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Econogics

Last updated 2010.03.07


Econogics

Econogics is my term for the marriage of "economics" and "ecologic". In our society, it does not seem a natural combination most of the time with business (economic) and environmental (ecologic) interests seeming to be at odds so often. That is truly unfortunate, because it is really so illogical. Free-market economics are probably the best way of encouraging the preservation of our environment. Using resources costs money. Using energy costs money. Consumers are naturally inclined to save money, so they are naturally inclined to reduce their consumption of resources and energy. This works when we make the price of consumption reflect the true cost of consuming the resource. When the price does not reflect the real costs (e.g. subsidies), this distortion becomes reflected in the amount of the resource that is used. In my opinion, there is a fundamental flaw in the current North American economic/ecologic structure:
we do not consider a clean, healthy and undamaged environment (including breathable air, drinkable water, and non-toxic soil) to be public property, which our citizens should be able to enjoy and which we are entrusted to pass on to our descendants for them to enjoy as well.

This flaw can be corrected if we have the will to do so. We need to accept an economic structure in which:
those that damage the environment, for whatever reason, should be required to pay compensation equivalent to the damage they cause. In simple terms, make the polluter pay!

Whenever we permit an individual or an industry to harvest a public resource (e.g. clean water by polluting it, cutting a tree on public land) without paying the full cost of replacing that resource, we are subsidizing that activity and encouraging overuse of that resource.

The absolute classic case of this is our profligate consumption of non-renewable petroleum and coal resources. It took millions of years to produce the fossil-fuel resource base (oil, natural gas, coal, etc.) that existed on this planet as of a hundred years ago. In fact, this carbon sink is probably the reason we live on a more habitable planet for humans than was the case on Earth 100,000,000 years ago. Within a century, we have consumed a significant portion of that non-renewable resource base. Do the prices paid by oil well operators and coal mining operations reflect the replacement cost of these resources? Hardly! And they certainly do not consider the environmental impacts and risks associated with the extraction, transport and burning of these substances.

If we want people to act in a way which is more beneficial to our environment - the air we breathe, the water we drink, the food we eat - then we need to make the consequences of their actions more obvious to them. If we give away clean air and water, people will use more of them than is necessary because there is no direct cost (price) associated with their use. There is definitely an indirect cost (loss of clean air and water, cost of cleaning up water to render it drinkable, increases in health care costs due to increased respiratory illness), but the people causing the problem have no real incentive to change their behaviour because we all suffer the consequences fairly equally.

So how do we remedy the situation? Put a real-world price on our resources and charge this price to those that consume them. Consider your "local" landfill site, which for many of us is now hundreds of miles from where we live as all the suitable sites that are closer have already been filled to capacity and closed.

Garbage and Econogics

What does it cost us to dump a garbage-truck full of waste into a landfill site? The cost of the land involved is a trivial component of the real cost, probably in the order of a dollar or so. The real costs are: the process in selecting the dump site; preparing the dump site to prevent leakage; the cost of collecting the garbage (labour, vehicle depreciation, fuel); the cost of hauling the garbage to the site (labour, vehicle depreciation, fuel); the cost of compacting and covering the waste in the landfill site; the cost of closing the site; the loss of this land for any significant use for hundreds of years into the future; the probable need for remedial measures decades in the future due to inadequate or failed containment measures; and there are undoubtedly others.

Some municipalities that have done this analysis have concluded that the real costs of landfill are between $1 and $2 per bag of garbage. A few have gone so far as to start charging their residents a "pay-as-you-throw fee" per bag or can of garbage to recover these costs. Result: the volume of garbage going to landfill fell by over 50% in a matter of months! Think about the difference that is making. A landfill site will last over twice as long. Materials that were going to landfill are now being recycled. Garbage trucks are making fewer trips to distant landfill sites, generating less air pollution and consuming less petroleum, creating less water pollution.

Most municipalities are content to dither the time away, and substitute future tax dollars for taking forward-looking action now. Some even expect recycling programs to turn a simple profit, without considering the cost benefits of extending the life of a landfill. Only when confronted with the cost of creating a new landfill does the enormous economic impact become evident, but that's an issue that we prefer to put off to future officials and ignore for the present. As a result, recycling streams tend to be selective as to what has resale potential, and there are boundless stories of recycling streams going to landfill anyway when markets are depressed. That behaviour completely sabotages the original point of implementing municipal recycling programs.

