Nothing wastes resources like saving them

Imagine you find yourself in possession of a diamond mine. However you don’t like diamonds very much; you think they are vastly overvalued compared to important resources such as soil. You are horrified that people waste good soil in their front gardens where they are growing nothing of much use, and think it would be better if they decorated with a big pile of this useless carbon crystal. What do you do?

a) Cover your own lawn with diamonds

b) Donate as many diamonds as you can for free to anyone who might use them to decorate where they would use soil

c) Sell the diamonds. Buy something you do value.

d) Something else

Environmentalism often takes the form of the conviction that human labor should take the place of other resource use. Bikes should be ridden instead of cars, repair is superior to replacement, washing and sorting recycling is better than using up tip space, and so on. This is usually called ‘saving resources’ not ‘using up more valuable resources’. One might argue that while human labor is usually relatively expensive (you can generally make much more selling five minutes of time than a liter of tip space and a couple of cans worth of clean used steel), environmentalists often consider the other resources to be truly more valuable, often because they are non-renewable and need to be shared between everyone in the future too. Even so, since when is it sensible to treat your overvalued resources as if they were worthless? How will resources come to be used more efficiently if those who care about the issue destroy their own potential by donating their most valuable assets to the world at large in the form of the very things which the world supposedly blithely squanders?

19 responses to “Nothing wastes resources like saving them

  1. I think this is an extremely important point, because it cuts to the heart of a commonality in a lot of flawed environmentalist thinking, and points towards a central principle that should be applied when attempting to take a more rational approach to protecting the environment

    Indeed, it made me almost instantly re-evaluate my own priorities – I had being weighing up whether or not to start paying more for Green Power, since I see lack-of-carbon-dioxide as hugely undervalued relative to nearly all other assets (economics could perhaps do with terminology for this “negative assets” concept?). Unlike steel cans, I think a low carbon atmosphere is a genuinely valuable environmental resource that we do need to conserve.

    However looking at it from the valuable resources perspective, I shouldn’t really be giving away my overpriced Australian dollars to obtain my nega-carbon at such a large markup, effectively subsidising the emissions of other energy consumers. The question then becomes, how can I get a better ROI, given I do genuinely care about climate change? I suspect the answer is to obtain property that has the potential to become valuable when nega-carbon becomes valuable – shares in a renewable energy company, acres in an Amazonian rainforest (which buys biodiversity as well), or bets in a Hansonian science-futures prediction market in global temperature – if only a well established one existed….

    So I think I’ll go and open a climate savings account and start putting the amount Green Power would cost on each power bill towards it, while I evaluate the options.

    Anyway, thank you for a blog post good enough to cause quick and genuine belief-reevaluation . For what its worth, though, I think either through your intelligence or your desire to focus on the non-obvious, you haven’t made your case as clearly as you could have. You went from a strange question about diamonds to discussing the environment abruptly enough for it to seem a non-sequitur at first glance; and your last sentence is tougher to unpack than a very pointed conclusion should be. Overall it reads a bit like a maths proof or computer program so terse as to dumbfound the smartest 0.1% of readers with its elegance, and the remainder with its opacity.

    Then again, I’m sleep deprived at the moment and hence inclined to prolixity, so maybe I misjudge. Or maybe I’m just slower on the uptake than I thought and your wording is perfectly transparent and obvious to everyone else.

  2. I’m a fan of Steven Landsburg’s “Why I Am Not An Environmentalist”(The Armchair Economist, 1993), although it’s probably too inflammatory to be persuasive to the undecided. I don’t agree that environmentalism can be equated with religious fundamentalism (because based on Landsburg’s arguments, a great many political views could also) but rather take a Hansonian perspective that it’s mostly signaling. Still, signaling when claiming to be altruistic is highly grating nonetheless.

