Russ Roberts

David Owen on the Environment, Unintended Consequences, and The Conundrum

EconTalk Episode with David Owen
Hosted by Russ Roberts
PRINT
William Black on Financial Fra... Adam Davidson on Manufacturing...

David Owen of the New Yorker and author of The Conundrum talks with EconTalk host Russ Roberts about the ideas in his book. Owen argues that innovation and energy innovation have increased energy use rather than reduced it and similarly, other seemingly green changes do little to help the reduce humanity's carbon footprint or are actually counter-productive. Only large reductions in consumption are likely to matter and that prescription is unappealing to most people. Owen points out that New York City, ironically perhaps, is one of the greenest places to live because of the efficiencies of density. The conversation concludes with a discussion of how to best approach global warming given these seeming realities.

Size: 32.5 MB
Right-click or Option-click, and select "Save Link/Target As MP3.

Readings and Links related to this podcast

Podcast Readings
HIDE READINGS
About this week's guest: About ideas and people mentioned in this podcast:

Highlights

Time
Podcast Highlights
HIDE HIGHLIGHTS
0:36Intro. [Recording date: February 1, 2012.] Russ: This is a fascinating, short, engaging book on the topic of saving the planet and the environment generally; and you've called your book The Conundrum. What is the conundrum? Guest: The conundrum--the book is about unintended consequences; and the conundrum is that even when we are acting with the very best of intentions, the results are very often at cross purposes with our goals. The subtitles of the book is "How Scientific Innovation, Increased Efficiency, and Good Intentions Can Make Our Energy and Climate Problems Worse." And the book is really a collection of that--of how easy thinking about these very difficult problems not only doesn't make things better but in many cases, I think, arguably makes things worse. Russ: Now, you write for The New Yorker, correct? Guest: Yes. Russ: When does the book come out? Guest: The book comes out very soon, in a week or two. Russ: So, that will be around the first or second week of February. Are you worried you are going to lose your job? Guest: I'm always worried that I'm going to lose my job. Russ: This is an unpopular position to hold, that you've staked out in the book--that good intentions don't always turn out well. What kind of reaction do you get from people when you tell them that? In a minute we'll go into some of the details obviously. Guest: I think that it's mixed. I think that it's hard to put an ideological label on it. I've been accused of being both a conservative and climate-denier, and a liberal and socialist. Russ: You don't strike me as a climate denier. Guest: No. But, when I gave a talk to a group of efficiency experts, they were quite angry; that was the accusation. I think, as in any field, there's lots of comfortable thinking. And sometimes comfortable thinking is accurate. But sometimes it's not. And the conventional wisdom is often not a good guide to the truth. Russ: But it's very depressing to people to be told that their good deeds don't have good consequences. That's one of the most--there are many interesting factual stories and facts; and there are also a lot of contrarian perspectives on things that everybody takes for granted. And that's why I think it's such an interesting book. Let's start with the energy efficiency case. There's a big debate, which as an economist I was unaware of--I think it's a little more straightforward from an economist's perspective, but there's a big debate in environmental circles about whether energy efficiency is a good thing or not. It seems obvious that making your car more fuel efficient or making your refrigerator more energy efficient or your house more energy efficient--that would seem to be a good thing. That reduces the amount of energy; and if you are only--we're going to ignore the material prosperity aspect of this--if you are only caring about the environment--certainly it would seem obvious that that's a good thing. But that's not so simple. So, explain why. Guest: Well, you are exactly right. It seems obvious, to the point that energy efficiency has been spoken of as the fifth fuel, as the most widely distributed and equitably distributed energy source in the world. What we waste, simply by making our machines work better, we could eliminate the need for nuclear power, for example--has always been Amory Lovins's [?] argument. The difficulty with energy efficiency is that it's not something we just thought of. It's something we've been doing for as long as there has been civilization. The history of civilization is making machines do more with less fuel. Doing more with less energy. And that hasn't caused global energy consumption to fall. It's the source of our astonishing prosperity, the wonderful way we live. The question is whether, why now, now that energy is a problem to us, why we think the thing we've been doing all along will cause our energy consumption to fall. The question first came into my mind was when--pretty much received wisdom in the United States is that energy is too expensive, too cheap. Gasoline is the--you go to a gas station and gasoline is probably the cheapest manufactured liquid that is for sale there. You go inside there and milk costs more. Bottled water costs more. Russ: A fascinating fact that's often not noted. It's extraordinary. Guest: Often not noted. In Europe; gas is two or three times as expensive. And yet, and an environmentalist will point this out, at the same time, we need cars that get more cars to the gallon. When you increase the miles per gallon in the car, you are doing the same thing as decreasing the cost of the fuel. You are just making a mile less expensive to drive. And so I wondered why is this in one direction a good thing and a bad thing in the other. And when you begin thinking about it, it doesn't seem quite as simple. It doesn't seem like the sort of one input-one output linear problem that it's usually portrayed to be. Typically when efficiency mavens talk about efficiency they'll say: If you cut energy efficiency by this much; or if you increase energy efficiency by this much, then consumption will fall--by roughly similar amount, with some wiggle room. Russ: It's just arithmetic. Guest: It seems like just arithmetic. But it's very complicated, and it reminds me of many of the things that you yourself have said about macroeconomics, which is that as you sort of draw back from your own life, from your own washing machine and refrigerator, and you pull back and take a look not only at the whole economy, but the whole economy over a period of time, it doesn't seem to be true. Russ: It's not true. Guest: There was just an article in the newspaper recently about airplanes, new airplanes coming, much more efficient than current ones. It's certainly the direction that research is going in aviation. Air travel is a very hungry energy-user and a major contributor to atmospheric carbon. Russ: But the people who are working to make airplanes more efficient are mainly doing it--there are a bunch of motivations, obviously possible political motivation, might be a good deed motivation--but money. It's expensive. Examples--as human beings we try to find more from less. Guest: Right. And when things become cheaper we tend to do more of them. Airplanes today are something like 70% more fuel efficient than they were when I first started flying. I'm 56. And yet we don't fly less. We don't consume less fuel. To the point where, as I said in the book, the main impediment to traveling 10,000 miles for a week's vacation is not the cost of the ticket, which is in many cases trivial, but the perceived unpleasantness of spending a whole day sitting in a cushioned, reclining seat and watching movies. So, I think that as you look at the way we consume, in all categories--as you draw back and look at the world--you don't see this relationship between increased efficiency and decreased energy consumption. In fact, you see the opposite.
9:21Russ: Now, of course, correlation is not causation. You point out in the book that many critics of your concern point out: Well, it's not the energy savings that causes the increase in use. It's population, it's prosperity. And one of your points, of course, is that prosperity is being driven by these energy savings. That's a feedback loop that's real, and it's not as straightforward as the critics are saying. But I think the right point is that it's an empirical question, and it's certainly true that if we can find cars that get better mileage, if we can innovate--I shouldn't say we; if other people, thoughtful engineers can think of ways to get higher miles per gallon--that lowers the price of driving. That's undeniable. That means there's going to be more driving. That's your point. Now, the critics have a point, which is: Well, it's true there is going to be more driving, but some of that driving could lead to less energy use because every mile driven now will require less fuel than it did before. So, the empirical question is--in economics, it's called elasticity--the percentage increase in one direction and percentage increase in the other direction. So, it's an empirical question. You'd want to hold constant other things that are changing--population growth, etc. And I think you make--it's not a persuasive case, but a thoughtful case--that a lot of the savings that seem obviously to overwhelm everything else aren't going to overwhelm everything else necessarily. I think the best example you give is when clothes dryers get more efficient, you don't dry your clothes for two hours. So, the critics are right there, that you as an individual are certainly going to use less energy with a fuel efficient, energy efficient dryer than an older one. But more people are going to be able to afford dryers now. So, that's one way that some of those savings are going to be offset. And there are a lot of things that aren't like dryers. A refrigerator--who needs two refrigerators? Well, I have two. I think you have two. I have one in the basement--when we throw a party. It's just sitting there humming along. It could have four things in it sometimes. I don't even bother unplugging it, by the way; that's a whole separate issue, when it's relatively empty. But we're relatively prosperous as a country, incredibly prosperous by historical standards; having a refrigerator is an enormously great thing; having two is, it's not just for really rich people. A lot of everyday people have them. Guest: It's become global. And you also see when you check into a hotel room, the room has a refrigerator. It's running; there's nothing in it. Russ: All the time. Sometimes there is--there's a little chilled water in case you have an urge to have one. Guest: Or some candy. Or the gas station that you stop at today has more refrigerator capacity than the grocery stores of my youth. And that has consequences, too, not only in energy consumption but also in our own consumption. The whole 20-ounce soda, the beverage, in many ways a product of this vastly increased refrigerator capacity. Now you can get anything refrigerated anywhere. This has improved our lives in innumerable ways. Things don't go bad the way they used to. But at the same time, what we waste has increased dramatically. The amount of food that is wasted by American consumers has grown right along with the increased refrigeration capacity. Once again, it's a correlation. It doesn't prove anything. But I think you become suspicious after a while when all the correlations seem to run in one direction. And it's not enough for an economist to say correlation doesn't prove causation, because you also have to say that lack of correlation doesn't prove causation, either. Russ: But there is causation. So, my point is that you are certainly right that there is a causal connection between lower energy use per item and the desire to use more of the item. And the book lays out some of the--I think the technical term in economics is intensive versus extensive margin, a phrase I never use. So the intensive margin is that when something gets a little cheaper, I use a little bit more of it. The extensive margin is that the bottles get bigger, more plastic is demanded; that's more petroleum used. There's all these, you might call them spillover effects in general usage that are going to change that. There's no denying that you are right--although I'm sure that people do deny it. There's no denying that this tends toward more energy use. There's an empirical question of how much it offsets--if it totally offsets and then some, which it appears to do; or whether the energy efficiencies merely overstated dramatically the gains. But I think there is no doubt that the behavioral impact of those efficiency gains is to encourage more energy use. Guest: Especially if your focus is global rather than in your house. In my house, everything I do, I'm trying to become more efficient at--for the purpose of pushing down my energy consumption to save money. Which I'm then not going to burn up. I'm not going to put that money on my compost heap. I'm going to use it for something else. So, probably at the individual level, if there's no price constraint pushing down on your energy use you increase these efficiencies even in your own life you are probably increasing things too. But certainly when you pull back to the global level, when the cumulative effects of all these efficiencies is to push down the cost of what were once luxury goods and bring them to the level affordable all over the world, you get these other consequences. It's so complicated that you can't reduce it to a formula, plug it in and make it come out the other end with a neat prediction as I can in my own house. But if you look at the world's energy meter, energy use per capita is climbing. It's not falling. Energy use overall is climbing; climbing faster than population. It's expected to double by mid-century. Who knows what will really happen; but it's a big number now and it's expected to be a really big number then. Population is not expected to grow at the same rate. The basic idea is as we become better at doing things, we do more things. And that's been true since the beginning. I was trying to think of any example of--when Amory Lovins and others talk about this, they talk about it at the end use, the individual end use level. Russ: They don't agree with you. Guest: No, they don't. And when I argue that the real world isn't like that, I always say that you could peel back the real world to the point where it was like that and think about early in human history when the only energy input was food. And imagine that the only way of moving that food around is to drag it or carry it. Now invent the wheel. Suddenly you don't need as much energy to move things from one place to another. But we do not expect in this thought experiment for the human population to cut back its food gathering now that it needs less. We expect the wheel to act as an amplifier of consumption. Now, it's easy to extend agriculture or to hunt farther away or to gather food over a broader area. And with that food, that energy, now that it's not going into inefficiently dragging things around, it's available for other uses. And the feedback loops multiply and extend.
