Posts by Robert McCormick

High Efficiency Devices, CFL Light Bulbs, Caveat Emptor

Starting in January, the common incandescent light bulb becomes illegal, well maybe, in most of the United States. (Some recalcitrant states, SC and TX to name two, seem hell bent on reminding the federal government of the long forgotten 10th Amendment to the U.S. Constitution, but wasn’t that fight settled a long time ago?) Advocates of this law say that it encourages the use of more energy efficient lighting sources such as CFL and LED lights. It has been noted that a large fraction of the energy consumed by an incandescent light bulb goes to create heat and not light, and that the newer, high tech devices produce an equal amount of light using less energy.

However, those of us who aren’t lucky enough to live in AZ, south FL, or San Diego, demand a LOT of heat many months of the year. In Montana, I use natural gas to heat my home about 7-8 months of the year. In South Carolina, I heat my home about 5-6 months of the year using wood and electricity, not every day, but most of them from November to April.

The energy that creates heat, not light, in a regular incandescent bulb is NOT wasted during those months. It is a nearly perfect substitute for the alternative heat in my home. The same electricity that heats the filament in my incandescent bulb in my living room in my South Carolina home in winter will be used by my heat pump to reproduce the heat lost when I convert to CFL or LED lights when my woodstove runs low. There is NO energy savings of any important degree. (It bears noting that my heat pump is a more efficient producer of energy than my incandescent bulbs, but that is not my main point as is explored more below.)

Of course in the spring, fall, and summer, the CFL bulbs will not be producing heat that I don’t want, but that isn’t my point here. I am only making the observation that you are foolish to think that you will get the savings printed on the carton of CFL light bulbs if you ever use gas, electricity, or any other energy source to heat your house. Replacing incandescent light bulbs with cooler CFL or LED lighting means that other heat sources have to work harder in your home when it is cold outside. Of this there can hardly be any doubt.

To be sure, heat pumps and natural gas may be more efficient heaters than incandescent bulbs, no argument here. I am only making the point that for homes in cool or cold climates, the promised energy savings simply cannot emerge.

It makes a lot more sense to use CFL or LED lighting outside where the incandescent light bulb heat is wasted, or during summer or non-heating months, and I use them myself in this application. I have made a little Excel spreadsheet calculator [XLS] that properly calculates the real energy savings you will get from switching to CFL or LED lights from incandescent which is based on the number of days that you think you heat your home. Those of you who are interested to see just how dishonest the current forecasts are are welcome to use this simple tool. 

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Brainless Sustainability

One of the envirobuzzwords of the 21st century is sustainability. I recently googled the term “environmental sustainability” and there were over 11 million hits. The National Science Foundation makes grants for sustainable engineering which “typically considers long term horizons.” More generally, most people think of sustainability as the capacity to endure.

There can hardly be any doubt that the word sustainability has captured the envirolandscape. Here is just a trifle of a list to make my point: www.sustainablefoodsystems.com (food) www.sustainableabc.com (architecture) www.sustainableagriculture.net (ag)

I could go on for a looooooong time, but you get the picture. Sustainable is certainly enduring, if in nothing more than the word. People worry about sustainability for a lot of reasons, and I would say mostly good ones. Pondering and preparing for the future makes great sense. However, being brainless about it seems odd. And I choose that word for a very particular reason.

If you asked most people what the most important natural resource is today, you would surely get a variety of answers. Some would say water, others oil. Some might say air, others sunlight, and who knows what all else including wolves or even snail darters. But there is a modern school of thought in economics and elsewhere that uniformly gives one answer, human brains. One of the architects of this movement, Julian Simon, liked to say, “It is your mind that matters economically, as much or more than your mouth or hands.” Matt Ridley has written extensively about this in his latest work, The Rational Optimist. Following these giants, I take the position that human minds are the world’s greatest natural resource.

