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Are recessions good for the enviroment?

Posted by: Adam Aston on February 12, 2008

There’s a lively rivalry boiling over at Lloyd Alter posted a tongue-in-cheek riff on how the economic slowdown could help the environment. Think about it: from goods like iPods to services such as air travel, less spending means less consumption, less energy use, less trash generated, and so on. Bring it on!

Not so quick, retorts Michael Graham Richard in a counter-point. Thinking a little deeper, Richard points our four reasons that a recession will hurt the green effort. For example, cash-strapped corporations (and governments) are likely to cut funding on green programs. Ditto, too, for anxious consumers who are likely to forsake costly organic products if money is tight.

Sadly, I lean to Richard’s more skeptical take. To his list I’d add a fifth example. A recession could send gas prices lower for a spell, a retreat which consumers yearn for deeply, no matter how temporary it proves to be. This could have lasting effects. A slight retreat in gas prices will attract more consumers to buy big vehicles than a proportional uptick in gas prices is likely to attract new hybrid sales. (Put another way, elasticity of demand for gas guzzlers is high as gas prices fall and low as it rises.) And since vehicles have a life span of a decade or so, such a backslide toward SUVs and trucks would hurt long term fuel savings goals.

What do you think?

Reader Comments


February 12, 2008 12:52 PM

You're right that Richard is right that it's not so cut-and-dried as Alter might suggest. Still, I think the jury would have to sit this one out until we did some more analysis. For example, and thinking in terms of global warming effects, it would be helpful to look at what happened during and following previous recessions. What were overall energy use/greenhouse gas emissions during those recessions as compared to periods of economic growth? When the economy got out of the recession and started growing again, was the growth in energy consumption faster than the slowdown had been going into the recession? And how long did it take for energy use growth rates to level off, assuming they initially rise extra fast out of the "hole" of a recession? In other words, doing our best to account for "all else being equal," are the dips in energy use (if any) in a recession larger or smaller than the bumps in energy use that follow them?

Here are some other "on the one hand, on the other hand" aspects to trying to figure this all out. This particular recession is notable because it has been triggered by a huge collapse in the housing market. Housing construction is a pretty environmentally intensive activity. Building all those suburban dream homes uses up vast quantities of wood products and concrete, to name just a few, plus all the appliances that get installed. A slowdown in harvesting forests has some environmental advantages, as does avoiding production and use of cement (at something like 1 lb. of carbon released into the atmosphere for every 1 lb. of cement used, if I recall correctly). Fewer new housing developments means less woodland or farmland being bulldozed and paved over. It's such a big industry and the fall in the housing market has been so extensive, that this could outweigh things like your example of a boost in sales of gas-guzzlers.

Okay, but then here's the other hand on housing: the more strapped people feel, the more they'll accept lower-quality construction. So that means that the houses that do get build now, and the houses that are built coming out of this recession (assuming we ever do :) ) will be more likely to cut corners on things like insulation and more-efficient appliances. So, like your case whereby recession-induced falling gas prices leads to more gas guzzlers which will be on the roads for a decade to come, the squeeze on home builders might result in millions of less-efficient houses with lifespans of 50 years or more. There's some amount of retrofitting that could eventually be done to these houses to improve their insulation and appliances, but it sure would be better to have gotten them right from the start.

Better, worse than, or just a plain wash? Your guess is as good as mine.


February 12, 2008 1:19 PM

PS: Of course the biggest effect of a recession on the environment might end up deriving from its effects on politics. My guess is that during a recession, the populace will be feeling less "generous" and more cautious about policies that might appear to be costly. So, for example, it probably becomes much harder to pass a carbon tax or cap-and-trade plan, even when, under some of these plans (like "cap-and-dividend"), the majority of the population would actually come out ahead, financially. I'd expect peoples' fears of higher energy prices to trump their perception of overall net benefit. And THAT means a huge, huge hit against the environment that can be traced back, in part, to the recession. Ah, well.


February 12, 2008 5:48 PM

Less homebuilding would be good for the environment. A break from rapid growth in some areas might give communities time to plan smarter or encourage in fill instead. But the MAIN reason it might be good for the environment is that current homebuilding practices are very wasteful and temporary.

Truly good builders and consumer groups often call today's new housing "Disposable Housing," because it's shoddy and doomed to rot or fall apart in a relatively short time.

Shortcuts taken by many in the industry have become commonplace, and accepted even when it involves code violations. E.g. a big one is to omit various types of flashing and watershedding and water proofing materials and steps. Application of these materials/steps helps keep water out of the walls, roof, attic, basements and crawlspaces. The application takes skill and time, as well as the materials themselves, things many of today's builders don't want to pay for. They cut corners and then act as if this is a "savings passed on to the consumer," when in reality it's a deception that will COST the homeowners thousands to rectify. It may not be discovered until the warranty or statute of limitations runs out either.

Regardless, the warranty is often an illusion, the builder often out of business and building under a new name, and the law is scant recourse when arbitration clauses take away a homeowner's right to sue anyway.

Many new homes start leaking and rotting almost right away. Water gets inside the wall assembly or basement and then you're looking at a huge repair bill to redo work that the builder didnt get right the first time, and often won't be held accountable for. You see dumpsters full of relatively new material, being thrown into landfills, and new material being applied, due to these defects. If the repair is equally poor, it'll just keep happening.

Houses aren't being built to last, they're being built as fast and cheap as possible, and often sold along with toxic loans set up by the builder's mortgage co. Talk about a waste of trees!

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BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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