18:08Russ: It's a classic example of: people respond to incentives, and if you think you can just hold everything else constant, including things like: Well, since we consumed a certain amount of food before the wheel, we'll consume the same amount as before; it just won't be as hard to move it around. That's just not how people behave. Guest: No. But it is almost the way--when we look at the world right now and we imagine the effect of some change, we assume that everything will stay pretty much the way it is. Russ: That's not an economist's statement. We economists, that's kind of our specialty, letting things change. Guest: Well, good. But I think if you wind things back to the 1940s, the world of the vacuum tube--it requires a lot of energy, a lot to build it; it takes up a lot of space; if we had something more efficient we could cut down our energy use, because this uses a lot of energy; and we could make things smaller. And then you invent the transistor--in the late 1940s. Which does all those things. But the effect of that is not that huge television sets can now sit on smaller tables; we can take these computers and put them into smaller rooms but they perform the same functions; we can make our radios smaller. It changes the world. And now in my house today there are billions of transistors. They are so small I don't even know where they are. But they are everywhere. So, the effect was not the effect you might intuitively might think might happen when you made a change that requires less physical material, consumes less energy, and is smaller. It wasn't that consumption fell. On the contrary--it exploded. And those two trends are not unrelated. And I think that the sort of counterfactual argument that the efficiency mavens make, which is: Well, you don't know what energy consumption would have been otherwise. What you are doing then is asking me to imagine a world in which I have all the same electronic gadgets that I have right now, my telephone headset, my telephone, the webcam on my computer, my computer--but they are all running on 1940s technology; they all have vacuum tubes--and so I need a house that's many times the size of my current house to fill all this stuff in, my billions of transistors. And yes, if that were what my house looked like in 2012, I would be consuming an extraordinary amount of energy, much more than I am today. But that's not the way that kind of innovation works. Russ: It's a meaningless thought experiment, that particular one. Again, to use an example I often think about: you found an antique can, an old beer can from the 1940s and you note in the book that it uses five times the--it weighs 5 times as much? Or it has 5 times the aluminum? I don't know what it was made of. Guest: Probably steel. Russ: But I think back to my youth, and I'm 57, so we have roughly the same youth--when I was a kid, you showed off by crushing a can with your hand. And now you can take a finger and press down and you can crush a can. And that's a miracle of human innovation, that a soda can can be stacked with that level of thinness; and it comes from an ability to machine the top in a different way, with a little--it's an extraordinary human success story. So, we need less aluminum per can; but we have more cans than we had in 1960 when I was six years old. And one of the reasons is: they are cheap. Guest: Right. We got better at making them. Russ: The only comment I would make about that, and then I want to move on to some other technology fixes that you are also pessimistic about, is that when I hear your story about these spillover effects, cascades of change that take place after these innovations, most of it is really great. And you can see this in the book. Most of our human history, it's not just energy use--it's everything--we try to find ways to produce more from less; and every year our knowledge gets a little bit bigger on how to do that. And that's what allows us to have the extraordinary standard of living that we have, even in a recession. And mostly that's great. The human enterprise, the ability to travel with your food, to keep your food cold, to throw a party on the weekend because you've got a second refrigerator, that you couldn't otherwise do--these are great things, mostly. The only downside of this story is that it increases the amount of carbon that goes in the air, and that appears to be bad for climate; and that appears to make the earth warmer, at least. I'm more agnostic than you are, than most environmentalists are about whether that's catastrophic or not; maybe we'll come back to that. But I think it's important to at least say, as you do in the book: most of these things are good. Guest: They're great. And I think you wouldn't willingly give up almost anything. I think there's more downside than the carbon issue. I think there are also old-fashioned air and water pollution, which we almost don't even talk about any more. I think water is a very fragile resource that reaches a crisis point--we can't expect that we are going to find something to replace water. So, there's another difficulty there. There's also another one, an economic one, which is that--the point at which our increased affluence ceases to increase our wellbeing, and in some ways can reduce our sense of wellbeing. It's very hard to dial back any of these technologies, and yet we can find ourselves with houses that are too big, with commutes that are too long--which are improvements in our economic profile, our economic activities but that don't lead to what are genuine improvements in our quality of life. You can see it in health care, too--extraordinary increase in investment in health care without probably a corresponding increase in our actual health. So, I don't think it's only the climate issue. There are other issues that are linked to thinking of increasing economic activity as the only possible source of doing good. Russ: I agree with you on the health care. We've subsidized health care unbelievably in the United States and most of the world, and as a result we waste a lot of resources. I think the other and more subtle and interesting question is this relationship between consumption and wellbeing, health, mental wellbeing, happiness. Obviously there's a big debate on it. I have no doubt that there are many technological improvements and many aspects of material prosperity that are illusory in their attractiveness and don't lead to better outcomes of happiness, satisfaction, meaning. But I don't want anybody mandating alternatives from on high. Guest: No. Russ: So, I limit my kids' computer time for game playing, which they love to do. I limit it a lot. And they don't like it. When they come in the house it's often the first thing that they want to do. I see that as a compulsive addiction and it would be a good thing to learn how to cope with that. And I say that as I compulsively check my email telling them not to get on that machine. So we all have frailties and things that seem like fun that afterwards we realize why did I spend two hours playing that game; but I did it anyway and I'll do it again. And I consider that an area for religion and growing up; and it's just not something I want public policy to deal with. But I think it's an interesting question. Guest: It is an interesting question. I think also--we pretty much exactly the same age--I think that your kids today--you and I experienced boredom in a way a modern child can't. The whole concept of late 1950s, early 1960s boredom just doesn't exist any more. Russ: But the way it's fixed is not necessarily the-- Guest: No. Russ: Losing the ability to gaze off into the distance and be pensive is not a good thing; but who knows? Guest: Maybe it's made us the wonderful people we are today. Russ: I hope somehow our children will have some of those advantages. We'll see.
27:37Russ: So, let's move on to a set of issues which really were fascinating. Talk about New York City and why it is a green place relative to the Vermont countryside. I really enjoyed that. Guest: Well, this is something that occurred to me. My wife and I lived in NYC for 7 years back in the late 1970s, early 1980s. Then when our daughter was 1 year old we decided we had to get out of the city. Our apartment, someone said, was decorated like a yacht--you had to sort of, everything was stowed and you had to walk sideways to get around. We desperately yearned for more room, so we moved to the country, 100 miles north of the city, into a big 18th century house across a dirt road from a multi-thousand acre nature preserve; and it felt as though we had stepped into Arcadia. And yet I noticed over the period of a couple of years that even though our lives felt as though we had taken on a time of environmental purity, we had actually become much more wasteful consumers. In every sense. Now we had this large house that we had to fill with stuff; and it required constant maintenance. In NYC we lived without a car. We immediately got a car, which was a huge change; and we realized, almost overnight, that one car wasn't enough, because if you have only one car, how do you get to the mechanic to pick up your car when it's being repaired? So suddenly we had two cars. And then later I had a sort of mild mid-life crisis and we ended up with a third car, which became a necessity as soon as our kids could drive. And our electricity consumption went from about $1/day to huge, a huge multiple of that--it's an old house that you could virtually put the furnace in the yard for all the insulation that we had. And I realized that even though our life looked greener, it was actually much less so, and began to think about that, and realized that even though, when most people look at a place like NYC they just see concrete and fumes and garbage and an environmental disaster, but what you really have is a large number of people living on a very small energy footprint. New Yorkers use the smallest amount of energy per capita of any Americans. New York State has the lowest energy use per capita of any state, because of NYC. Russ: Not because of the raised consciousness of the average New Yorker. It's a very large city. Guest: No one is more surprised than a New Yorker when you mention this. New Yorkers are the only real consumers of public transit in the United States. Half of all subway stops in the United States are in NYC; almost a third of all public service passenger transit miles are in the NYC metropolitan area; and the reason--it's all the same reason, which is that when you move people closer together, driving becomes more difficult, an impossibility. Russ: Also, it's not as necessary. You can walk to stuff. Guest: Although I think the lure of the car is so huge that if every apartment came with a garage space, people might have them anyway. But they don't have the same kind of utility. In the United States today we have more registered automobiles than we have licensed drivers. In Manhattan, 77% of households don't own even one car. That's not even on the chart. Russ: It's not American! Guest: And they don't drive them the way the rest of us do. They drive basically only to escape New York. Obviously there are many downsides to urban life. My wife and I fled urban life. But in terms of organizing human beings in a way that constrains energy use, water use, resource use, density has tremendous value. Not all density is equal. I've seen studies that talk about the limits of density in terms of encouraging things like public transit use; and they say, yes, as you move people closer together, transit use rises, but then it levels off. And that's true. But the reason is, once you move people together Manhattan style, even transit begins to seem inconvenient; and the fact is people simply walk. Russ: I walk everywhere in NYC--miles. Guest: That's why New Yorkers live longer than other Americans, probably it's one of the reasons. NYC is one of the very last places in the country where walking is a primary form of transportation. It's almost inconceivable anywhere else. Russ: There's a nice quote from the book I want to read that relates to this, and relates to another issue, which is buying local as an environmental statement. So, here's the quote: "A recent documentary about Portland's Green consciousness shows a concerned resident driving her minivan 25 miles to buy two bags of fresh produce from a farmer on the other side of the city's urban boundary. And it shows the same farmer in a pickup truck transporting a very small selection of produce into the city to sell it in an urban farmer's market. Both trips are presented as virtuous acts, but neither makes environmental sense.... Locavorism is appealing because like many of the most popular green strategies, it feels enlightened, yet entails no actual sacrifice even if you don't grant yourself exemptions for coffee and out-of-season fruit." So, that was a spectacularly insightful paragraph. Guest: Oh, good; thank you. Locavorism is a tough one. My wife, who has written cookbooks, points out food is an extremely emotional topic. People, she says, can identify themselves by what they refuse to eat. And these are powerful personal, spiritual issues for people. I think you can say it a little more easily if you move to non-food agricultural products and think about, say, cotton. It wouldn't make any sense at all to demand that my cotton clothing come from a cotton field within 25 or 100 miles of where I live. It would be ridiculous to grow cotton in most of the places where people live. It doesn't make any sense. And if you had to grow cotton that inefficiently, you'd be using up land that shouldn't be producing that. My anti-locavore argument doesn't address the industrial food argument. Russ: Separate issue, I agree. Guest: But it means that it's yet again an issue where there is not an easy answer that won't force you to think more than one step through a problem. It's a complicated problem, especially when you start to think of it on a global basis and how all these things play out over a world of 7, 8, 9, or 10 billion people.
