Green2 Discontinued

I've decided to discontinue this blog indefinately. If I get the time later to address this subject as it deserves, I'll revive it.

Want to Be Green? Work From Home

I'll make this prediction: In 10 years, more than half of white-collar employees will be working from home. The number of workers who work from home is on the rise. There are several reasons, and those reasons will be even more influential in the future:

1) Technology. Faster Internet connections, better video and voice conferencing technologies, and cheaper computers for home offices contribute to the trend.

2) Productivity. Some people commute for hours a day. Imagine if that time could be used working instead. And, if you work in a cube, you know how distracting hearing someone else's phone conversation can be.

3) Employee-happiness. This one speaks for itself.

4) Cost. I saved the most important for last. Businesses are always looking for ways to cut costs, and working from home is a way to cut costs, and it saves the employee money too. If more workers work from home, the business doesn't have to pay for as much office space, including utility bills. If you think about it, leaving your house and going to work is a horrible waste of space and energy. For the whole time you are at work, your home is still there, taking up space and energy for no purpose. Even if you have family at home, your home is still big enough for you also, so why not use the space?

But not only does it save the business money (and here's the main point of my post) but it saves the employee money also. As gas prices skyrocket, businesses will increasingly realize that giving employees the opportunity to work from home is a bigger perk than it used to be. You thought your hybrid was saving the environment? How about not driving at all (well, for work anyway)?

And I believe this will be only a piece in a larger trend of a cutback on transportation. Grocery delivery will become more popular, since it is more efficient for one person to travel the neighborhood and drop off goods than it is for everyone in the neighborhood to drive to the grocery store. Locally grown foods will become more cost effective. More choices for entertainment will appear in even small towns, as residents are less willing to drive to larger cities.

All of these changes, which are positive in my opinion, depend on one thing: the free market. These changes will have much more impact than government-mandated fuel-efficiency standards, but these changes will occur as a result of unregulated market forces.

Happy Private Conservation Day!

Actually a day late, but I was waiting to post until The Heritage Foundation posted their video and audio. Private Conservation Day is held around the time of Thomas Jefferson's birthday to recognize the concept of environmental protection through private property rights.

Robert J. Smith, who coined the term "free-market environmentalism," was given the 2008 Lifetime Achievement Award from the CEI. In his speech, which you can find linked above, he gives an overview of the success of conservation through private property rights in the past, and opportunities for the future. It is about an hour long, but well worth the time.

For those who don't want to take the time, I'll summarize. Private property rights improve environmental conservation, from the time of the first settlers of the Americas to today. The government's attempts to protect the environment through regulation and government ownership fail. Mr. Smith gives many examples in his speech. We need to know how much land the government owns (some estimate it to be above 50%) and what the resources on those lands are so that we can begin to debate if private ownership would be better.

A Hybrid Hummer?

Not likely, but even the Hummer cannot crush economic forces:

With sales of the brutish H2 in a free fall – they dropped from 28,898 in '04 to 12,431 last year – new Hummer models will be smaller, shorter, lighter and more fuel-efficient, says Martin Walsh, general manager of the division.

Of course this development alone is not going to make much a difference to our planet, but it is evidence that even the companies without the slightest sympathy for environmentalism cannot escape the reality of the changing market.

The Hybrid is So Yesterday

The auto industry is going green:

Just as Toyota's hybrid Prius went from being a curiosity into a best-seller, so air cars may follow suit. Given the pace at which manufacturers are developing greener vehicles, that day might come sooner than anyone thinks.

To be clear, I don't know if any of the specific technologies mentioned in the article will pan out. But the important thing is that the auto industry recognizes that this is the future. Increasingly, green means profits. It won't be long, in my opinion, before the hybrid is the technology we are trying to phase out in favor of better, cleaner, and cheaper technologies.

Ethanol: The New Oil

While researching for a post on how ethanol is like oil in many ways, I came across this recent article from the Heritage Foundation that said it better than I could. Here's a preview:

For a growing number of people, including some who had supported the mandate, the many problems, trade-offs, and unintended consequences have proven too great to ignore. Even those who see benefits have to ask themselves whether they are outweighed by the costs.

Expensive. Resource intensive. Environmentally damaging. Yes, ethanol is the new oil. This is one more example of the government thinking it knows better than the free market. Some have been asking since the beginning: If ethanol is cheaper and cleaner, why do we need a mandate?

Some argue that ethanol is just the first step to something better. I agree that is possible, but first steps aren't always viable. When the Wright brothers made their first flight, they didn't start hiring flight attendants. If there are more promising fuels down the line, the free market will find them easier without government-mandated false hope in corn ethanol.

Capitalism 101: Profits = Good

Oil executives recently were dragged in front on congress by the ears to explain how they could have the audacity to make a profit.

What strikes me as odd is that the same people who are so upset about the obscene, below-average profit margin of the oil companies also think we should get rid of oil in favor of ethanol and biofuels. (More on why those are bad ideas another day.) This is evidence of a fundamental misunderstanding of the free market.

When a resource becomes scarce, its price goes up. The rising price may mean a good profit for oil companies for now, but it also signals something of the future. There are two options:

1) The oil companies will realize that they must invest their profits in the development of other forms of energy if they want to survive in the future. As gas prices go up, consumers will demand alternatives.

2) Oil companies will ignore alternative forms of energy, and then go out of business when other, smarter companies find better alternatives and sell them for less.

Either way, the consumer and the environment win, without the need for a single government hearing.

