Interview: Economic Policy Changes Will Move the Needle, Not Reusable Bags

Walking in Greenwich Village after Gernot Wagner’s talk at the New School last Tuesday, I realized that I’m probably not very far from the home of Colin Beavan, aka No Impact Man. I find it very interesting that these two bright people, who are so passionate about the future of the planet, have such different approaches to dealing with our environmental challenges. While Beavan takes a more personal approach based on efforts to lesser the impact on the environment, Wagner believes that “only the right economic policies will enable us as individuals to be guided by self-interest and still do the right thing for the planet,” he wrote recently in a New York Times op-ed. Although he himself is a vegetarian, rides his bike to work and is very enthusiastic about recycling, using reusable bags and so on, Wagner thinks none of these will stop global warming. I was very intrigued by his arguments on the NYT piece and therefore was very happy to hear that the Tishman Environment and Design Center at the New School is hosting a book launch for Wagner’s new book But Will the Planet Notice? How Smart Economics Can Save the World. Here’s an opportunity to get it right, I thought to myself. And I wasn’t wrong. For over an hour, Wagner, who works as an Economist at the Environmental Defense Fund and holds a PhD in Political Economy and Government from Harvard, presented his perspective on the right ways to make a difference. Recycling, using a tote bag and other similar daily efforts won’t solve global warming, he told the audience, adding that self-sacrifice doesn’t make a difference and can actually be counter-productive. The part of not making a difference is actually quite clear – there aren’t enough people who do the right things to create a positive impact on a large scale. I was curious though about the counter-productive part – how doing good actually worsens things. Wagner explained that for example when we buy carbon offsets for our flights, it can make us feel better about flying and as a result we fly more. There’s also the single-action bias phenomenon, he added,  where if I do something good like using a reusable bag at the store, I feel this gesture might compensate for other environmental sins I’m committing like getting into the car and driving home instead of taking the bus. This can also lead to another phenomenon – mass delusion. He gave the example of Obama voters that thought the environment was getting better just a week after President Obama took office, when nothing was actually done yet. If we go back to the part dealing with making a difference, the questions is how you get the critical mass to do the right thing and hence make a real impact. Wagner believes the only way to make a difference is through policy changes that can lead people to do what is in their best interest. These are not necessarily big changes – they can be tiny like the PlasTax (Ireland's fee on plastic bags which was enacted almost a decade ago). Even though it was only 15 euro cents (later it was increased to 22 euro cents), this tax resulted in decreasing approximately 94 percent of the plastic bags used in Ireland - about 1 billion less plastic bags a year! It is more complicated to make these steps on a global level, but we can still find positive examples like the EU plan to extend its emissions trading system (ETS) to aviation, which means that airlines flying to, from, or within the EU will need to pay for their flights’ carbon emissions. If all goes as planned, then such a policy change will provide a greater incentive for airlines to develop and use alternative fuels, as well as for their customers, who will probably pay most if not all of this tax, to explore cheaper transportation options. Wagner is not the first talking about solutions based on internalizing externalities or the first to criticize green consumption practices, but he’s synthesizing both in such a way that definitely gets you thinking. Following the event I sent him couple of questions to further learn about his perspective. Triple Pundit: What do you think about the common suggestion for consumers to vote with their dollars and purchase green alternatives whenever possible? Can it make a difference? Gernot Wagner: Voting with your dollars is clearly an important part of what we ought to do as conscious and responsible consumers, but it can only go that far. It presupposes the belief that we need to act differently, and it very quickly runs up against real constraints. If overwhelming market forces are pointing against you—and your name isn’t Buffett—it’s tough to have your own dollars make a real difference. 3p: Are you afraid some people will use your book as an excuse for not doing anything, or stop recycling for example, because why do it if it doesn't make a difference anyway? GW: There’s always that danger, but it would be a clear and perhaps deliberate misreading of the message. That message is clear: keep recycling, keep buying green, keep doing all the right things. The point isn’t that we shouldn’t do these things. The point is that everyone should be doing them. That’s where policy change comes in. 3p: Do you think movements like Occupy Wall Street or organizations like 350.org can play a role in achieving the solutions you talk about? If so, what is it? GW: Absolutely. 350.org, environmental movements everywhere, and especially also OWS are clearly important. (You can read more of his thoughts on OWS here and on 350.org here). 3p: How do you want people to apply the messages in your book to their day to day life? What is the most important thing or things they can do to help if they were convinced that only smarter economics can make a difference? GW:  The one main message is indeed: study up on your economics. Make sure you and everyone around you knows what’s at stake and what can and should be done. I don’t know about you, but I sure hope people and especially policy makers will read Wagner’s book before the question will be not how to make the planet notice but if it’s not too late. Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.