35:48Russ: So, in terms of cities and the issue of--I guess we could think of three parts of urban life, or semi-urban life. We have a dense city. We have a suburb. And then we have country living that's sort of near a city. You are arguing that if we really want to make an impact on America's energy use and carbon footprint, we ought to be encouraging people to live in denser, more urban areas, and that the in-betweens, the lack of density in these other areas are not effective. Is that true? Guest: All the incentives push the other way. The incentives we give to people to buy homes, the incentives in the form of the transportation network to make it easy to get to those places; the cheapness of the fuel that moves the vehicles possible to live in those places. All these things--zoning regulations. I was the chairman of my local zoning commission until very recently. All our zoning regulations encourage what we call sprawl, suburban sprawl. They are all framed in terms of creating distance between uses rather than shrinking it. And they are basically saying, if you look at it--they grew up with the history of the automobile, and their main focus is on making sure that everybody will always have a place to park. All these push us outward and make it less likely that we will organize ourselves in a way that actually has some long-term environmental value, which is by moving people closer together. And I think that environmentalist groups have been guilty, too, by having, really from the beginning, from the time of Henry David Thoreau and John Muir, really impressing on us the idea that urban life is evil. Russ: Tawdry. Guest: And harmful. And for a long time it was. I mean, read Charles Dickens. Russ: Sewage running in the streets. Guest: There's a lot of bad things about cities. The plague, the Black Death. Russ: Malaria. Not malaria--cholera--sorry. Guest: Everything. But on the other side, I think that groups like the Sierra Club that I pick on in the book have done a disservice to the environment by making us feel what my wife and I felt--that we need to be authentic, that we need this personal contact with the green world, which we now have, but at great cost in terms of our personal environmental damage and energy consumption. And really, there's a tradeoff in our wellbeing. We haven't exactly been clamoring to move away from this paradise. But it requires a significant investment in automobiles and fuel and heating fuel and paint and everything else to maintain it. Russ: That's interesting. I live a suburban life, and I happen to have been in NYC yesterday. NYC doesn't have a lot of green. The green it does have is very concentrated; obviously--Central Park; I was in Manhattan. But it has a lot of a natural thing, which is people. I love so-called nature; I love mountains and hiking and being outdoors. But being outdoors in NYC is an extraordinarily interesting and visually stimulating thing, in a way that natural landscape isn't. It's still natural. We just don't have romantic books about it. Guest: Right. I think it's a mistake. It's the wrong way to protect the unspoiled places by trying to throw fences around them rather than by trying to turn the problem inside out and thinking about how do we organize people in a way that puts these resources at less risk? I think that you don't do it is by suggesting that the best way to live is with your own personal relationship with these things. Because if you believe that, then when the next person follows your example and moves next door to you, you have to move another step further along. And you see that. That's the history of our settlement across our continent. And once again, the thing you talked about earlier--it's had tremendous value for us. But also it reaches a point where our tolerance for the automobile commute has risen. One of the consequences you see is, any city. I was just in Orlando, FL, and you see, where am I in this metropolitan area? Because everywhere I go looks exactly the same. Many lanes, bypasses, Interstates; this time I spending in my car to go from one identical place to another is not really enhancing. Russ: There's something Kafkaesque about Orlando. I know exactly what you mean. Guest: It's an alarming place. Russ: Not that I haven't had some very good times there. Guest: There is a good example, too, of how we don't necessarily think clearly about environmental impacts. You look at the automobile, and people will talk about traffic congestion, for example. Example given of an environmental problem. Traffic congestion is not an environmental problem. It's a driving problem. Driving is the environmental problem. So, if you think of congestion as the problem, then almost everything you do actually makes the real problem worse, the driving problem worse: Let's make traffic move more smoothly, but use computers, add more lanes, use computers to organize the traffic better, let's give cars a little computer thing that will tell you where the empty parking space is so that driving will be more convenient. Give me books on tape so that I am not bored when I am stuck in traffic. Russ: Podcasts. Guest: The famous National Public Radio (NPR) moment, everyone is familiar with it, where you are listening to something either on the radio or a podcast or a book that you are not ready with or not finished with when you pull into your driveway, so you take a couple more laps around the block to listen to it. These all make being in the car more pleasant. They solve the congestion problem but they make the driving problem worse. I was thinking, what would an actual green car look like, a truly green car? I was thinking it would probably look something more like a golf cart. It wouldn't have doors on it. It wouldn't have a heater. It would have a very low top speed. You would be able to get your child to the hospital. But you would not just go jump in it and spend the day tooling around the country.
43:25Russ: Unpleasant. What you want is like a WWII jeep where the springs are shot and the seats are uncomfortable. And I think that's the challenge of your book. It's that it naturally points to making life worse as a way to solving some of these problems. And as you recognize in the book, that doesn't sell so well. Guest: I think the difficulty is I don't think it's necessarily pointing to making life worse. It's making life's impact, imprint, smaller, and finding different ways to think about what makes life better. Would I rather live in a different way that gave me benefits in other ways rather than just my income? If I weren't burning up my income in this house that's twice the size of the average house or the house in which I was born, or driving thousands of miles more a year than my father did--are those really gains in my well-being? And I don't think all of them are. Many of them are. I certainly wouldn't give up email. Or online bridge. Or my new golf club. But I don't think it necessarily--thinking about less doesn't necessarily mean thinking about worse, in many categories. I think it means thinking about better. Russ: You don't spend much time in the book on that. It's a short book. Guest: It is a short book. I was thinking at the end I should just write "Time" across the last page, like a blue book in college--just when I get to the solution. Because I think that they are very difficult. When you talk about global problems, the reason we focus on things like the cans we set out at the curb--what you do as an individual is not enough; every individual bit doesn't count because it's a huge problem. Even at a national level it's not sufficient. When you talk about global problems it requires a kind of global action, and across a huge range of affluence levels. And it seems discouragingly inconceivable when you think about it. I think in fact you see that--someone said to me: Why do you think that the, could I account for the low and in fact declining level of a sense of emergency about climate change? I don't think that among educated people it's because people haven't thought about it or because they reject science, the scientific method. I think it's because people have consciously thought about it and decided the potential downside is not worth the potential upside. Russ: I think that's true. Obviously there are a lot of different motivations and ways people feel about it. But one way to summarize your book is that what your book says is that the things many of us do to feel green--putting cans out at the curb, paper instead of plastic, better yet bringing your own tote-bag as we are encouraged to do here where I live in Maryland where there is now a nickel charge for them to allow me to use their paper and plastic bags; my electric car that's really a coal-powered car if it were widely adopted because electricity is generally generated by coal--we have all these symbolic statements that we make. There is a piece of us inside that says if everybody did it, we'd save the planet. What you are really saying is that it's not true. It would take a lot more than that. And what it would really require at current, the way the world works now, is a significant reduction in our consumption of stuff across the board. No one really wants to do that. And as a result we are living in a bit of a fantasy world where our green gestures are not much more than gestures. In fact, we didn't talk about it yet but you talk about other so-called fixes--solar, wind--that are just not practical. It's an illusion. Is that an accurate summary? Guest: Well, yes. I think that they are not economically rational in the way we think about economics. And the idea that the will suddenly become that way if you think about it hard enough-- Russ: or force people to use them. Guest: Yes, and as I say in the book, and we don't often think that way, is that problems innovate, too. You tend to think, you identify a problem, you just imagine the problem sitting still while we offer a solution to it. But in fact the problem is innovating as well; and it often has better funding than the solution does. The sudden abundance of natural gas is an example of that. Here's a technological innovation that has vastly increased our estimates of our reserves, U.S. reserves, global reserves, of gas. As well as pushing down the price. I was at a conference in Washington where an expert referred to natural gas as great for the environment. Russ: One of the cleanest. Guest: Amazing for rebranding success stories of modern time. Natural gas is a fossil fuel. It's a good fossil fuel. The other white meat. And what it has done is completely taken the wind out of wind. It's made--that was a hard sell to begin with. Essentially an impossible one. And so, for anybody who is hoping that--people refer to it as a bridge fuel. This is what will carry us, give us the time we need to develop renewables. If natural gas is a bridge to anything, it is a bridge to coal. Because when we get to the end of it, if we ever do, then we'll say: What was it we didn't like about coal? And go on to burning it.
