Freakonomics Radio - 143. Why Bad Environmentalism Is Such an Easy Sell

Episode Date: October 24, 2013

Being green is rarely a black-and-white issue -- but that doesn't stop marketers and politicians from pretending it is.

Please identify yourself, name, rank serial number, whatever version of rank and serial number you wish to convey. I'm Ed Glazer, the Fred and Eleanor Glimp Professor of Economics at Harvard, where I also direct the Taubman Center for State and Local Government and the Rappaport Institute for Greater Boston. Okay. You've said that a few times before. The short version is that Ed Glazer is an economist at Harvard, and he studies a number of interesting things. But his obsession seems to be with the city. In fact, we did another podcast with him a couple of years ago called Why Cities Rock. Glazer looks at cities from a number of angles, how they deal with housing booms and busts, how they incubate ideas and wealth, how much cities pollute compared to suburban and rural areas.

Glazer argues that cities are, in fact, very green, primarily because if you live in a city, you share so many resources with so many other people. So Ed Glazer is what you might call an urban environmentalist. It is not, as you can imagine, an overcrowded field. So, I was interested to see a new paper that Glazer wrote called The Supply of Environmentalism. What does he mean by that? The conversation starts here. I actually do believe that almost all environmentalists are motivated by relatively benign forces and they're trying to do good for the world.

And I do not think on net that environmentalism isn't a good force. I believe on net it is. There's a but, isn't there? You're just waiting for the but. But I do think that in the sales pitch, in the persuasion process, inevitably decision rules get simplified. Inevitably, we move things down to sound bites. We move things down to simple implications. And sometimes these just mean that we get results that are less than perfect.

In some cases, we can get results that are completely the reverse of what we wanted. From WNYC, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dupner. Today, we're talking with the economist Ed Glazer about what he calls the supply of environmentalism. Now, what does that mean? Glazer believes that most environmentalism is based on good intentions, but for a number of reasons, environmental messaging can be counterproductive. All right, let's get specific. What's the greenest thing you can think of off the top of your head? All right, maybe walking or riding a bike instead of using something with an engine. Maybe that's the very greenest thing that comes to mind. What's the second or third? What's the 19th greenest thing you can think of?

Maybe it's bamboo? Yeah, bamboo. Now, here's a commercial for bamboo from an Australian retailer called Etitude. The commercial features a talking panda. And as the panda tells us, bamboo is pretty green. Bamboo is great for the earth because once it's cut down, it grows back quickly, which means it's a great renewable resource. It also doesn't need any pesticides or fertilizers to grow and soaks up nitrates from the soil, which makes for a clean and happy earth. Bamboo has become a ubiquitous ingredient lately. You can buy bamboo flooring for your house, bamboo dishes and cutlery, sheets and towels made from bamboo, even deodorant and toilet paper. Brand name, Bambusa. We're Bambusa, yeah, we're Bambusa.

100% tree free and they're safe for your whole family. Hypoallergenic and BPA free. And one reason that bamboo has become so popular is that it's an easily renewable source, and therefore it's easy on the environment. But is it really? In terms of the conversations around bamboo, what's surprising is that it seems like people really fixated on that single attribute, that it grows fast. And in some ways, we should know better than that. That's Catherine Fernels with Dovetail Partners. They're an environmental think tank in Minneapolis.

Dovetail published a report called Bamboo Flooring, Environmental Silver Bullet or Faux Savior. Just because bamboo grows fast, Fernald says, does not make it a miracle crop. There's all kinds of things that grow fast. Corn grows fast, and we've heard all of the negative impacts of some types of ethanol production. So that's what's surprising is with how sophisticated environmental conversations have become, too often still we just go back to single attributes and we forget to look at the whole context of how things are produced. The context of bamboo production, Fernal says, is a bit more complicated. Most bamboo, to be economical for an export market, is going to be

cultivated in an intensive way. And so that generally means monoculture. It's going to be one species or maybe a few different species, but all bamboo in a cultivated area and most likely with intensive inputs like fertilizers and chemicals to boost that productivity. So what else do we not talk about when we talk about bamboo? Well, most bamboo products are imported from Asia, where increased demand can lead to deforestation and other unsustainable practices. And just because something is made from bamboo or promoted as being made from bamboo doesn't necessarily make it so green. Turning all that bamboo into all those products means going through the typical

manufacturing processes, which involve plenty of additives and hazardous chemicals. Earlier this year, the Federal Trade Commission fined four national retailers a million dollars for falsely marketing fabrics made from bamboo as environmentally friendly. The FTC, in a bout of cleverness, had a warning for consumers. Don't get bamboozled. This brings us back to Ed Glazer's point. The fact is that it's easy to be bamboozled because it feels so good to be told that the things we like to do aren't bad for the environment, for our kids and grandkids. We all want clean air and leafy forests and pristine lakes, which means there's a lot of demand for the supply of environmentalism.