    A major issue I have with inefficient environmentalism (and any ostensible charity with a large signaling component) is that a more environmentally-friendly allocation is usually possible if the person worked longer and donated their money to a specific cause. Or you could even just buy commodities if “saving resources” is what you want. If you want your grandchildren to have more resources in a future, why not buy a mine (perhaps with other environmentalists) and shut it down for 30 years?

  3. I don’t buy this.

    The environmentalist intuition is that some resources are not renewable, while human labor is, so the resources should be valued more highly than they currently are. So far, so good. However, this doesn’t amount to a good arbitrage opportunity–buying the resource now and selling it later at a higher price is merely an inflation hedge, not a source of profit, if the price of almost everything else is linked to the resource–and environmentalists do not have enough purchasing and military power to drive prices up to where they should be given proper discounting to the present.

    “Buy a mine and shut it down for 30 years” is actually an interesting idea in a world with perfectly secure property rights, but when it comes to a resource like oil, there’s too much incentive for others to disrupt the arrangement. Armies may no longer seize oil fields outright any more, but if, say, Saudi Arabia’s leadership suddenly decided it wanted to stop pumping oil today because its oil would have greater value a few decades later, I don’t think said leadership would remain in power for long. The tragedy of the commons problem is bad enough even without outsiders providing massive backing to the wrong side…

  4. if, say, Saudi Arabia’s leadership suddenly decided it wanted to stop pumping oil today because its oil would have greater value a few decades later, I don’t think said leadership would remain in power for long.

    Suppose the market consensus was that oil prices will increase significantly over the next few decades. Suppose that, as you imply, the most significant threat to Saudi Arabia’s property rights is a disgruntled citizenship which is placated by oil revenue. Why couldn’t Saudi Arabia simply stop pumping now and sell long-term oil futures, the revenue of which would placate the population as much as the revenue from oil today?

  5. Suppose that, as you imply, the most significant threat to Saudi Arabia’s property rights is a disgruntled citizenship which is placated by oil revenue.

    No, I’m implying something more insidious than that: the current leadership of other countries have an incentive to make sure Saudi Arabia keeps pumping oil–an incentive strong enough to perhaps interfere in its internal politics.

  6. No, I’m implying something more insidious than that: the current leadership of other countries have an incentive to make sure Saudi Arabia keeps pumping oil–an incentive strong enough to perhaps interfere in its internal politics.

    Perhaps so (though it seems a rather unlikely candidate for an environmentalist pet cause). Regardless, the point Katja makes in her last sentence still stands:

    How will resources come to be used more efficiently if those who care about the issue destroy their own potential by donating their most valuable assets to the world at large in the form of the very things which the world supposedly blithely squanders?

    Even if certain resources are underpriced, simply avoiding the consumption of them is unlikely to do much to help future generations, since what you forgo is likely to be consumed by someone else in the present. Reducing your consumption now can help future generations, but overwhelming in the form of your heirs (who gain a larger inheritance).

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  8. I live in the EU which has a (partial and rubbish) carbon emissions trading system, so if I reduce my (covered) personal carbon emissions that will have no effect whatsoever on global carbon emissions (assuming the price of carbon doesn’t drop to zero).

    Even buying and “putting verifiably beyond use” (as they used to say in Northern Ireland) carbon credits is of highly dubious value, since governments could simply decide to exactly counteract any large-scale campaign to do that by reducing the rate at which they shrank the emissions scheme cap, entirely consistently with their preexisting policy objectives.

    Does this however generalise to other resources such as water? Well, it depends on whether they are rationed, like carbon credits are in the EU. If they aren’t, it’s not the case that the water you save will inevitably be used by someone else, cancelling out your “sacrifice”. But Katja’s point that you might do something more valuable with your time or money is still valid in principle.

    Also, I dispute the implication of the post that using a bicycle to commute is a good example of waste. I cycle, and although I do it partly for environmental reasons, it also has many other benefits. I would choose to cycle to work just because I enjoyed it even if it didn’t have any other benefits.

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  10. Actually – replying to myself – water is a bit of a special case, I think. Other commodities like oil are likely to be bought by someone else if you don’t buy them. So I don’t think rationing is the relevant factor.

