Monday, January 10, 2005

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.


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?

3 comments:

Dry Guy said...

"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."

Like? I do think at some point conservative media is going to have to acknowledge that there are other monies invested in programs that make less sense than some of the environmental causes. For instance, I tend to believe the amount of unpractical technological junk fads produced are even more wasteful.

"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."

Exactly. But because it's the "environment," mere assertion is enough?

Dry Guy said...

" In large scale nation states, it makes no difference whether people recycle of not, or are environmentally conscious because they level of waste in terms of resources is basically the same. Eventually Nature will become unbalanced because of what humans are doing, and a series of natural earth changes and catastrophies will destroy the basis for large scale states, as well as for technology... Man cannot survive technology or himself. Nature will step in and end technology through catastrophic events that will destroy the tech. infrastructure for good, and also wipe out most of the human population of the world. It will be back to the stone age, but at least then humanity in small numbers will survive, and Nature will have a chance to regenerate. The earth is not a 'closed system," Nature will regenerate after millions of years no matter what humans do, but humanity will destroy itself unless Nature steps in, and She will."

How will Nature regenerate the landfill, with molten lava exploding from within the surface? You can say She will regenerate, but you certainly cannot say extinct species will regenerate unless 'a hand' from a higher power has been offered. I respect your comments, but you seem to suggest the best answer is to just let humanity destroy itself (and the world around) without atleast making an effort to bring about change with environmental awareness. The moto, "I can't change the world, but I sure can try," seems to be better than the alternative.

j&c said...

Hey there!
Mostly what I meant by the "assumption" comment is that the H car is still being developed and there is no infrastructure for it. If it ever is practical, there might be another fuel source that can provide the hydrogen. My only point in this is that this is not a good example to use to make the author's point. He has a good theory, but he could have used better examples.

There's a point that both the author and I missed: the concept of lifecycle costs. In the case of green building, an initial increase in cost of 2% pays back the money in utility bills within 5 years. If you look a the full costs of a product, you can get a better idea about its environmental and monetary costs.

So, I agree with the theory, but the article itself just didn't seem that well-thought out to me.