On a related note, a pop quiz:

When companies make a profit, who keeps the money?

A) The CEO
B) Stock holders
C) Fat, suspender-wearing guys with cigars
D) None of the above

If you answered D, you're right! Profit, by definition, is what's left over after everyone else has been paid. Profits, then, are used to re-invest in the company, creating jobs, fueling innovation, and other evil free-market plots.

Free Market Works to Save Forest

An investment group purchased wetlands in order to make money by conserving the resources:

The group, called Ecosystem Investment Partners, is at the tip of a paradigm shift that is turning one of the bedrock notions of free market economics on its head. “The fundamental pattern has to do with supply and demand,” says Adam Davis, a business sustainability consultant and one of EIP’s principals. “There used to be very few of us people out here on Earth compared to the size of natural systems. But with 6.5 billion of us, and with our consumption and production of resources per person going up and up, there’s a new relationship of supply and demand. Ultimately, it’s that new relationship that creates the financial value of natural systems.”

...

Some environmentalists balk at the new approach, arguing that moral suasion should be enough. They also object to the commoditization of nature and are repelled by the idea that the same sector of society that has historically destroyed the environment, the business sector, will now be the primary beneficiary of efforts to restore it. Proponents, however, say they are just being practical. “From a pragmatic point-of-view, all the indicators are going to continue to go down in terms of planetary health unless you price things into our economic system,” says BSR’s Stewart. “It is scary,” says Gretchen Daily. “It’s economic forces that have taken us to the brink. But we need a force that powerful to bring us away from that brink.”

The heart of environmentalism is the idea that nature is valuable. It turns out it is not only valuable in the "priceless" sort of way, but sometimes in real dollars. Businesses and environmental groups are finding that preserving nature is in the interest of their bottom line. The article above is just one example. The company I work for bought a huge plot of land that the city wanted to preserve. Instead of restricting growth, the city sold it for cheap, with the agreement that the company would only develop a small percentage of the land. This was also in the interest of the company, who estimated that the unique work environment they could create would attract better workers, and the land would pay for itself in a matter of years in increased productivity. This company also put in geothermal heating that not only protects the environment but also will be a good long-term investment.

While the issue of carbon credits that this article also brings up is complicated, that will have to be a post for another day. I agree with the basic premise that since the environment is valuable, it is in the interest of the free market to preserve it.

I'll bring up one more point that the article didn't get to. If we truly are facing a situation were natural resources are going to become scarce in the future, that means that those resources will become more valuable. Scarcity increases value. Considering that, wouldn't it be a great business move to buy up a whole lot of natural resources, and then do nothing with them? They will be worth a lot more in the future, right? Although the article left it to our imagination to figure out exactly how they planned to make money, it seems to me this is just what the Ecosystem Investment Partners did.

This is the first of many posts I plan to write how free-market environmentalism is, or could be, at work to save our environment. All of these posts will have the label, in the news.

Introduction to Free-Market Environmentalism

As I said before, this blog is not intended to be the definitive source for information on free-market environmentalism. It is only a discussion of it from my non-expert perspective. Still, I'll give a brief introduction here. I'll try to avoid defending it too much for now--I'll have plenty of posts that try to do that later on. For now, I'll be satisfied to give an overview of what it means.

Before we understand what free-market environmentalism is, we must first understand conventional environmentalism. Most environmentalists who are activists for changing government policy have the opinion that the free market destroys the environment since it encourages businesses to think only of their bottom line and neglect other concerns. Therefore, regulations should be put in place that restrict businesses from causing environmental damage in their quest for more money. The typical environmentalist would view the free market as an economically successful system, but one with negative environmental consequences that must be mitigated through government intervention.

On the other hand, free-market environmentalism argues that government regulation is not the best way to address environmental concerns. Instead, the key is private property rights. When people and businesses own resources, they are more likely to take care of those resources. They will try to strike a balance between using those resources to make money and preserving them as an investment for the future. As a resource becomes more rare, the ownership of those resources becomes more valuable, so there is an incentive for economic players to invest in the future by preserving as much of the resources they own as possible, and creating more of those resources if possible.

A simple example to illustrate this principle comes in the forestry industry. There are many companies competing to produce lumber, which means they are looking for trees to cut down. If the forest is not owned by any individual company, and instead is loaned out to all of the companies, then there is an incentive for each company to cut down as many trees as possible to make into lumber. If one individual company doesn't cut them down, another one will, so there is no benefit to a company to try to limit forestation. On the other hand, if the land were bought and sold on the free market, companies then have to buy the land for a price that represents the value of the resources on that land. The company should now consider how to best make use of this land, and preserving it to some extent becomes a more attractive option compared to depleting it. If the company were to immediately cut down all of the trees, the land would then be worth much less than before. But if the company preserves the trees on the land, the lumber that can be produced from the trees might be worth more later. Now there is an incentive to take care of the resource, instead of deplete it. Surely some resource consumption will take place in order for the company to be profitable now, but the company will now have an incentive to minimize the consumption, and mitigate it's negative effects so that the land, and the resources on it, will be worth as much as possible in the future.

To the pure free-market environmentalist, every environmental problem can be mitigated by applying free-market principles, as opposed to government regulation. Certainly there are issues more complicated than the forestry example, but I'll leave those for another day.

To learn more about free-market environmentalism, google it (don't worry, this is an obscure enough field that you'll actually get real research from real experts on the first page of results, not just musings from random people like me). I'll add resources that I find helpful to my sidebar.