Our Wednesday Environmental Issue:
Trying to optimize energy efficiency, we might have unexpected results.
First, where we live…
Referring to an environmentally friendly community where he once lived, New Yorker writer David Owen described his 750 square foot dwelling. 77% of the households in his community did not own an auto, per person energy use was among the lowest in the US, and neighbors lived so close to each other that they could share heating and cooling equipment. His community? Manhattan.
When Owen moved to his second home, a big 18th century house that was 100 miles from the city, near dirt roads and a nature preserve, his electricity and gasoline consumption skyrocketed. Harvard economist Edward Glaeser points out that “a single family detached house uses on average 83% more electricity than urban apartments within the United States.” And yet, it might be tough to recognize that high density urban areas have much less of an environmental impact than low density municipalities.
Next, what we eat…
It is asparagus season in New Jersey now. So, for dinner this evening, I had an omelette with asparagus that was grown by a nearby farm. It tasted good and I supported a local business. But did I conserve energy?
Not necessarily. A Carnegie Mellon study has concluded that the environmental impact of transporting food is relatively minimal while specializing makes economic sense. Almonds, strawberries and grapes should come from Californians because their weather and soil conditions optimize output. Warm days, cool nights and fertile volcanic soil make Idaho one of the best places to grow russet potatoes. Compared to larger operations, small farms are just not very efficient.
Last, the appliances we use…
Our final stop is Mexico and an appliance story. Hoping to reduce pollution, Mexico subsidized low emission air conditioner and refrigerator purchases. Because they were so cheap, though, and because electricity was also inexpensive, people ran them longer than the inefficient units they had previously used. The result? More energy efficiency created more emissions.
The reason is the Jevons Paradox. Also called the “rebound effect,” energy efficiency encourages more energy use rather than less. As Jevons said about the steam engine, “It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is truth.”
Our bottom line? Trying to achieve energy efficiency, we are creating unexpected externalities. Also called “spillover,” the externalities are just a positive and negative ripple of consequences. Like a row
When the externalities are positive, as with city living, we can encourage them through subsidies that make it more affordable. Correspondingly, we can tax whatever creates the negative externalities we want to discourage. But the decisions are rarely easy nor even obvious.
Any way in your life that energy efficiency has boomeranged? Please do comment. It would be a pleasure hearing your experiences.
Sources and Resources: Our information and some of the above text came from past econlife posts here, here and here. I also recommend this David Owen New Yorker column on energy dilemmas.
After it appeared, while this post was edited, content remained the same.
Our Wednesday Environmental Issue:
Elaine Schwartz has spent her career sharing the interesting side of economics. At the Kent Place School in Summit, NJ, she has been honored through an Endowed Chair in Economics and the History Department chairmanship. At the same time, she developed curricula and wrote several books including Understanding Our Economy (originally published by Addison Wesley as Economics Our American Economy) and Econ 101 ½ (Avon Books/Harper Collins). Elaine has also written in the Encyclopedia of New Jersey (Rutgers University Press) and was a featured teacher in the Annenberg/CPB video project “The Economics Classroom.” Beyond the classroom, she has presented Econ 101 ½ talks and led workshops for the Foundation for Teaching Economics, the National Council on Economic Education and for the Concord Coalition.