Not all of which, unfortunately, is as green as it sounds. Here's Ed Glazer again. I walked through three cases in the paper about things that have been clearly part of environmental campaigns. And two of them, I think, are just being less than perfect, recycling and hybrid cars. And one of which I think of as being, in some cases, downright counterproductive, which is local opposition to new construction, particularly in greater San Francisco or greater California.

I'd like to ask you now to just back up and give me a very brief thumbnail of each of those. So talk to me about the less than perfect outcome of recycling, for instance. So recycling, this is an old idea among economists. Darby is the person who's associated with it. The point being that if what you care about is the number of trees in the world, you actually want people to use more paper rather than less because in the long run, the demand for paper determines the stock of trees because fundamentally, this is a renewable resource and you have to plant more trees in order to get more paper. Now, that isn't true if the paper is being produced from first growth forests. If paper feels more like we're fishing from a

common pool, that isn't true, but that's not actually how paper is produced in the U.S. It's actually produced in these renewable forests. So pushing people to recycle more doesn't necessarily do anything good in terms of forests. And indeed, if you want more trees, use more paper. Now, the flip side of that and the reason why that's a little bit too glib is that, of course, there still is potential for energy savings in recycling. There still are other potential advantages from recycling. And anyway, I'm just talking about paper. I'm not talking about plastic or any of the other things.

So I wouldn't try and say that I'm trying to beat the band against recycling. But it is clear that many of the reasons why recycling is – how recycling is sold often with this save a tree, don't recycle, get it backwards. That actually it's the people who are using more paper that are actually encouraging people to supply more trees. And it's similar to the point about vegetarianism and the number of animals, right? I mean, if we wanted to make sure there were no pigs on this world, we wouldn't start eating a lot of pigs. We would stop eating pigs. Another classic recycling argument is, you know, let's say paper or plastic cup versus ceramic mug. And it's held by many people that it's somewhat close to a sin to use a disposable cup when you

have a ceramic one at your disposal. And yet you have to consider the energy associated with the ceramic mug, not only making it and how long it lasts and so on, but every time you wash it, the hot water it consumes and where that water, how that water is produced, where does the electricity come from, the detergent in the drainage and so on, using the water with which to wash it, the time involved and so on versus throwing away a paper cup. So what do you know about that beyond what I just blathered and where do you stand on that? So I think I'm not going to take a stand specifically on the recycled cups versus not. But I know that what, as economists, we would tell people is to perfectly calculate the full environmental consequences of everything that you're doing and then make the appropriate choice taking that into account. We also know that that's an absurd thing for people to say. And part of the recycling story is that we boil things down to a soundbite, i.e., please recycle. And as a result, we don't necessarily get always the perfect outcome.

So it may be that most of the time using the ceramic cup is actually the right thing to do, but there surely are cases where it's not and we don't have any ability to nuance because we're following a bright line rule. And we could go on and on, electric hand dryers in a bathroom versus paper towels and probably a hundred other examples. The bottom line is I certainly don't know. I'm guessing you don't know. Somebody probably knows if they take a lot of time to figure out each case,

but your point is a larger one, yes? Yes, it is. It's that because this works through this public market, you inevitably get towards simple bright line rules, some of which can be imperfect. Coming up on Freakonomics Radio, why electric cars might make us drive more and why new construction in San Francisco, for instance, is greener than you think. Here is probably the area in which I both am least convinced by the pure benevolence of the persuaders and most convinced that the effects are actually counterproductive from an environmental point of view. From WNYC, this is Freakonomics Radio.

Here's your host, Stephen Dubner. Ed Glazer today is telling us that environmental messaging can be substandard and yet we'll still consume it hungrily because we're so eager to believe it. grass that I could practically pull out of the ground with my bare hands instead of lumber that comes from some big, hard, barky tree that needs a chainsaw burning gas and oil to cut it down? Sure, I'll use a bamboo. Now, obviously, we're all susceptible to marketing messages, but just because someone says something doesn't make it true. For example, I am a cat. I am a cat. I am a cat. Right, I'm not a cat. To Ed Glazer, one of the trickiest environmental messages of the moment concerns electric cars.

