Econ Talk and the Environment

I’ve never been too swayed by movements to save “the environment.”  After all, the only reason we enjoy the quality of life that we do is that our species has been able to keep nature in check, at least for the most part, most of the time.  But whether it’s a tsunami, a volcanic eruption, a deadly mutating virus, a near-miss asteroid, a dangerous solar flare, a flesh eating bacteria, an earthquake, a deadly spider, the ice age that’s right around the corner, or even our own highly imperfect evolution, nature and “the environment” are aligned against us and could kill us at any time in any number of terrifying ways.  True, I live in Wisconsin where I happen to be shielded from many, but not all, of these completely natural but deadly creatures and phenomenon.  Also true, I’ve yet to fall victim to my aging and disease-prone genes (although I likely have lived more years than I have left in front of me).  But my point is that “the environment” strikes me as more of an adversary than a thing worthy of my charity or concern. 

But I do like things like clean water, clean air, and even several wild animal species that pose no direct threat to me.  So I am willing to accept that it’s possible that the climate is warming, that the warming might be caused by human activity, and that this might have a negative impact on “the environment,” and possibly even on me.  And assuming the truth of all of these things, it makes sense that our government should force us (or at least give us incentives) to make the things we use even more energy efficient.  Or does it?  Econ Talk host Russ Roberts and his guest David Owen think otherwise.  Why?  Because when things become more energy efficient, they become cheaper to operate.  And when things become cheaper, people will buy, do, or consume more. 

Take cars, for example.  If a car gets 30 miles per gallon of gas, a person might drive it, say, X miles.  But if a car were to get 60 miles per gallon of gas, a person would use half the amount of gas, right?  Right, except that now that gas is cheaper, and the cost of operating the car is lower, the person is likely to drive it more—say, 1.5X or even 2X miles.  (That cross-country Griswold family trip, for example, is now well within financial reach.)  And this, from an environmental perspective, offsets the more efficient gasoline engine that was supposed to save the environment.  That is, even though mileage per gallon of gas improved, the negative impact on the environment could be unchanged due to increased consumption.  In some cases, it could even be worse. 

Learn more about these unexpected consequences by listening to Econ Talk, where Russ Roberts and David Owen discuss David’s new book, Conundrum.