  11. Mr. Chang: I imagine Henry thought you were implying Saudi placation of its own citizenry rather than fear of foreign invasion because that’s what they are actually worried about.

    Saudi oil revenue keeps the Sheiks rich and in power. They’re not worried about eg. an American or European invasion if they shut off the taps, because their own subject citizens (and the hordes of “Princes” who make no wealth) would turn on them long before the US could decide to do anything, even if it wanted to.

    (Who does Saudi Arabia fear? Iran, for a mixture of regional political and religious reasons – but not because Iran would even think of invading for the oil.

    The hedge against “they’ll invade us if we shut off the pumps” is “we’ll destroy the wells”. Combine a year or two of cleanup and rebuilding, bare minimum with a motivated native insurgency [rather than a foreign-funded and not all that popular one as in Iraq now] and you have a disincentive against invasion for anything but an existential need on the part of the invader.

    Assuming, that is, that the invader isn’t thinking in hundred-year terms and also assuming that oil power will be king in a hundred or two years. History suggests that nations rarely act on such timeframes, and the latter assumption is questionable.)

    (Change of topic: Remember that in some places water is either used or simply dumped into the sea. Places not draining off an aquifer very often must dump excess water into the sea if demand isn’t drawing it down enough, and the reservoirs are full.

    This is why I’m, for example, puzzled by people in BC’s Lower Mainland thinking they’re going to “save the planet” by using less water.

    Not so much, guys. It’s rainwater.)

  12. The hedge against “they’ll invade us if we shut off the pumps” is “we’ll destroy the wells”.

    So what does it imply when this hedge could very well exist?

    Also, what does it imply when (i) there really are a lot of people who think oil production isn’t going to increase any more, and prices will consequently rise in real terms in the future, and yet (ii) not a single major oil-producing country is following the “sell oil futures” tack?

    I’m not arguing that there’s no domestic threat to the regimes in control of the oil; indeed, I’d agree that’s the primary threat, whereas I don’t see much of a “threat” of a Singapore-style foresighted regime arising in Saudi Arabia/Iran/Iraq any time soon. I’m just saying that there’s an incentive for other countries to keep the internal dynamics that way. A hypothetical Saudi government that unilaterally shut down its wells to sell oil futures just might find few buyers for the futures, because somebody may ensure those futures have too much… “counterparty risk”… to be a prudent investment.

    That said, Russia, as a major oil power with absolutely no problems defending itself, is a wildcard.

  13. i migth have catched the idea. the resource katja is talking about is time, education and human effort.

    imagine this situation: I could be a scientist part of research team working on sustainable energy sources (wind, sun), I might be close to find a real improvement to present technologies. Oversimplifying my “life choices”, I can act in two ways: put all my time and effort on energy research or waste it on cultivating vegetables at home, making compost or making rallies at school/job to raise awareness about environment issues.

    this situation applies to policy makers/enforcers, engineers, architects, designers…..all the people that can impact the way how we use natural resources.

    indeed, present day “environmentalism” is more suited to people that does not have any education or influence to solve global-scale environmental problems. I can’t get out of my mind those Greenpeace advocates screaming loudly outside G8 meetings or artists making performances to raise “awareness”.

  14. I agree with your point in principle, but I believe its validity is rather narrower than you realise.
    One of the ways in which people exert an influence to reduce resource consumption is influencing others through their own actions. To preach one course of action for others, while not oneself following it, risks losing influence through the perception of hypocrisy.
    Your example of cycling/driving is a rather poor one. Providing one lives within reasonable cycling distance of one’s destination, cycling is extremely time-efficient, as it combines transport and exercise time. Additionally, one should factor in the other external costs (besides resource depletion) linked to driving – a study Rob cited recently (don’t have the link on this computer) suggested that the marginal cost of driving to society is 2x or 3x what an individual experiences, in addition to resource depletion concerns.

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