50:29Russ: So, what would you like to see happen? I'll give you an alternative, but I want to hear what you say first. Given these realities, which are that people like comfort, they like being able to drive their cars, they like having a big house, they like having a big yard, they like to water it and mow it and all these cultural aspects of our lives--how, what might, if there is a problem, what might be done about it? Guest: I don't know. I don't know. The annoyingly honest answer to that question. Russ: One of my favorites, I love that answer. Guest: I don't necessarily appear often enough. Russ: No, you don't. You know why? It doesn't sell that well. I think anybody can say it. My 10-year-old, my 12-year-old can say it. So, why would I pay you to say it? I pay you for something better than that. I can get that from--you know. Truth is good. Guest: What you don't know, you don't know for the wrong reasons. But I think what we saw in 2008, we saw an actual reduction globally in energy use and carbon output. The reason wasn't that everybody suddenly became green. It was the price of oil went way high, and the global economy tanked. Russ: Hey, hey! Guest: So, we know how to push down global energy use. We know how to push down carbon output, through price. When people feel threatened in their livelihood they hunker down and consume less. They do that in a benign way; and we certainly don't know how to do it in a way that limits the disproportionate consumption of those of us who are fortunate enough to be the world's consumers of everything, without also making life impossible for people at the other end of the global scale. Hundreds of millions of people in the world who have no access whatsoever to electricity. And there are millions more coming. Russ: And when they get it, they like it. Guest: And when they get it, they like it. And it's great. And they should. And it brings the benefits that we know: health care, education, longevity. Russ: Movies. Guest: At the same time, though, it compounds these other problems, because when you have an electric light, your workday doesn't end when the sun goes down. Your energy consumption rises in other categories. And when it rises in one category, it rises in all, eventually. You want a car. You see these. I think it's why--it's an easy explanation of why we think it's why I'm going to stop eating raspberries from California, and that's going to be my contribution. Russ: Well, your book reminded me--it probably doesn't remind very many people of this but it reminded me of a book I learned a great deal from, which is by William Easterly. He wrote a book called The Illusive Quest for Growth. And in that book he gives the history of how economists and policy experts have tried to figure out how to make poor people richer, how to make poor countries richer. And each chapter has a new solution to the problem that concludes by saying: Well, we thought it was this, but it turns out it's not. We thought it was investment, but it turns out investing doesn't always lead to growth. So, I'm reading the book, and I'm waiting for--well, when he gets to the education chapter, well, that's the answer! It's education. But no, it turns out, that too--we can pay for more schools in poor countries, and we can even pay for children to sit in classrooms longer, but they don't necessarily have a better standard of living when that's done. So, that book in a way is a very depressing book. That last chapter never gets written, about what that real silver bullet is to help poor countries get richer. And the conclusion, of William Easterly, is: We don't know how to do it very well. And that's just the reality. Your book reminded me of it as well. I get to the chapter that energy efficiency is a bit of a, doesn't really lead to what you think it does--and then solar; well, not quite; wind, nope; buying local, no--and you keep waiting for that chapter, and it doesn't come. So, let me give you an optimistic and pessimistic reading of your book, and then you can tell me what you prefer, or either of your own. The optimistic reading is that these are hard problems; the essence of economics is that there are no solutions, only tradeoffs, and in this case the tradeoffs push in one direction, people choose a particular set of choices and activities that lead to more consumption and that's built into our humanity. So, the way to change that, if you want to change it, the optimistic story is that the best you can do is that you've got to preach. You've got to change people's cultural and spiritual outlook towards smaller and less impactful. And that's hard to do. We don't know how to do it very well. It's not a technological problem, not an engineering problem, etc. The pessimistic story is that there's not much we can do about it and you should just go on living your life and enjoy it, and don't fool yourself into thinking there's something to be done about it. And for me, I'd go--actually, I'm going to pick a third choice, which is: Why don't we spend our time and energy dealing with what the world would look like with more consumption, because that's where we are going? Unless we want to live under some kind of tyranny. Obviously a world authority of environmentalists could impose regulations. I think they would do other things as well, so I'm not real big on concentrating power in the hands of people who would save the Earth. They tend to save themselves in that situation, and hurt other people. So, my view, which is very eclectic, is that--this is a little bit pessimistic; but I'm a little more optimistic maybe than you are about how we will cope with these changes. But I don't think we can stop them. And having said that, that would make a lot of people angry, which is another reason I suspect the reaction to your book is somewhat hostile from your environmental friends, who you basically agree with. Guest: I might agree with all three of your [?] there. I think one thing I've been very interested in--I've written for the New Yorker a profile of a chemist at MIT named Daniel Nocera. It hasn't run yet. But anyway, he's a chemist; he's been working on energy his entire career. He's our age exactly. He is most famous for inventing what he calls the artificial leaf--it basically uses sunlight to split water into hydrogen and oxygen. His goal is not to do with what we have done with research in this country, which is how do we provide alternative energy sources that meet our current needs; but to look from the bottom of the global scale, the [?] force, people who have no access to electricity now. And he says: When you look at the problem from that end, when you are not thinking about how do we power a car to make it go 100 miles on one charge or go from 0 to 60 mph on one charge, but how do we provide some power, 100 watts, an average rate of 100 watts through the day to someone who currently has no electricity, because the energy problem is [?]. And his utopian idea, his long term idea, is that if you approach the energy problem from that end, you end up improving the lives of hundreds of millions of people who need a significant improvement. And in the course of doing that, you create the technologies that eventually enable people at the other end of the income scale to live in adequate comfort but at a smaller impact. It's plausible. You always come back to, or at least in my sort of frame of thinking, what are the unintended consequences? All consequences are unintended consequences. And if you look back through the history of science, there is support for that position. But I think it's a very hopeful one, and I think it comes from sort of turning the problem upside down and trying to think of it in a different way.
59:55Russ: Explain that again. Why does that turn the world upside down? Why does thinking about getting some electricity to really poor people help so much relative to a different perspective? Guest: His [Nocera's] line is if you think of the renewable energy problem as how to power a car, it's a huge engineering problem, because storage is a problem; if you try to recharge a car for example with solar panels on its roof, you have to leave it in a parking lot for weeks in order to be able to drive to work. It's just not--solar energy is too dispersed. You need a huge storage; it's extremely expensive. You need to be able to deliver that power in a hurry, from a stop to highway speed; and you need to be able to hold enough of it in that car to move you along the highway for most of the day. And there's no way, he says, there is no level of technological ingenuity that will make that affordable for somebody, for, say $1 a day. But, he says, if you flip it upside down, you think: How do I provide a minimum level of electricity to someone at the very, at the cheapest possible way, the crudest possible way but cheap; then all the chemistry and physics and engineering look different, and you approach the problem from that way. And his belief then, is, for example in India, by providing a minimal level of electricity through his method--which is basically turning water into a fuel and then burning the fuel, turbines to generate a very modest amount of electricity--you make a dramatic improvement in the lives of those people. And then eventually through the spread of this large number of people, the technology improves to the point where it actually could have an impact on people at the level of consumption of you and I. As I say, it's a very idealistic view; but it's another way of looking at global energy use that's different from the way we usually look at it. Russ: I wonder, though, if there's a way--I mean, if we thought about the amount of resources we currently spend--there's a huge amount we currently spend on trying to find out a way to make a car have a little bit better mileage or have the battery weigh a little bit less, the materials weigh a little bit less, or make the can a little bit thinner. Right? There are engineers all over the world working on those problems right now. A lot. But there are also people who are trying to just reduce energy use for its own sake. And the professor you are talking about--who view this as not doing it for the monetary benefit but doing it because he thinks he might make the world a better place. He's going to be famous as a result, which doesn't hurt; but he's not doing it just for profit. He's got an ulterior motive as well. Another motive. There's a lot of people in that group, people who are doing things, some of which are counterproductive, as you point out. I wonder if it's possible, if we took those resources--and again, I'm not saying we should steer them this way, but people would voluntarily do it if they thought it was more effective--into thinking about how to cope with climate change, rather than how to prevent it or mitigate it. And I think ultimately there is a deep spiritual, religious, non-rational--I don't want to call it irrational. It's not a technology or engineering problem. There's so much more going on there. And I think that tapping into that is one way to improve things that is part of my possibly optimistic story. And the other is, though, that if we could change the way people look at these things, maybe they would cope with change rather than try to prevent it. Guest: I think there is merit to that. Especially since we don't have any confidence that the steps we are taking to prevent it are likely to be effective. I think, I was at recently, of a conference in Washington, D.C. about energy and security; and there were a number of people there from the Pentagon, from the Defense Department who were retired, people from various military branches. And the U.S. military has a very sort of unemotional, straightforward, forward-thinking view about the environment, climate; and there was someone, an admiral, saying: The climate is changing, we have to change. And his view was very simple. If there is no ice on the North Pole then ships can cross; the navies of other countries can travel through the Northwest Passage. And this is an issue for the U.S. Navy. There is something bracing about this non-emotional, straightforward thinking about something like that. And there is also, you see in the military--they are tremendous energy users. They've been in an environment where they haven't had to think about energy consumption. The interesting thing I learned which was from someone in the Energy Department, Defense, said something like they had 300,000 American buildings and until very recently none of them had metering of any kind. Electricity or water. There's no incentive. And now, if we are actually going to shrink the military budget some, there is an incentive to think about these things. There is also a human incentive: the American military, if you think about it as a single entity, is probably the single largest consumer of energy in the world. Jet fuel is measured not in miles per gallon but in gallons per mile. It's staggering. And also, in places like Afghanistan and Iraq, many casualties have taken place in this tremendous logistical problem of moving fuel to the soldiers. Our fuel conveys are easy targets, and many casualties have been suffered by soldiers who were accompanying those shipments. So, the military is thinking about these things I think in a sort of, kind of clear, non-emotional way that you are talking about. Not an ideological way. And in some ways they have the luxury of being almost kind of extra-democratic--they haven't really, their budget items aren't voted on individually by Congress to any great extent. They have sort of been a group apart. But at the same time you could also say the American military has been responsible for more energy consumption and resource destruction than any other comparably sized group on Earth in the history of the human race. So, it sort of works both ways. But there was something that I found that was refreshing in the same way. Kind of taking this less fraught and heated approach to this problem. I was thinking if an asteroid were bearing down on the Earth, people would be much less emotional about deciding whether we were going to do something about it, because we wouldn't feel that there was this sort of implicit criticism of yourself in the fact that something potentially extremely dangerous was possibly going to happen. We'd look at it much more clearly.
1:08:21Russ: There wouldn't be a lot of baggage. It would just be, as Samuel Johnson said: The knowledge that you would be hung in a fortnight concentrates the mind. Guest: Right. Russ: And that's what would happen. But I was thinking of something a little starker, which is: the Earth is going to get warmer, and maybe we ought to be figuring out something about how to make that the most pleasant world it could be rather than figuring out how to keep it from happening. If it's true. I'm relatively agnostic about the science. I don't think it's settled. But let's say it is settled. Let's say it's unavoidable that if we get richer, there is going to be a warmer Earth. I'm not quite sure of the consequences of that. I'm not sure they are as catastrophic as people say they are. But if they are, maybe we should be trying to cope with that rather than saying we have to stop it. Guest: Right. Well, even if you believe we have to try to stop it, you still should be thinking about the adaptation question, too, because nobody who talks about stopping it thinks that anything we can do will cause the effects to disappear. It's still something we'll have to cope with and adapt to. And you are right. Once again, the Pentagon is saying: If you are in the Navy, our bases are at sea level, and we have to be thinking about what it means potentially. A meter rise in sea level over the course of the next half century or century--and the Admiral who said this, said: It's not just the base itself. It's the community that surrounds it and both supports it and is supported by the base. And so even if you are Bill McKibben you have to be thinking about adaptation in addition to circumvention.

