27 May 2007

The ways forward are not obvious

All is not as it seems with systems as complex as the environment. You'd think that encouraging people to walk rather than drive would reduce fossil fuel use or CO2 emissions? Think again.

The grinding, milling, wetting, drying, and baking of a breakfast cereal requires about four calories of energy for every calorie of food energy it produces. A two-pound bag of breakfast cereal burns the energy of a half-gallon of gasoline in its making. All together the food-processing industry in the United States uses about ten calories of fossil-fuel energy for every calorie of food energy it produces. That number does not include the fuel used in transporting the food from the factory to a store near you, or the fuel used by millions of people driving to thousands of super discount stores on the edge of town.... Richard Manning, The oil we eat.
What about US agriculture as a whole?

In 1994, David Pimentel and Mario Giampietro estimated [that for every] 0.7 Kilogram-Calories (kcal) of fossil energy consumed, U.S. agriculture produced 1 kcal of food. Source
Similarly, you might assume that travelling by train is kinder to the environment than flying or going by car. But in June 2004, ‘Modern Railways’ published an article, Rail loses the environmental advantage, which pointed out that high-speed rail can consume more fuel per passenger than cars or even short-haul aircraft.

This happens when electricity for the rail network is generated by oil- (and presumably coal-) fired power stations, which convert fossil fuel into oil-equivalent at only 40 percent efficiency. As well, for supposed health and safety reasons in the UK, rail passengers cannot travel in the front third of the two vehicles that drive the fastest trains, and there have to be 'seat-free crumple zones' as well as toilets for the disabled (each occupying the space of eight seats. The result is that you end up with trains of 186 seats that weigh 227 tonnes, or a massive 1220kg per seat.

All this is to say only that it's not always obvious how to proceed when confronting environmental problems, and that our first instincts are likely to be wrong. Unfortunately, such are the disconnects in our complex societies and economies that our first instincts are likely to be expressed as government reaction, and that can entrench or aggravate problems rather than solve them.

With very complex systems, I suggest an outcomes-based approach: don't try to think of the best way of solving a problem, but define the desired outcome, and reward people for achieving it, however they do so. That's where Social Policy Bonds come in: they would be redeemable for a fixed, high, sum, once the specified social goal had been achieved, however it is achieved, and whoever achieves it. Under the current political system government bodies are set up, or regulations enacted that attempt to guess the most efficient way of achieving goals - if these goals are made explicit, which doesn't always happen. Or some funding is diverted from taxpayers to various interest groups that have stated objectives that sometimes sound as if they are congruent with those of society. But the reality is that there are no strong financial incentives for government or private agencies actually to achieve social social goals. In many instances the incentives are perverse. What happens to the police force in an area where the crime rate plummets? The organizational objective above all others is self-perpetuation, and that often conflicts with its stated objective.

So if our goal is to reduce greenhouse gas emissions, target that. If it's to reduce traffic congestion target that. Let the market work out whether doing these things means putting people into cars or trains, or replacing highly processed cereals with locally grown vegetables. In short: start off with the targeted objective, subordinate everything else to its achievement, and contract out that achievement to the market.


Harald Korneliussen said...

Now as a genunine peak oil worryer, I don't want to belittle the importance of our dependence on oil, but I have to point out that these "oil calories" numbers are grossly inflated. They are artifacts of highly creative bookkeeping: yes, tractors use fuel, and transport uses fuel, but very little per unit of food. A simple investigation into how connected food prices are to oil prices should show the weakness of these arguments.

Unfortunately, I can't trust any study that says hybrid cars are more lifetime efficient than SUVs, or that trucks are more efficient than trains, or vice versa, because there is just too much wriggle room in how the environmental costs are accounted for.

Ronnie Horesh said...

Thanks Harald; I saw a wide range of estimates for the 'oil calories' embodied in food and chose the lowest (by a factor of 10), so of course you are right to be skeptical. Much depends on the boundaries we choose for the analysis: do we include the oil cost of mining the metal that goes into the manufacture of the tractor etc? However, I'm not sure about arguing this on the basis of the absence of a relationship between oil and food prices. My recollection of Economics lectures is that the sale price of something is completely independent of its cost of production - at least in the short run. Both agricultural and oil prices are a complete fiction anyway; largely set by government subsidies and regulation. Farming in the rich countries seems these days to be largely about making capital gains from land value appreciation. However, the broader point and the one you also make is that a handful of government bureaucrats today has no idea whether walking or driving, cars or planes, hybrids or SUVs, etc is better for the environment today; still less which will be better in the future. Which is why I would argue that we should subordinate our policy to outcomes: contract the job of finding out the efficiency or otherwise of all the options to an adaptive and motivated market. Regards