Spend a few minutes considering your household waste stream. Aside from toxic items like batteries, paint, cleaning products, etc., how much of what you are throwing out could be recycled if a recycling program complementary to your garbage pickup was in place in your municipality and it was comprehensive enough? All organic material can be composted (leaves, grass clippings, kitchen waste, even leftovers, although meat is usually not recommended for composting). Most plastics (including polystyrene foam, grocery bags, containers), metal foils (including foil pie-plates and disposable roasting pans), glass, paper products (if not too contaminated with other substances), cardboards (corrugated and boxboard), metals (cans) can be recycled. Paper products that are contaminated with food (e.g. paper plates, napkins, cups) are suitable for incineration, as are most scrap wood wastes. Incinerators can reduce the volume of waste to be disposed of and produce electricity and heat. The ash can be used as a resource for other products (e.g. fertilizer). So, what volume of your household waste is not either organic, plastic, paper, cardboard, wood or metal? Probably not much. Of what remains, how much can be recycled outside a conventional recycling program? For example, most batteries can be recycled, including car batteries, nickel-cadmium batteries or alkaline batteries (check your local Home Depot for non-rechargeable alkaline battery recycling bins). The great majority of our household waste stream now is plastics which are excluded from our municipal recycling program. Recycling programs should be aligned to the waste stream, not to the commodity markets. Once a waste component is identified which does not have a ready market, municipal officials should be working toward finding a market for it, not simply shunting it off to landfill, either by exclusion from diversion programs or actively moving it to landfill. Large municipalities have the clout to outlaw specific products, such as plastic grocery bags or non-recyclable materials. These actions force the vendors to devise alternatives or create their own recycling programs. (E.g., in Ontario, many grocery stores set up their own recycling programs for plastic bags rather than see them outlawed. Many also instituted a small fee for the bags taken by customers - $0.05 is typical.)

Consider FreeCycling, simply giving away the things you no longer need, but are too good for landfill. (Do an Internet search on freecycle and your community name, e.g. "freecycle ottawa", and see if a group already exists where you live.)

If you do not have a compost pile and your recycling program does not accept organic materials, do you have a neighbour or a local farm that would like to have your compostible wastes? If you can save $2 or $4 a week by separating your waste into recyclables and non-recyclables, are you more likely to do it than if it saves you no money? Clearly, for most people, the answer is yes - that is why "pay-as-you-throw" programs work. Make the costs direct and visible and people will be motivated to change. And for those that do not, well at least now they are paying for the consequences of their actions and those that are being more environmentally responsible are being rewarded for their behaviour. Regrettably, this approach does involve paying for its administration, but those governments that have done it have indicated that the program pays for itself on a purely financial basis, without even considering the environmental benefits.

Petroleum and Econogics

Would you consider finding ways to consume less gasoline, diesel fuel, heating oil, natural gas and other petroleum products if they were 5 times more expensive tomorrow than they are today? Today, (mid 1998) crude oil sells for US$15 to US$20 a barrel. Several sources have suggested that the real cost of using this oil is in the range of US$80 to US$100 a barrel! Another source has said [link has bit-rotted: http://www.icta.org/projects/trans/rlprexsm.htm] a gallon (U.S.) should sell for US$5.60 to US$15.14, when the price at the pumps hovers around US$1.20. The costs include: costs of environmental impacts due to major oil spills (e.g. the Exxon Valdez); costs of environmental impacts due to minor oil leaks and spills (e.g. your car, small gasoline engines like lawn-mowers, outboard motors); costs of groundwater contamination due to leaks in underground and aboveground storage tanks; costs of lost productivity and health care due to increased respiratory illness caused by air pollution produced by internal combustion engines; weather-related damage caused by global climate change related to increases in green-house gases, the largest cause of which is the burning of fossil fuels; cost of maintaining a significant military presence in the Middle East to protect our access to the oil we consume from there; and there are undoubtedly more.

In those parts of Europe where petroleum-based fuels are considerably more expensive than in North America, those consumers do purchase more fuel-efficient vehicles, drive fewer miles per vehicle, make greater use of mass transit facilities for both local and longer trips and are more open to alternate fuel technologies. If you want to get a taste, you could try this. Every time you fill your vehicle with gasoline or diesel fuel, put the same amount as the purchase price into a piggy bank or savings account for a year. At the end of the year, count up the money. I suspect even if you are paying North American prices for fuel, you will be surprised by how much is there, and now you can put that money toward something for yourself as a reward for your self-discipline.


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