Ponder the sustainability question from a slightly different slant. Who really deeply, truly cares about whether buggy whips are sustainable, or candle tallow, or firewood? Isn’t what we really care about being sustainable are the outputs of these inputs: transportation, home lighting, and warm houses? A hundred and fifty years ago, whales neared extinction owing to their fat for lighting lamps. We have light at night today not because whale oil is sustainable but because our ingenuity is sustainable and some smart fox invented kerosene; and who really cares whether kerosene is sustainable so long as we have nuclear, or solar, or wind energy to light our homes. The concern over sustainability is real and important, but leaving the human brain out of the equation, brainless sustainability, makes hardly any sense.

I too am concerned about whether we will have all the things we care about tomorrow and into the future for our kids, but I truly don’t care whether our trees are sustainable. What if some genius figures out a way to make housing lumber out of corn cobs or waste water? I will then care less about certified wood products. Forest sustainability isn’t important to me. There are lots of services that forests provide besides housing lumber, such as, clean air, animal habitats, luxurious views, and hikes to name a few. It is reasonable to care about having an ample supply of these into the future too, but don’t neglect our capacity to build spaceships or other ways to achieve the same ends. There is almost always more than one way to skin a cat, and human energy and other resources that we dedicate to maintaining the status quo are resources which could have been used to help us advance.

Just imagine if 150 years ago society had gone on a crusade to create whale oil sustainability. It is entirely possible that the geniuses who created and brought kerosene to the world would have been sidetracked into trying to find ways to make whales procreate faster or to have certified sustainable whale oil. That’s brainless sustainability to my way of thinking.

Let’s get behind brain-powered sustainability and figure out ways to build houses out of non-wood products, and electricity out of non-fossil fuels, and eat food which uses less land, water, and labor. Let’s create human, mind-based sustainability instead of land or nature-based sustainability.

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The Prius Premium and Other Sensible Nonsense

Photo: Toyota
As this working paper by Steven and Alison Sexton explains, there is a substantial, and important, price premium that Toyota Prius buyers are willing to pay to drive a Prius. They are clearly buying something other than mere transportation. To some—indeed many—this waste of resources seems silly. To others it seems wonderful. The comparable gasoline-powered Toyota costs several thousand dollars less. Why would anybody do this? After all, the Prius buyer could purchase the equivalent gas Toyota and use the savings to donate to an environmental organization, or to pay the local boy or girl scouts to pick up litter? Or donate the money to some climate change cause?

For the economist, there is a deeper rationality that generalizes about this type of behavior. And there is a rich and full academic literature in economics that speaks on the topic of commitment via waste, the Prius being just one recent example of that principle in practice. The idea is simple. You and I want a friend or a customer to do a particular thing, yet it’s hard to know what they might do next. If they can pre-commit to a course of action then we might act differently toward them, making us both better off.

Wasting money can do the same thing. Spending money to buy things which are by themselves unproductive or of no value can commit the buyer to a course of action. Once convinced, this will lead others to treat them differently. Economists argue that, other things equal, the more an engagement ring costs, the longer a couple will stay married. Not because the ring cost a lot of money, but instead, the person most deeply committed to the relationship might invest the most in the ring. And, the money wasted on the ring only repays itself if the relationship persists. Therein the waste has rewards. It signals, bonds, and commits, and by doing so gets the spouse to act differently. This explains the custom of why prospective brides are not obliged to return rings to suitors who break off wedding plans or why divorcees are not required, usually, to return rings to their former husbands. If the ring could come back, its expenditure would not have been a waste and of no value.

I have an acquaintance who likes to pay the dinner bill when he goes out with close friends out of respect and love for their relationship. Naturally, the other couple often feels the same way. Occasionally they split the tab, but other times he insists on paying. When he does, the other friends have brandished a $100 bill, torn it into small pieces, and tossed it into the air because they wouldn’t let him pay. Having watched him do this several times, his past behavior of tearing up $100 bills has since convinced them of his earnestness. The past waste has rewarded him as he gets his way.