Comments and Sharing



TWITTER: Follow Russ Roberts @EconTalker

COMMENTS (37 to date)
Speed writes:

David Owen said, "I think there's more downside than the carbon issue ... I think water is a very fragile resource that reaches a crisis point--we can't expect that we are going to find something to replace water.

Water is one resource we have in inexhaustible supply -- it's just contaminated by salt. We know how to remove the salt using lots of energy. If energy is cheap enough we will never have a water problem.

John Strong writes:

As a friend of mine and natural comic is prone to say, we are in violent agreement!.

Jane Jacobs wrote very persuasively 50 years ago about the "quality of life" benefits to mixed uses (i.e. relaxed zoning regimes) and letting cities develop spontaneously. It makes public transport (including privately owned public transport) feasible. In fact, it is the *only* thing that makes it feasible. And more importantly, it makes walking feasible, as the statistics David Owen provides about New Yorkers and their habits make clear. So it seems that a low energy footprint is yet another advantage to keeping city uses mixed and zoning regimes loose.

Many people think government-owned transport is the best way to reduce energy consumption for the same reason people climb Mt. Everest: because the challenge is "there" (the challenge being to persuade a skeptical public of this elitist policy prescription). In other words, their thinking is dialectical. They are so busy fighting the folks they view as unenlightened that they don't pause to examine the facts on the ground.

Badge of Authenticity

I can't tell you how many people I know who have followed David Owens pattern of moving to the country to lead the "good life" only to discover that they loath being so many miles from friends, family and (most of all) the businesses they patronize.

Marietta K. writes:

The cost of energy doesn't take into account what we spend on military projection around the world to maintain reserve currency status which in turn keeps fuel cheap. And on top of that we borrow the money to pay for this subsidy. why don't we pull our military back, protect just our boarders and then see how much energy costs? I would bet conservation would be embraced in this scenario.

Mads Lindstrøm writes:

Great podcast. I loved that the guests seemed to look for realistic answers. Many (obviously not all) other environmentalist have a nag for suggesting things that does not seem to be rooted in reality.