Now, one of the things that's interesting about cars is it harkens back to perhaps the greatest hit of environmental and energy economics, which is the Jevons paradox, which is Stanley Jevons' great observation that between 1750 and the age of the new common engine in 1850, steam engines in the United Kingdom had become wildly more efficient, much better at moving things with smaller and smaller amounts of coal being burned. Now, you might have thought that this would create a radical reduction in the use of coal and indeed, all fears that the UK would mine itself out would have vanished in the rise of all this energy efficient engines. But of course, the opposite

was happening, that what those more efficient engines were doing, what the age of Bolton and Watt was creating, was a whole world built around the steam engine. That meant that instead of using less coal, we were using more and more coal because of the behavioral response. And I think one of the reasons why Jevons is so popular is because he really focuses on what economists care about most, which is the behavioral response to changes in conditions. So just think about that the Jevons paradox is closely tied to how we think about CAFE standards for cars or other forms of energy efficiency. So you're implying here, let's say we could convert our internal combustion engine fleet right now of however many hundreds of millions of vehicles that is with a few hybrids and electrics thrown in around the edges, to an entirely electric fleet tomorrow. Let's say we could push a magic switch. Your

warning is that because the electric car would seem to be so environmentally friendly, it will produce an oversupply of, well, people would drive a whole lot more. Yes? That's the fear? Well, it doesn't even have to do with because it seems environmentally friendly. It's because it's so much cheaper. So typically, let's apply Jevons to normal mile per gallon gas powered car. So typically, what you need is for what's called the rebound effect, which is the amount of extra miles per gallon increased with respect to a reduction in the cost of driving. What you need to have the direct effect of reducing the mileage of cars, not be overwhelmed by the behavioral blowback, is you need that elasticity to be less than one, meaning that you can't have too big of a

behavioral response. Typically, the estimates of this rebound effect are that it's substantially less than one. Short-run effects are maybe as little as a quarter. Large-run, long-run effects can be a little bit more than a half. Studies differ, but I think most people think that as cars have become more efficient, we have genuinely had a reduction in gas mileage. Although it is certainly true that over the past 30 years, we've taken a lot of our more fuel efficient engines and then put them in heavier and heavier cars or cars with more and more horsepower. So we have certainly undone a fair amount of it. Now, what's interesting about electric cars is that because they use a totally different technology, they both reduce the cost of driving a mile and also they change the environmental footprint. They reduce both, both of which is a good thing, but they reduce

the cost per mile by a lot, substantially more than they reduce the environmental footprint. So, you know, I walk through some estimates, but, you know, it can be that the cost per mile of driving something like a Tesla is a quarter to a fifth of the cost per mile. And this is, of course, the marginal cost. It's not taking into account the upfront cost of buying the car. But a quarter to a fifth of the marginal cost of driving a gas-guzzling car. Now, by comparison, the carbon emissions related to driving is a much less substantial reduction. It is a substantial reduction but much less substantial reduction. It is a substantial reduction, but much less than that. So you're pushing so strongly on the cost that it's much easier to imagine that an all electric fleet could have a big enough rebound effect to offset it. Now, I'm not sure I believe

that, but it is something actually to worry about in terms of the impact of this. Your third example in the paper has to do with development regulations. Can you talk us through that? Yes. So here is probably the area in which I both am least convinced by the pure benevolence of the persuaders and most convinced that the effects are actually counterproductive from an environmental point of view. So the point is that there are certain parts of the country like San Francisco that are intrinsically incredibly green. If you just think about the climate of San Francisco, it requires very little heating in the winter and very little cooling in the summer. And parts of the older areas, the core dense areas, are also endowed with excellent public transit. And as a result, building more housing there is about the greenest spot in the country in which you could do so.

