Economics and environmentalism

My husband is annoyed at how Green I have become. Those of you who know us will likely not find this surprising. Part of it, however, is his fault, albeit indirectly, due to his economics class and the ensuing conversations. I somehow escaped high school and college without a single economics class and was intrigued with some of the concepts he was learning such as the concepts of a ‘public good’ and ‘private good’. Specifically his example that air was a public good as breathing air does not decrease the air available for others (so it is non-rivalrous) and breathing air does not prevent others from breathing it (it is non-excludable). From a scientific standpoint that is factually incorrect: if I breath the oxygen out of the air, you can’t breath it. I’m sure an economist would wave their hands at the issue and say “but plants just convert the carbon dioxide we exhale into oxygen — your example is too narrow” and he or she may well be right if they discounted environmental issues. That did get me wondering how economists calculate environmental impacts into their evaluations.

Fast forward to the article The Economist Has No Clothes by Robert Nadeau in the April 2008 edition of Scientific American. In the article the author asserts that the current formulas being used by economists, by definition, do not include environmental impact:

Because neoclassical economics does not even acknowledge the costs of environmental problems and the limits to economic growth, it constitutes one of the greatest barriers to combating climate change and other threads to the planet.

Ah – so the answer to my question is that they don’t — economic reports just ignore environmental impacts.

Later in the class Benjamin did a report showing how online music purchases has increased public good. This, in particular, opened up to me a fascinating line of thought. The general logic was that if people downloaded music instead of purchasing physical copies of CDs it would decrease the manufacture of CDs and free up resources for other purposes. During our conversation it occurred to me that downloading music, and other media like movies, is more environmentally friendly than borrowing or buying physical copies be they new or used. Not only does it save in physical media (less end-of-life costs due to landfill) but in the amount of greenhouse gas released due to gas. Yes, gasoline. If demand for physical CDs decreases, manufacturers will create fewer CDs which will decrease the amount of merchandise shipped to stores resulting in either fewer trips or the use of smaller, more fuel-efficient vehicles for the transportation. Not to mention the obvious savings of gas for people making trips to their favorite box store to purchase one.

That got me thinking about other things like DVDs: should I feel good or bad about my Netflix subscription? On the plus side I’m not purchasing a copy (reduce and reuse) but it still has to be mailed to me (transportation costs and mailer waste). After some thought I decided that, in general, I should feel good about Netflix. Yes, the mailman has to deliver it to me but he’s coming to my house every day regardless if there is a movie in the mail or not so while it doesn’t have a zero cost it has a near-zero cost compared to me getting in a car and driving to Blockbuster, for example. Even better would be to stream the videos directly from their website (the lack of Linux-compatible video player notwithstanding). This resulted in the creation of a list containing possible movie-watching options from most environmentally friendly to least:

  • Netflix Instant Watching
  • Netflix DVD rentals
  • Borrowing DVDs from friends that live closer to you than the local video store
  • Driving to local video store to rent DVD
  • Buying DVD from online retailer who ships via USPS
  • Driving to local box store to buy DVD

Note that “Buying DVD from online retailer who ships via UPS/Fedex” didn’t make the list. If the driver was already going to be in your neighborhood to deliver something else, it probably ranks around “Driving to local video store”. If they have to drive much further than the distance between your place and the box store, it probably comes in dead last.

I came up with a slew of others, all of which are obvious after you think about it. Like for produce:

  • Growing your own produce
  • Buying produce grown locally
  • Buying produce grown regionally
  • Buying produce grown nationally
  • Buying produce grown internationally

Or commuting:

  • Telecommuting
  • Commuting via walking or biking
  • Commuting via public transportation
  • Commuting via car pool
  • Driving by yourself

Or music:

  • Buying music via the internet (iTunes, Amazon, etc)
  • Borrowing CDs from friends
  • Buying used CDs
  • Buying new CDs

See, not rocket science but I never considered the environmental benefit from buying music online prior to the economics conversation. This seems like an under-marketed area for online retailers.

I predict that we’ll see a Tipping Point for digital vs physical media in the next few years after which physical DVDs and CDs will go the way of the 8-track yielding both economic and environmental benefits. I just hope the movie and music providers get past their shortsighted DRM tactics prior to the Tipping Point or it will be a step backwards for consumers (although part of me wonders if the Tipping Point can even occur until content is provided DRM-free).