Regarding the discussion of what can be done, it feels like I am missing something, as there seems to be something quite straightforward we can do. If you want less of something you tax it. So why not tax pollution more severely? Possibly only in rich countries.

Note that not all joules of energy we use leads to an equal amount of utility. Thus, if we limit our consumption by taxation, the activities with worst utility/energy ratios will cease.

Also, we are becoming more and more efficient with our existing use of energy. Unfortunately, we also find new ways of using our energy with a very bad utility/energy ratio. But it is the energy usage with very bad utility/energy ratio that a tax would remove.

Taxation do not necessarily mean that we must lower are consumption below our current level. Given that many existing activities becomes more and more energy efficient, it follows that a tax increased a sufficiently small bit each year, would lower our growth in living standard, but not below our current standard of living.

It may not be politically easy to increase gas taxes, but it do not seem completely unlikely either. First of all, most western countries already have gas taxes. Second, it would make it possible to lower other taxes, which could be a selling point to voters. Some taxes, such as the income tax (or payroll tax), has a negative effect upon economic output, so maybe a lowering of income tax could offset the negative effect upon economic output of a higher gas tax.

Patrick R. Sullivan writes:

Owen doesn't know much economics--never heard of Jevons' 'rebound effect', I guess--and Russ seemed wary of teaching him any. He seems unable to overcome his romantic ideas of the environment even while they slapped him in the face.

Speed writes:

Mads Lindstrøm wrote, "If you want less of something you tax it. So why not tax pollution more severely? Possibly only in rich countries."

The cost of energy alone causes manufacturing industries to use less and emit less carbon -- a fact often overlooked by commentators and pundits.

"Between 1990 and 2006, the overall energy efficiency of manufacturing industry in 21 IEA member countries improved by 1.6% per year. Without the energy savings resulting from these improvements, manufacturing energy consumption in the IEA would have been 21% higher in 2006. This represents an annual energy saving of 9.5 exajoules (EJ) in 2006, equivalent to almost 600 Mt CO2 emissions avoided. The effect of these savings is significant: despite a 45% increase in output, final energy in the manufacturing sector decreased by 0.6% between 1990 and 2006."
http://www.iea.org/papers/2011/CEM_Progress_Report.pdf

Paul Eldrenkamp writes:

The December 20, 2010 New Yorker has a piece by Owen on the Jevons paradox, so I think it's safe to assume he's heard of Jevons, even if it didn't come up explicitly in the interview. I expect his new book incorporates most if not all of the content from that article.

Speed writes:

David Owen said, "If you are in the Navy, our bases are at sea level, and we have to be thinking about what it means potentially. A meter rise in sea level over the course of the next half century or century ... "

The United States Environmental Protection Agency says, "The International Panel on Climate Change (IPCC) estimates that the global average sea level will rise between 0.6 and 2 feet (0.18 to 0.59 meters) in the next century (IPCC, 2007)."
http://epa.gov/climatechange/effects/coastal/index.html

The predictions are loose enough without "experts" inflating them.

James writes:

I found David Owens viewpoint quite amusing. Its a blend of Chicken Little (there will be some disaster if we all use too much energy) mixed with George Orwell (what we are naturally inclined to think of as good is actually bad, we need to be reprogrammed).

I have no idea what the big deal is when people talk about renewable energy, sustainable living, etc. OBVIOUSLY we will exploit cheap fossil fuel to the fullest until we run out, and THEN we will use renewable sources...Necessity is the mother of invention.

And its never explained what exactly is wrong with this picture. Who cares if we burn all the fossil fuel? If the climate changes, so be it, we will adapt. The planet has millions of miles of frozen wasteland that will become valuable beachfront property. If millions of people die, environmentalists should be quite pleased at the population reduction! If things get too hot, I'm sure we will be able to find some way to suck carbon out of the air. That is what plants are for, after all.

And why don't these people love nuclear power? Doesn't it solve all these "problems"? An island of radioactive waste seems less potentially damaging than climate change.

Please someone explain what I'm missing here.

dave writes:

I think what you are missing are the "unknown unknowns" (to quote a US military philosopher).

Dynamic systems such as the climate are much like our economies. And we know how the economy can at times spin itself out of control and become extremely volatile.

For example, what are the effects of the ocean now being a net source of atmospheric GHG for the next 1000 years instead of being a net sink? What will be the effects of a rotting tundra release truly astounding quantities of methane into the atmosphere?

The option of our climate swinging into a feedback loop that ends in the earth resembling Venus is not entirely off the table.

The US Geological Survey website reports that if we lose the Greenland ice sheet sea level rise will be 6.55 meters. And if we lose all the worlds ice sheets the rise is 80 meters.
http://pubs.usgs.gov/fs/fs2-00/

However, Climate change was not my reason for writing. I found this podcast to be lacking much of any kind of substance. Anyone who did not know that fuel efficiency has lead to bigger house and bigger cars rather then a reduction in fuel use has just not been paying attention.

What was missing from the discussion was any prescriptive brain storming. The conversation did seem to take it for granted that reducing use of fossil fuels served a public good. So if it is desirable or even necessary from a societal point of view AND if fuel efficiency ALONE does not achieve this reduction, what then?

An earlier commenter pointed out the obvious need for a carbon tax but perhaps Russ has a hard time using the word tax in a positive context. :)

It seems to me that a carbon tax fits the bill very nicely. It internalizes the costs that have been externalized into the commons. And those tax dollars can be turned around and used to support more sustainable sources of energy.


Speed writes:

Dave wrote, “ … we know how the economy can at times spin itself out of control and become extremely volatile.” And we know what a good job the government has done controlling the economy.

“The US Geological Survey website reports that if we lose the Greenland ice sheet sea level rise will be 6.55 meters. And if we lose all the worlds ice sheets the rise is 80 meters.” At the peak of the last ice age, sea levels were so low that people walked from Siberia to North America and parts of North America were buried under a mile (!) of ice and snow. Climate changes and humans adapt – that’s why we’ve populated the earth instead of just the Great Rift Valley.

“Anyone who did not know that fuel efficiency has lead (sic) to bigger house (sic) and bigger cars rather then (sic) a reduction in fuel use has just not been paying attention.” Among those not paying attention are various governments that continue to raise fuel economy and building insulation standards.

“It seems to me that a carbon tax fits the bill very nicely … And those tax dollars can be turned around and used to support more sustainable sources of energy.” Will emerging economies be taxed on energy just as they are beginning to buy cars and move to the suburbs? And we’ve seen how good government is at supporting “more sustainable sources of energy.”

John Strong writes:

Lumps of Energy

I have to offer one more compliment. This was such a good podcast.

Owen exposes yet another example of armchair policy assumptions. You might call it "lumpy thinking." Similar to the lump of labor fallacy, the lump of wealth fallacy, the lump of jobs fallacy, you might say there is a "lump of energy fallacy." Save some energy here or there and you make corresponding reductions in the aggregate energy footprint. "It's just arithmetic!" Russ Roberts comments wryly. Not so!

kebko writes:

I was surprised that in a podcast about seen versus unseen effects, you let the statement about urban versus rural living go unchallenged.
Living in New York City is much more expensive than living in practically any rural area. To simply look at your personal resource consumption in the two locations and conclude that we would use fewer resources as a society if we all lived in cities, is an example of the same error you are trying to combat.
The tremendous cost of living difference alone should create a significant burden of proof for that claim.

Narasimhan writes:

It was an amazing podcast. It also mirrored some of the arguments that Ryan Avent put forth in his Book (The Gated City) and in his discussion with Russ in an earlier podcast.

Manny C writes:

Very enlightening podcast. Easier to digest than Kelly's "technium" or Hanson's "singularity".
Mr. Owen's insights are very compelling and reminds us that the easiest solutions to environmental issues may indeed have hidden long-run consequences. The problem remains though of the short-sightedness of policymakers who are more interested in the preservation of their government posts.

Jeff writes:

Great podcast as usual but I was disappointed that the idea of a carbon tax was only briefly touched on.

We have a real world example of net energy use/carbon output going down: the massive spike in fuel prices in 2008, which both Russ and Owen acknowledged.

It follows then, that a carbon tax, which increased the price of carbon fuels by a factor of 1.5 or 2 or even 3, would also lead to decreasing carbon usage and less C02, even if average MPG increased by 20 or 30% (a tall order).

"Oh but it would wreck the economy," they say. Well it didn't in 2008, and what's more, it would also give wind, solar, and other renewables a fighting chance in the marketplace. And guess what? Renewables do scale, and when renewable energies are cost competitive with carbon energies, they will find mass adoption and will decrease in cost.

As someone said above, necessity is the mother of invention. A carbon tax is smart policy because it attacks consumption directly, requiring us to stand-up alternatives.