Now, you would think that environmentalists who were interested in minimizing America's carbon footprint would therefore be beating the band to increase the amount of production around the San Francisco Bay. Because indeed, it's just that production that will ensure that we live in an area that is environmentally sensitive rather than an area that is environmentally difficult. But of course, the opposite is the case. For 45 years, San Francisco has been a center for environmental activism that was focused on restricting building in greater San Francisco and it became increasingly difficult to build in San Francisco. The Supreme Court of California also helped with the Friends of Mammoth case,

which required an environmental impact review for any large-scale development in California. And those environmental impact reviews are intrinsically flawed because what they do is they ask about what the local environmental impact is of the project, but not the global environmental impact of not building the project. Because every time you say no to a project in greater San Francisco, it means that you're saying yes to a project somewhere else, right? I mean, the rate of household formation in the US doesn't get to be determined in San Francisco. They just get determined whether or not it happens there. So if you turn off building in Berkeley, it turns on outside of Houston,

it turns on outside of Las Vegas. And in order to ask yourself whether or not this local environmentalism is good environmentalism, you have to compare the carbon emissions associated with building in Houston versus building in San Francisco. And I think once you start doing that, the oppositions of local building in coastal California look like they have it backwards. So that is fascinating and it makes sense. On the other hand, we can't really – on that kind of environmental issue, we can't profess to be that surprised, can we? Because this is basic NIMBYism, isn't it? I don't want – yes, of course I'm an environmentalist unless my environmentalism requires me to do something right here that affects me in a poor way. Now, some people are incredibly selfless and altruistic, but probably most of us kind of constantly juggle.

We want what's good for the world, but we especially want that's maybe more generally about energy or generally about recycling or generally about the advantages of one kind of energy versus another? Well, I think you're exactly right in that it is precisely because it is motivated by fairly personal issues rather than a generic altruism that it has been more likely to not be to the environmental good. I think that's exactly right. In terms of lumping it together, I think all of this stuff is on a continuum. So, I don't think of this as being radically different. I think, you know, if I ask my neighbors who are opposing development for allegedly environmental reasons, they would think that they are thinking globally and acting locally and part of exactly the same crusade as,

and in some sense, the job of the economist is to create something of a hypocrisy tax, right? To say you can oppose the development, but you can't pretend you're doing good for the environment. You have to at least admit that what you're trying to do is to make your own commute a little bit easier or to not have to deal with the construction on your street corner. You're not allowed to pretend that you're doing good for the world by doing it. Gosh, that's a great way of putting it because I think that's a struggle that most right-minded people have. And let's assume for the moment that 100% of us are right-minded. We want what's good for ourselves and our families and the ones we love.

And we want to punish everyone else, not very much. Right? Let's assume that's the case. And yet, I guess what I'm taking from hearing you talk is that the message of environmentalism is too often the bright line or the black versus white that doesn't allow for that contradiction to kind of live within us. I think that's probably right and that we should probably be most aware of environmental messages when they are sold by people who have an obvious personal interest in it. minute. That makes sense, doesn't it? Follow the money and follow the incentives. Like earlier, when we were talking about bamboo, the anti-bamboo sentiment came from Dovetail Partners, which is, quote, Landowners Association, the kind of folks who might not be crazy about all that Asian bamboo being turned into floorboards and toilet paper. And if you think the incentives get murky in marketing, just look at how environmental

ideas are handled in politics. You remember when ethanol made from corn was thought to be the next great green energy breakthrough? Ethanol turned out not to thought to be the next great green energy breakthrough. Ethanol turned out not to be as green as promised. And I'm sure you'll be shocked to know some of the politicians who subsidized it had their own incentives. Al Gore, back when he was vice president, was a big supporter of ethanol subsidies for corn farmers. But a few years ago at an energy conference in Athens, Gore admitted that it had been a bad policy. So why did he support it? One of the reasons I made that mistake, he said,

is that I paid particular attention to the farmers in my home state of Tennessee and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president. Hey, give the man two points for being honest at least, right? Now if we can only get that talking panda to come clean about bamboo. Hey, podcast listeners. Next week on the show, we revisit one of our most popular episodes.

It's about the value of a college degree. Now, we all know that a real college degree is expensive. But a fake degree is pretty cheap and pretty easy to come by. We negotiated the price for my bachelor's, master's, and doctorate with no work whatsoever. Wait, you bought a bachelor's, master's, and a doctorate all at once? Sure. Triple combo. Have it backdated, you know, with transcript.

What's a college degree really worth? That's next time on Freakonomics Radio. Freakonomics Radio is produced by WNYC and Dubner Productions. Our staff includes David Herman, Greg Rosalski, Greta Cohn, Beret Lam, Susie Lechtenberg, and Chris Bannon. If you want more Freakonomics Radio, you can subscribe to our podcast on iTunes or go to Freakonomics.com, where you'll find lots of radio, a blog, the books, and more.