsibility programs. While many do so, particularly those in industries with poor environmental records, there is a public perception that much corporate reporting is focused on whitewashing the reality. Without a verifiable public record of mitigating actions taken and outcomes achieved, self-reported corporate initiatives can be seen as simply an exercise in PR.

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Solutions

  • System of ANLOG incentives and rewards and penalties that align interests of all parties.
  • Timegraph serves as perfect medium to improve the transparency of progress towards environmental targets.
  • Mandatory time submission will allow for future audits to determine quota adherence.
  • Add transparency and verifiability to claims made by businesses.

Solution

Externalities and incentives

Analog’s smart contracts are well suited to address the issues of externalities and incentives. Governing bodies, regulators or even environmental non-profits can set up a system of ANLOG rewards and penalties that align the interests of businesses and shareholders with that of the wider population. For example, if businesses submit data to the Timegraph demonstrating a reduction in climate emissions, they could be rewarded with ANLOG. Conversely, should they be found to be underperforming or failing to meet standards, they could be penalized.

This system could also be partially self-funding, with penalties from the worst-performing companies funding the rewards for the best-performing companies. In this respect, Analog can therefore help drive a competitive business environment that mitigates the environmental externalities of industry.

Visibility over climate change targets

Analog’s Timegraph serves as the perfect medium via which to improve the transparency of progress towards environmental targets. Instead of reporting via lengthy and obtuse governmental reports, signatory nations can be required to submit ongoing Timegraph updates on the outcomes of the initiatives. The Analog API could then be utilized to prepare dashboard reporting on progress, comparisons versus other nations, run rates, statistical analysis on the probability of achieving goals, etc. As this data is public and objectively verified, it would serve as an excellent resource that allows for greater transparency for the public, media and regulators. This in turn generates greater public interest and accountability for signatory nations.

Resource allocation

The Timegraph can be utilized by industry watchdogs to ensure fair and impartial access to resources. For example, in the case of disputes over fish stocks, fishermen could be required on returning to shore to submit the time, date and location of their catch to the Timegraph. This would allow for future audits, if required, to ascertain whether quotas are being exceeded or whether certain fishing boats may have strayed into regulated waters. While not a complete solution, it would serve both as a means of increasing visibility over the situation and a deterrent to intentionally illegal actions.

Corporate reporting

In the realms of corporate social responsibility, the Timegraph can again serve as a means of adding transparency and verifiability to claims made by businesses. When positive actions are taken by a business, they would be naturally incentivized to submit this data to the Timegraph. As it is subsequently verified and recorded immutably on-chain, it then forever serves as proof of environmental initiatives taken. This adds a great deal of credibility to existing methods of reporting. Similarly, the Analog API could even be utilized to present data in downloadable formats that could supplement or even replace current reporting methods.

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