Finally, another point, again from the real world. In 1990 President Bush signed amendments to the Clean Air Act. The act established, for the first time, a marketplace for sulfur dioxide emissions. The federal government put a declining cap on the amount of SO2 emissions, but let the power industry itself determine the best way to reduce their emissions. Some bought pollution credits, some made investments to lower their emissions (then sold their excess pollution credits to other emitters for profit). "Cap 'n trade" as it came to be known, helped solve (with other factors, I'll grant) the acid rain problem of the 70s,80s and 90s. And it was a conservative idea, hatched by market-friendly environmentalists against more regulatory-minded liberals.

My larger point is this: Owens central thesis seems to be that market forces determine our energy usage and any gains in efficiency will necessarily increase consumption. Yet here we have two ideas that directly attack consumption, either by making it more expensive (and thus making alternatives a better bargain) or making that which is measurable (emissions) into something that is tradeable in order to harness market power.

But overall a great podcast. I recommend reading Naomi Klein's essay from November last year on "Capitalism vs the Climate" for another look at this problem (she comes to a similar conclusion, the empty gestures aren't enough, what we need is a radical turn away from consumption).

stephan writes:

First, thanks for the podcast. Gave me lots to think about. Especially the argument against increase in fuel economy.

Prof. Roberts argument, that the resources currently funneled into prevention of climate change could instead deal with climate change if just let be.

The problem is that we do not know the effects of climate change. The worst case scenarios range from mass starvation, war over dwindling water and food to the complete acidification of the entire ocean.
These are all scenarios that are unlikely but not impossible. The resources spent on preventing these are a pittance in comparison to what these events would cost. Like an insurance against a fire that might never come.

Then, thanks Speed for many "what in gods name"-moments.


"The predictions are loose enough without "experts" inflating them"

Just googling "current sea level rise" would have gotten you to the source of Owens numbers: the same IPCC 2007 report you are quoting as cited on Wikipedia.
It says:
"sea level will rise another 18 to 59 cm (7.1 to 23 in), but these numbers do not include "uncertainties in climate-carbon cycle feedbacks nor do they include the full effects of changes in ice sheet flow". [...]one meter of sea level rise is well within the range of more recent projections"

And my favorite:
"Climate changes and humans adapt."
You realize that one could say that about anything? "Diseases come and go and humans adapt", "Flooding comes and goes and humans adapt" or "Draught comes and goes and humans adapt"
Just because a portion of humanity could survive an event (draught, hunger, an asteroid) does not mean we should not try to prevent it. It might be possible for humans to survive on a dead planet with acid oceans, but who wants to?

Steve writes:

Putting effort into making urban living more feasible would get at both the prevention and adaptation goals. We need people to consume less and/or we will have less land (sea level rise) and more people to house and feed: so how do we encourage people to want to live in cities or equivalently make living in dense cities less horrible?

It is worth being more explicit about the "incentives" pushing people away from living in the city. I've lived in New York city for 8 years. I can't wait to leave, not because I have some strange set of sierra-club-programmed beliefs about nature, but because it is so unpleasant to live here. Fewer resources and less energy is consumed per capita, but they are exceptionally more expensive to consume.

I've been a graduate student but paid a stipend of 30k/year. This grants me an uncomfortable standard of living in NYC. My rent consumes almost 1/2 of my net income, and I have lived in university subsidized housing primarily. (The subsidies don't make rent cheaper nominally, the apartments are just better maintained then private apartments nearby. I later moved to deep Brooklyn and pay almost the same.) City infrastructure is pretty good, safety and order are high, transportation good, pollution not outrageous, on the other hand there is a high sales tax and income tax for the city (4.5% city sales tax on top of 4% state sales tax, 3-4% income tax on top of state and federal.) Even ignoring tax, food is incredibly expensive. Cell reception and wireless are overused and terrible. Health care is mediocre at best, doctors and hospitals are overworked and understaffed. People are notoriously unhelpful because they have to help so many people. Many people still commute several hours a day, they just don't do it by car. Things that most people would consider to be cheap hobbies are expensive and difficult here. E.g. working on furniture in the garage requires membership to one of a few expensive collectives. Gym memberships are expensive. If you know were to look there are cheap art, interesting clubs, free events, and a vibrant DIY scene. But the difficulty is in doing the mandatory things like eating and sleeping. Planning for the future, requires planning to leave NYC.

a report worth looking at from 2009: http://www.nycfuture.org/content/articles/article_view.cfm?article_id=1233&article_type=0

Given the vastly higher cost of living in New York City, however, it is doubtful that any New York household that earns even $60,000 per year enjoys a quality of life that remotely approaches what we typically imagine as “middle class.” The “New York City premium” on goods and services from housing and groceries to utilities and transportation means that a $60,000 salary earned in Manhattan is the equivalent of making $26,092 in Atlanta; $31,124 in Miami; and $35,405 in Boston. In less-expensive Queens, that same $60,000 salary carries only as much purchasing power as $37,451 in Atlanta, $44,673 in Miami, or $50,819 in Boston.

Basically NYC is a great place IF you have a lot of money, it is unpleasant otherwise. The city itself has a lot to offer: it would be enjoyable to visit, and older financial secure people should definitely consider living here. But as the dense model for the US ironically it is very difficult for middle class. Interestingly it must be a slightly different story for those whose life will be uncomfortable everywhere. It obviously has advantages for immigrants. And it must not be the worst place for the poor, especially those with large families. That is at least if you consider the fact that 21% of the population live below the federal poverty level!

Sebastian writes:

A different problem with climate change beyond its impact on temperature and sea level is the simple effect of increased CO2 in the atmosphere. What this appears to do is increase the concentration of CO2 in water, specifically oceans, which leads to ocean acidification. Which in turn can lead to mass extinction.

But who cares if every ocean on the planet is completely dead. People in the Kalahari desert survive just fine without ever seeing the ocean so human beings will just adapt.


The proper argument against preventing climate change isn't, "who cares if it costs something, we'll pay when it happens." The alternatives are

a)the cost of climate change is fundamentally ambiguous
b)it's not happening
c) we can't do anything about it since it is not anthropogenic
d) the cost of doing something about it is greater than the cost of just dealing with it
e) we don't know what to do about it(+/- yet) OR we don't have a good enough solution

Generally b) and c) are quite discredited by the scientific community(and the Big Climate lobby, of course). I think a) and e) are where a lot of people are at the moment. It's unclear what the effects of CG are going to be, and we have no acceptable solution to prevent it from happening. It's an almost bizarro Black Swan phenomenon, where you replace the uncertainty of it happening with uncertainty regarding the cost.


I also agree with the guest that water is going to be a big problem in the future. The difference in price between ground water and water transported(and perhaps detoxified and/or desalinated) from hundreds of miles away is almost unthinkable.

Of course dealing with that is the real problem. How do you minimize or eliminate the problem of the US Southwest running out of drinking water?

xian writes:

[Cryptic, contentless comment removed. --Econlib Ed.]

Speed writes:

Stephen agrees that the IPCC best estimate for sea level rise over the next 100 years is 18 to 59 cm. but adds that the IPCC also says, in effect, but it could be worse. I agree – it could be worse. But the IPCC actually says it may be worse on century time scales.

There is high confidence that global warming over many centuries would lead to a sea level rise contribution from thermal expansion alone that is projected to be much larger than observed over the 20th century … the risk of additional contributions to sea level rise from both the Greenland and possibly Antarctic ice sheets may be larger than projected by ice sheet models and could occur on century time scales.

This discussion is about David Owen’s inflated forecast of sea level rise over the next 50 to 100 years, not centuries.

Stephen questions the idea that humans could/would adapt to a warmer climate. The IPCC tells us,

Comprehensive estimates of the costs and benefits of adaptation at the global level are limited in number. However, the number of adaptation cost and benefit estimates at the regional and project levels for impacts on specific sectors, such as agriculture, energy demand for heating and cooling, water resources management and infrastructure, is growing. Based on these studies there is high confidence that there are viable adaptation options that can be implemented in some of these sectors at low cost and/or with high benefit-cost ratios.

And to return the discussion to economics, the IPCC further states ...
The capacity to adapt is dynamic and is influenced by a society’s productive base, including natural and man-made capital assets, social networks and entitlements, human capital and institutions, governance, national income, health and technology. It is also affected by multiple climate and non-climate stresses, as well as development policy.

http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr.pdf

So rather than spending untold dollars to reduce developed industrial countries’ energy use while denying cheap energy to developing nations, we would be better off improving the productive base of all nations so that we can better adapt to uncertain and unknown changes in climate. Such a policy would also make us less susceptible to the next tsunami, earthquake or volcano eruption – and we know for sure that there will be tsunamis, earthquakes and volcano eruptions.

chitown_nick writes:

dave and stephan, I couldn't agree more. Especially the sentiment of:

Just because a portion of humanity could survive an event (draught, hunger, an asteroid) does not mean we should not try to prevent it. It might be possible for humans to survive on a dead planet with acid oceans, but who wants to?

I work closely with energy issues and have enjoyed the conversation both on the podcast and in the comments here around the complexities of this issue.

