As an economist who also supports environmental issues, I often get asked if it's hard to reconcile the two. I usually answer "not at all - many policies are both good economics and good for the environment". But I understand where people get the idea that the two must conflict, particularly when I read articles such as this one
from my home-town London Free Press
If you just can’t get by without your bottled water, you might soon be sweating it out at London city arenas.
Ditto at the city’s four golf courses, parks — and even at city hall itself.
That’s because a city council committee is being told it should lower the boom on sales of single-use bottled water on city property, under a ban that would be phased in starting this fall and be fully in place a year from now.
Saying the ubiquitous plastic water bottles litter streets, leach chemicals into landfills and don’t send out the right environmental message, a city council committee meeting tomorrow is being urged in a staff report embrace the ban.
It may not take much convincing to persuade the environment and transportation committee, some of whose members are already solidly behind the idea.
This policy may have little impact on the environment, but it is likely to have some fairly nasty effects on city finances. There are four basic points to the policy:
- Sales of bottled water would not be permitted.
- Sales of other bottled products, such as juice and soda would still be permitted.
- Consumers would still be allowed to bring their own bottled water.
- More fountains will be put into place. (Though how many and in what proportion to existing fountains is still an open issue).
Even if we accept the idea that reducing the number of plastic bottles used is beneficial (and I do accept this), the net efhttp://economicsadmin.about.com/cgi/edit/Document/t.pl?mode=stage1&Cat=&Board=Document&Number=1225&page=0&view=collapsed&what=showflat&sb=8
Editfect of this plan is quite likely to be negative. The apparent theory behind the policy is that consumers will switch from drinking bottled water to water from a fountain. However, there are a number of possible substitutions that could take place here; I count four:
1. Users Switch From Bottle Water to Fountains
This would reduce bottle usage. It would also force consumers to switch from their preferred choice, bottled water, to their less preferred choice, fountains (this is by definition since if fountains were their first choice, consumers would be using them, making the ban unnecessary). Taxpayers also lose as the city sells less bottled water and collects less revenue.
2. Users Switch From Bottle Water to Nothing
This again would reduce bottle usage. It would again force consumers to switch from their preferred choice, bottled water, to their less preferred choice, nothing. This could have public health impacts if golfers overheat from lack of water consumption, but that seems to be a stretch when there are so many alternatives available. Once again, taxpayers lose as the city sells less bottled water and collects less revenue.
3. Users Switch From Buying Bottle Water to Bringing Bottled Water
This does absolutely nothing to reduce bottle usage. It would again force consumers to switch from their preferred choice, buying bottled water, to their less preferred choice, bringing bottled water. Once again, taxpayers lose as the city sells less bottled water and collects less revenue.
4. Users Switch From Buying Bottle Water to Buying Bottled Juice or Soda
This does absolutely nothing to reduce bottle usage. It would again force consumers to switch from their preferred choice, bottled water, to their less preferred choice. Here taxpayers may or may not lose, depending on what the relative profit margins are for each product. But there are public health considerations, considering that the alternatives to water are likely less healthy. This should be taken into consideration given that North America is plunging into an obesity crisis.
Without having any idea of which of the four substitutions is mostly likely (and in what proportion), we cannot be sure that bottle usage will go down much (if at all) even if bottle water usage is eliminated. But we can almost be certain that both consumers and taxpayers will lose. Without careful study any proposed policy can have all kinds of unanticipated substitution effects and unintended consequences. This one appears to have them in droves.