Sustainability and The Tragedy of the Commons

Well, it’s been a busy couple of weeks. I moved into a quaint little neighbourhood in the Village of Ashburnham (colloquially known as East City – though I plan to call it ‘The Village’ and start a trend). Everything across the bridge is cozy and quiet, quite a difference from the hustle and bustle of the downtown core that I used to call home. In my two short weeks here, I’ve noticed that everyone in The Village has a dog. Or rather, that there are approximately 3.2 dogs per household in this part of town (the addition of a two year old Siberian Husky to my household has us under the average- but two dogs is still enough fur for one house, methinks).

In the ten days without cable and internet here, I managed to start and finish Andrew Heintzman’s The New Entrepreneurs: Building a Green Economy for the Future. It was a gift from a colleague last Christmas, and to be honest, I wasn’t entirely sure about the message of the book. I’ve found that environmentalism and ‘green’ messages in the past have been quite unrealistic- in the sense that reconciling these messages with the nature of consumerism and the mores of our society is, at best, extremely difficult. At worst, we’re closer to ‘snowball’s chance in hell’ territory.

But I was pleasantly surprised with Heintzman’s work. Here, we have a venture capitalist and entrepreneur who not only discusses environmental sustainability, but rationalizes it within the framework of the market-based economy and western capitalism. This line of thought is relatively new in business circles. Not original of course, some of the ideas have been around for a century (Heintzman discusses them in that context)- but what’s new here is that the ‘greening’ of business has begun to make its way into mainstream circles. I’d certainly count myself among the new wave of entrepreneurs who have made social responsibility and sustainability a core practice- very rarely does my work for clients not include aspects which address sustainability in one form or another.

What struck me the most about Heintzman’s work is the part which discussed the old economic theory The Tragedy of the Commons (the mere name of it shook some mental cobwebs off an old macroeconomics lecture I attended during my post-secondary studies). Sounds a bit like something that Shakespeare would have written at London-upon-Thames.

In a nutshell, this theory suggests that when resources are plentiful, humans tend to overuse them to the point of decline and collapse. In Canada, think water (we water our lawns several times a week in the summer- this is unheard of in the Middle East), lumber (many of us cut a tree down and stick presents under it once a year- a practice that would evoke shock and awe in Africa), and oil (how many of us drive to the corner store for milk, when a five minute walk would carry us there?). In essence, the Tragedy of the Commons suggests that the overuse of these plentiful resources ultimately continues until the system which generates the resources in question collapses.

Cue dramatic music here.

You can actually see this theory in practice within the billing of electricity and utilities for residential properties. In particular, how utilities are priced for the occupants. For instance- when renting a house or apartment, would-be tenants can comb the market and select a unit where utilities are either included, or cost extra. Within inclusive utilities arrangements, the rent tends to be higher- but the tenant never has to pay for an expensive electricity bill where all the lights or the oven get left on accidentally or carelessly. For anyone who’s rented an inclusive unit, think back to your electricity usage habits… I’ll bet that you weren’t that conscious of lights being on during the day, or the TV/radio left on when you took the dog for a walk, or the computer being left on when you weren’t using it.

Naturally, these consumption habits tend to change when the occupants of a unit become responsible for paying any electricity costs that they incur. When the true costs of consumption are passed on to the end user, efficiency and conservation tend to rise quite dramatically. For instance, many consumers were and are quite angry, now that Ontario Hydro is pursuing a ‘time of day’ pricing model across the board. Electricity use during peak hours now costs significantly more than usage during off-peak hours- thus, price to the end consumer using resources inefficiently has, and will, increase substantially. But, there’s an upside to this- with the increase in the cost of this resource, demand for energy efficient technologies will increase… thus spurring the free market mechanism (read: entrepreneurs) to spit out solutions (think- programmable water heater, lights that automatically shut off when you leave the room, ‘smart’ power bars for entertainment units that automatically shut off the power when you hit the appropriate button on your remote- thereby eliminating the ‘phantom’ power drain of electronics). Energy-efficient technologies only become important when consumers want them, and consumers only tend to want them when the normal costs of energy increase, thus decreasing their personal resources disproportionately (less cash in the wallet).

Perhaps this is the new environmentalism. Conserving resources because of increasing cost- not because it’s the ‘right’ thing to do. Regardless of your take on the ‘green’ movement, it’s tough not to see that cost is a near-universal motivator for change (no pun intended). Even though it will be difficult for some to modify their habits of consumption, the big picture of our society will look much better for it in the years to come.

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