Generally, I would agree that price is the best tool to drive actual change in reducing consumption. There are many ways to get there - removing exploration subsidies, decreasing military intervention, introducing cap and trade, or introducing a direct tax. Any of these pose significant logistical and political problems. Who wants to be the one saying - "yes, we've built this into our way of life, but it may not be great for our national interests in the future, so I'm going to deliberately raise everyone's cost of living until we innovate a way to reduce this pressure." It's a tough sell, but compared to some of the potential downsides if climate predictions are near to the mark or if fossil fuel prices spike and people have to adjust much more quickly, it may not be the worst choice.

chitown_nick writes:

Speed writes:

we would be better off improving the productive base of all nations so that we can better adapt to uncertain and unknown changes in climate.

This argument seems to me to put forward a strategy that leaving the problem alone will allow for future investments in "improvements." These future improvements in a climate-degraded condition would mimic the broken window theory of economic growth (sorry Mr. Keynes). If our goal is to continually provide for a better quality of life in the future, shouldn't one of our goals now be to limit the erosion of the base from which we can start?

Bret Swanson writes:

Peter Huber and Mark Mills, in their pathbreaking book The Bottomless Well, explain the basics of energy better and more concisely than any other source. Efficiency makes the world world richer and increases energy consumption. Our new knowledge of manipulating matter and bits is a good thing. David Owen's book The Conundrum looks to continue this theme. Eager to read the book.

Speed writes:

chitown_nick wrote, “These future improvements in a climate-degraded condition would mimic the broken window theory of economic growth … “

Wikipedia … The parable, also known as the broken window fallacy or glazier's fallacy, demonstrates how opportunity costs, as well as the law of unintended consequences, affect economic activity in ways that are "unseen" or ignored.

Bjørn Lomborg writes about Germany’s $130 billion investment in solar power …

Indeed, despite the massive investment, solar power accounts for only about 0.3% of Germany’s total energy. This is one of the key reasons why Germans now pay the second-highest price for electricity in the developed world (exceeded only by Denmark, which aims to be the “world wind-energy champion”). Germans pay three times more than their American counterparts.

Moreover, this sizeable investment does remarkably little to counter global warming. Even with unrealistically generous assumptions, the unimpressive net effect is that solar power reduces Germany’s CO2 emissions by roughly eight million metric tons – or about 1% – for the next 20 years. When the effects are calculated in a standard climate model, the result is a reduction in average temperature of 0.00005oC (one twenty-thousandth of a degree Celsius, or one ten-thousandth of a degree Fahrenheit). To put it another way: by the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.


Clearly there were better ways to spend the $130 billion that was wasted on solar panels.
Schepp writes:

This was well done. Mr. Owens is far more supportive of Environmental causes than I. But compared to the typical save the environment at any cost, this is a breath taking step closer to reasoned environmental solutions.

I am not sure that a carbon tax is really going to do anything. The problem is that for a piguovian tax to really work you need to have the payments made by the commons encroachers go to the commons encroachees. The problem is the encroachees are 100 to 500 years in the future and there is no way any government cannot spend the money they recieve from a carbon tax on things let say that enduce more carbon emissions.

Indeed OPEC acting in a manner that effectively did add a carbon tax doubling the price of carbon producing energy. The result? A very small temporary reduction in energy used. We will burn through most of the oil eventually. A carbon tax will likely just change the insignificant figures of how long it will take to spend out.

I would also add that while I agree to some extent urban dwellers are less carbon intensive. On the other hand, it is hard to track how extensively they have contracted with rural workers to produce goods for them that are carbon intensive, yet are unseen to the environmental measurement.

For example one could argure that a brain in much cleaner than the human digestive system, but the two are inexerable linked and would not be fair to assess them indepently.

John Strong writes:

Steve wrote: "Basically NYC is a great place IF you have a lot of money, it is unpleasant otherwise."

I am not competent to give a counterpoint to this complaint (don't know enough about NY), but usually when the cost-of-living is high, someone is using government power to create artificial shortages.

A couple of things that come to mind: taxi medallions, lack of competition in the transportation market generally, dysfunctional yet expensive educational institutions, rent control.

Stephen H writes:

Great episode. Picked up a new phrase that I'll be sure to use in the future: "comfortable thinking".

Kevin S writes:

I listen to a lot of these podcasts, and think one of the great points I picked up from this one is a quote about how we think problems are static, when, in fact, they are dynamic. "Holding all other factors constant" is never an option. I also relate this back to the recent podcast with Nassim Taleb. Our ability to forecast is dismal, but we just feel so much better intervening.

Separately, I recall reading an article in The Economist some months back where a study showed that all cases of technical innovation in the decrease of use of energy led to the increase in the total use of energy. For example, from incandescent to florescent to LED lighting. The cheapness scale overwhelms the efficiency scale every time resulting in a perpetual increase curve (so far). Yak herders in Mongolia are going to have LED lighting...

I very much agree with the sentiment of planning for where we are headed rather than these attempts to predict how conservation can save us.

Brenb writes:

A little curious why there was no discussion about pricing carbon or other forms of pollution. Using fossil fuels come with externalities, so it seems like some quota/tax/auction system would be in order.

However I do like the point about preparing for the inevitable destruction from rising sea levels (ie the State of Florida). Like most global problems, the wrath of global warming will predominantly hurt the poorest people in the world. The people of Bangladesh have a latent acceptance that over the next century a large part of their country will be submerged. How 'bout that for something the US military must worry about!

Jim Feehely writes:

Hi Russ,

There is no solution to the environmental destruction that increasing consumption is clearly causing without reforming the obsession with economic growth that is at the core of free market ideology.

In effect, our future is currently the product of the tyranny of the free market, not of regulation. Civil regulation is principally necessary because of the amorality of the free market and the those who participate; i.e. all of us.

The flawed devotion is the product of hundreds of years of elite thinking that has been underpinned by an assumption of limitlessness, both in philosophy and economics. However, for at least 50 years we have known that we are subject to limits - environmental, population, rights - everything. But none of our thinking has been adjusted to account for those limits.

Gary Soto writes:

"if all the worlds groceries traveled from farm to fork in minivans two bags at a time we'd have exhausted the worlds resources long ago."

This is really slimy and rhetorical argumentation. The fact that the person in the "documentary you saw" drove a great distance to buy her groceries has nothing to do with the issue of local agriculture. There should to be a latin name for this sort of fallacy because it is annoyingly popular among armchair cynics: "I don't support X because this one guy I saw in a movie was supporting X in a misguided way...."

(but i love this podcast. keep up the good work.)

A. Goddard writes:

Owen seems to agree with Roberts that he would not like to live under an "environmental tyranny," but then goes on to explain how this fellow at MIT is developing energy rationing systems for all those OTHER people in India... or wherever.

I know the smell of an alternative energy source when I hear it and that was a doozy.

Greg Linster writes:

Great interview, Russ! I really enjoyed this one.

Jakob Engblom writes:

Very interesting podcast on an often overlooked aspect of how humans work. However, the mechanisms that cause more energy use as it becomes less expensive might still be possible to affect a bit.

An obvious example is point taxation of "bad things". the market might not put prices correctly since not all externalities are taken into account, and then taxation is an obvious way to use prices to steer consumption in a desirable direction. Over here in Europe, energy is made more expensive than in the states by using taxes. This does make people drive less and build more energy-efficient homes. Which often comes at a very small cost in standard of living and encourages living closer together which in turn drives communities and city life. It has been successfully used in the past to do things like change how Swedes consume alcohol.

Another aspect is the direction of aspiration. Why do people buy bigger cars when they get richer? Quite often, the only purpose is to show off that they are richer - and that is not a natural law. Norms can change under external influence (like the sierra club example shows), and an obvious long-term strategy is to disassociate status with overconsumption. There are places where refusing to have a car at all is considered "chic", it is mostly a matter of perception. Being modern and having a high status does not have to entail buying tons of stuff just to prove you can.

Scott Campbell writes:

It seems to me that the premise of the book was missed by most people commenting. The conundrum of any chosen course of action is that it is replete with unintended consequences many of which turn out to be counter-productive and counter intuitive.

Russ was able to articulate the three most obvious. I find myself expecting the second and believing the the third was the most desirable.

There is yet another one. Akin to the second. There is a natural tendency for the things to get better in spite of ourselves. If we were to augment that through conscious behavioral incentives, stewardship acknowledgements, and acceptance of change does the conundrum lessen?

For lack of a better platitude-trickle up economics- best describes the consequence of providing the poor with a modicum of electricity which enables them to become consumers. However, the unintended consequence may be disastrous.

Todd writes:

[Comment removed for supplying false email address. Email the webmaster@econlib.org to request restoring your comment. We'd be happy to publish your comment. A valid email address is nevertheless required to post comments on EconLog and EconTalk.--Econlib Ed.]

Comments for this podcast episode have been closed
Return to top