Economics of Environmentalism

Enviropundit has a forum on the economics of environmentalism, and my post on guilt-free consuming has been noted and commented upon:

[Jeff: ]I read the Forbes piece Karl suggested, and I find it less than convincing. I'm right in the middle of re-reading Paul Hawken's The Ecology of Commerce, which argues that the cheapest item in our market system comes from the company most successful at "externalizing" costs of that item. In other words, the company pays for the resources, but the costs associated with everything from environmental degradation associated with the resources used to the costs of finding the cheapest labor (unemployment, health care, etc.) are borne generally by taxpayers. If companies making cheap products had to pay all costs associated with their product, the market would favor products produced with the lowest social and environmental costs. Of course, our system doesn't do that, and Howard's right that generally the government has to play a role in reassigning responsibility for costs.

This claim always appears whenever the subject of environmental costs comes up. Although I haven't read the book linked above, I notice neither the page at the end of that link, nor the person citing the book provided any support for the claim; it is simply assumed to be true.

I assert that, given evidence to the contrary, companies making cheap products are paying all the costs associated with their product. I see no reason to assume otherwise until someone shows me the calculations. Until that happens, I am inclined to suspect either double-counting of one form or another.

Indeed, I could easily counter that if environmentalists were to count up all the costs of their proposed solutions, they'd find them ruinously expensive. What costs? Not just the costs of research and materials, or the costs of, say, the pollution generated by the manufacture of solar cells, but opportunity costs. Time and money spent on squeezing the last erg out of every passing calorie may mean that huge opportunities go untapped because we were too distracted.

Of course I have no proof. Of course I'm not showing my work. But in discussions of environmental costs, mere assertion seems to be enough.

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Jaqui calls it an "assumption" that hydrogen burned in a hydrogen-powered car would come from fossil fuels. This is true, and it happens that right now, the cheapest source of hydrogen is a conversion reaction from fossil fuels.

But the fact is, hydrogen is going to have to come from somewhere. There aren't any hydrogen wells, and hydrogen is reactive enough that any of the gas entering the ecosystem by natural means will combine with something pretty quickly. (The solar wind, for example, is mostly protons – hydrogen nuclei. We don't have huge amounts of hydrogen sitting in the upper atmosphere.)

One interesting point from a review of Hawken's book is that:

For example, he calculates that 27 years of stored solar energy are consumed every 24 hours by our utilities, cars, houses, factories, and farms.

That's an interesting figure. (I wonder, does he show his work?) To me, it implies that solar energy will meet, at most, 0.01% of our energy needs. This seems, somehow, inadequate. I suspect there are some large inefficiencies in the mechanisms by which solar energy is stored, though.

The point is, energy has to come from somewhere, and ultimately, we're tapping energy that was stored in some form or other. Even solar energy is nothing more than energy that was stored in material form at the Big Bang, and eventually all matter will reach its minimum energy state and no more usable energy will be available from anything. Barring major revisions of the laws of physics, this is inevitable. The question is, into what uses can we divert this energy on its run downhill?