And this is why Priuses have to look ugly. If they looked like other Toyotas or similar cars, then no one could observe the waste of resources.

A prediction emerges: Hybrids and electric cars will look like regular vehicles once the price of gasoline makes them cost effective. Once there is no waste to buying a hybrid, there need be no signal of the waste, because there isn’t one.

So what is it that Prius owners are getting for the money they waste at the time of the purchase? They are almost instantly recognized as an environmentalist. That can pay dividends in many dimensions. For instance, sales people who want to impress environmentally-sensitive clients who drive a Prius have a leg up. Simply calling yourself an environmentalist is not nearly as effective as driving a Prius and proving that you are. The money wasted at purchase is returned via potentially enhanced sales.

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10 Years of Enviropreneurs

The lives of many and the face of PERC were indelibly impacted some 11 years ago when Bruce Yandle, PERC senior fellow and Dean Emeritus of the Business School at Clemson University, met with members of the Searle Family and their Kinship Foundation. The meeting was to discuss the idea of creating a leadership institute that would focus on environmental managers and issues. What became of that meeting was an idea whose time had come: to bring management principles, economics, property rights, markets, and business ideas to the environmental movement. Soon after, the idea of a leadership institute was born and in June 2001, the Kinship Conservation Institute convened in Bozeman, MT, as a partnership between PERC and Kinship Foundation. The Institute has evolved and is part of TEAM (Teaching Environmentalists about Markets), and operates today as PERC's Enviropreneur Institute.

What is an enviropreneur, a phrase and concept created at PERC in the teenage years of the Institute? Well, each of the 167 current fellows and the crops yet to come will each paint a slightly different picture for you, but the overarching theme is a cunning desire to create environmental assets out of environmental problems. An enviropreneur sees an opportunity where others might see waste, pollution, nastiness, sadness and sorrow. An enviropreneur sees a chance to do well while doing good.

Enviropreneurship is the subject of my essay in the latest PERC Reports, which will hopefully give you a taste of what this program has accomplished over the past decade. You can also see what some of the very first enviropreneurs from 2001 are up to in the "Where Are They Now" section accompanying the article. Indeed, the sun never sets on the Perconian empire!

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Wolves, Mosques, and Other Environmental Problems

Most environmental issues involve resource conflicts. One person wants to use a river to carry away her waste products, while another one wants to swim and fish in the same stream. Often these uses conflict and collide. A modern example of how “enviropreneurs,” or environmental entrepreneurs, come to see these conflicts involves wolf restoration to Yellowstone National Park. Since wolves were exterminated from the park by rangers in 1922, some people have worked like crazy to get them back against all odds. Ranchers of cattle and sheep despise the wolf for what it does to their herds. In the late 1980s and early 1990s, Defenders of the Wildlife created a viable solution to the wolf predation problem, and the wolf now roams that part of the American West again. Defenders, and the hard work of Hank Fisher, created the wolf compensation fund to pay ranchers when there was a demonstrated kill of calves or lambs. In the early 1990s wolves were released back in the park, and they now thrive there. The plan isn’t perfect, but it has worked now for almost 20 years.

Hank now works with the National Wildlife Federation trying to solve similar resource use conflicts over grazing rights in the Montana, Wyoming, Idaho area. Ranchers with valid steer grazing permits issued by the Forest Service and Bureau of Land Management have the legal right to put their cattle on certain public parcels of land for foraging, but grizzly bears and wolves like to use these same lands. Again, a resource conflict. The people who like wild wolves more than domestic cattle are frustrated, but Hank and his group have come to the situation with a bargaining solution. They buy the grazing permits from the ranchers, and with the aid of the Feds, they retire the permits. The rancher voluntarily gives up his rights, and the wildlife admirer gets what she desires: wildlife roaming and grazing free of domestic cattle. Win, win.

Now comes to us the thorny situation of a group of Muslims desiring to build a mosque on land that some others would like to use differently. Specifically, they would prefer that a mosque not be stationed so close to the site of the Trade Towers which were destroyed nearly 10 years ago by terrorists. To many on both sides of this resource use conflict, there are moral imperatives and all manner of ethical concerns, the right to worship and the right to “life, liberty...” to name two.

Yet, the land is owned by the Muslims, and there seems to be no question as to their proper title to the property. What would Hank Fisher do? I don’t know; I haven’t asked him, but I can suggest to those who want the mosque situated somewhere else, try to negotiate a deal or contract to either buy the land, or buy some other suitable land where the mosque might be alternatively located. Just like the friends of the wolf who want to use the land for their desires, why don’t those who oppose the mosque near Ground Zero, offer to buy the mosque site, or purchase some land elsewhere suitable to the Muslims wishing to worship in that part of Manhattan. Isn’t this better than a national political fight?

Those who fear the desecration of Ground Zero can use the newly acquired land in a way more to their liking, and the Muslims who wish to worship in Lower Manhattan can get their mosque without the rancor and resource conflict that has reached presidential proportions. Free markets, contracts, and property are often better tools than screaming, fisticuffs, and endless zoning commission meetings for solving resource conflicts among competing users.

UPDATE: Reason's Ron Bailey provides more background on the wolf controversy.

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Crosses, Stars, Moons, and Green Street-Side Bins

What do these four symbols have in common? Well, to start with they all cost resources, that is, they are not free. Why in the heck then do practitioners waste their money on them? Why do churches have steeples, and synagogues wonderfully ornate glass windows, and mosques, exquisite wool carpets? Surely the money spent on these trappings could have been used to do missionary work, feed the poor, or heal the sick. What is going on?

For some time, economists have understood that wasting money could pay big dividends, if the money was wasted carefully (see here, here, and here). Ornate signs, symbols, or Super Bowl ads, more than drawing attention, signal commitment. When money is spent on trappings, it will only return if the seller delivers as promised.

So, Christians wear crosses, perhaps for adornment, but also to signal to others that they believe in certain things and might be expected to act in certain ways. Some Jewish merchants close for Sabbath, even while it might appear to cost them money, presumably it pays more in loyalty and customer satisfaction by the symbol of their commitment.

The time that Muslims spend praying each day precludes a lot of production. Yet it remains valuable to them for many reasons, one of which might be external signaling to friends and colleagues of their religious and personal beliefs.

The modern environmental movement is hardly different. People desire to commit to a way of life, to signal their preferences, their values, their beliefs, and they also seek to enlist converts in their cause. Hence, symbols that are otherwise a waste of time and resources, come to play.

As Dan Benjamin at PERC, and others, have noted, a lot of recycling is (directly) wasteful and does not help the environment. Yet recycling remains a mantra of the movement. I offer that it is symbol of commitment, a willingness to waste, that bonds the recycler to a course of action, begs others to join, and creates a sense of community within the movement.

So here’s my prediction. The more people learn from Dan that recycling is wasteful, the more they will recycle. If recycling paid for itself, then it would not serve as a symbol and commitment of heart and soul to the cause. Recycling is good by virtue of the fact that it wastes, and the more that people learn this, the more they will do it. If crosses could heal or feed the masses, churches wouldn’t put them on the top of steeples. Their uselessness is their virtue, their symbol, their commitment.

While I agree with Dan that most street side recyling is an economic waste and environmentally unwise, the green street side recyling bin is a valuable important social sign precisely because it proves a willingness to waste. It says to the person pedaling by, “I am a believer.” The environmental movement would be less without it; that’s why I leave mine on the street for a couple days after the truck comes by and doesn’t empty it (cause it already is).

Bobby McCormick is a senior fellow at PERC and professor emeritus of economics at Clemson University.

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