What Does “Sustainability” Cost?

Rachelle Peterson

Don’t tell Ronald Liebowitz, but the law of diminishing marginal utility is one of the most fundamental economics principles, ever since William Stanley Jevons developed his Theory of Political Economy in 1871. Liebowitz is the president of Middlebury College, recently honored by environmental nonprofit Second Nature as a 2013 Climate Leadership Award winner. Middlebury, along with nine other schools, was selected for its “innovation and leadership in sustainability.” But before vaunting its laurel, Middlebury might do well to invest a few hours’ study in the economics library–that is, if this archaic morgue of leather-entombed trees hasn’t already given way to e-books.

Middlebury is a paragon of the sustainability movement, a nebulous network of environmental, social, and economic interests often depicted as three interlocking circles in a Venn diagram. The shared overlapping center of the three corresponds to sustainability’s sweet spot. The idea is that the earth is fragile, social justice is elusive, and the economy (capitalism, mostly) assaults both. Like an armor-clad lad donning a plumed helmet and brandishing a shiny megaphone (swords are too destructive these days), sustainability aims to rescue us and our world from impending eco-pocalypse.

Liebowitz himself was an early convert to the sustainability movement, joining 151 other college presidents and chancellors as original charter signatories on the American College & University Presidents’ Climate Commitment (ACUPCC), which Second Nature originated in 2006. That number has since climbed to 672 signatories. Each one pledges his or her college to responsibly steward the environment by completing a college emissions inventory, reducing greenhouse gas emissions through seven proposed methods such as purchasing renewable energy or buying only ENERGY STAR certified appliances, and making sustainability a cornerstone of the curriculum. The telos of the ACUPCC, culminating as the result of these intermediary commitments, is for each school to achieve carbon neutrality.

“Carbon neutrality” sounds noble enough, serene and balanced and green, but it’s an economic black hole. ACUPCC signatories like Middlebury vow to eliminate their net greenhouse gas (GHG) emissions entirely, by “minimizing GHG as much as possible, and using carbon offsets or other measures to mitigate the remaining emissions,” until the school’s carbon footprint, like the trail to the lost Dutchman’s mine, vanishes.  

Full elimination of carbon emissions requires a massive overhaul of campus life. Schools must retrofit or even reconstruct campus buildings to reflect cutting edge technology, and replace college vehicles with electric or hybrid biodiesel cars. It’s invasive, too: in calculating a school’s net GHG emissions, the ACUPCC includes student, staff, and faculty commutes, obligating signatory schools either to mandate green transportation or to purchase carbon credits that off-set their students’ and staff’s behavior.

Middlebury, especially zealous, vowed to go fully green by 2016, more than 30 years sooner than most of its fellow signatories. It’s instituted a custom bus route providing students and faculty free rides to campus, developed a biomass gasification center that turns wood chips into eco-friendly electricity and heat, and established a campus composting facility (rescuing waste from the dining hall) that annually churns out 300 tons of fertilizer. Distinguished scholar in residence Bill McKibben, nationally known for his 1989 book The End of Nature and his advocacy group 350.org, helped a fervent band of Midd Kids lead the charge for the divestment of endowment funds from fossil fuels. Students at other schools, perhaps green with envy, have since campaigned for similar measures at their own alma maters.

All this is enormously expensive. Middlebury doesn’t make its budget publicly accessible, but its most recent Progress Report on file with ACUPCC estimates that as of January 2012, the green make-over has cost between $10-20 million, financed by grants, loans, and student “green fees.” Some of those costs may be justified in old-fashioned economic terms. Equipment, buildings, cars, and other campus assets depreciate, and replacing them with eco-friendly options isn’t necessarily bad.

But eliminating all greenhouse gas emissions? That’s a gargantuan task requiring a princely sum, and it’s not clear the rewards are proportionally sized.  Middlebury’s initial $10-20 million investment cut down 22,000 metric tons of yearly GHG emissions, at a price ranging between $454-909 per metric ton. By comparison, the Environmental and Energy Studies Institute estimates that the EU under a cap and trade program launched in 2005 has spent €10-30, or $12-36, per metric ton eliminated, and Pigouvian carbon taxes in Canada reduced emissions at a cost of $15 per metric ton. The most expensive program profiled in the EES study was Tokyo’s, which cost $142 per metric ton. Perhaps it sounds unfashionably frugal to expect a good bang for your buck, but the reality is that Middlebury might improve the environment several hundred-fold if it invested its students’ green fees not into its own, already eco-friendly campus, but into easier, cheaper solutions elsewhere.

And Middlebury still has a long way to go towards achieving carbon neutrality. According to its 2013 GHG Report on file with the ACUPCC, Middlebury has just over another 8,000 metric tons of yearly GHG emissions to either eliminate or offset, down from 30,000 when it signed the pledge in 2006. If the cost of eliminating the first 22,000 metric tons remains constant, Middlebury will spend another $3.5 to $7 million getting rid of the rest, but it’s likelier that the last emissions will be harder and much more expensive to eradicate.

Granted, energy-reducing technology does save money, too. According to Middlebury’s 2012 Progress Report, the college hopes to save up to $30 million in reduced energy costs, thus yielding $10-20 million in the green (both environmentally and fiscally) after subtracting the initial $10-20 million cost. But Middlebury’s report optimistically calculates the savings based on the entire lifespan of its new equipment and buildings; presumably technology will improve in the next 50 years, and Middlebury will upgrade again, investing another hefty chunk of money without ever realizing the full life-span of its purchases.

It’s unclear whether Middlebury’s budget takes into consideration maintenance costs, future upgrades, or staff salaries for the multiple sustainability departments, boards, and committees. The ACUPCC requires its signatories to submit numerous environmental impact statements for review and verification, but none on financial viability. The moral imperative to save the earth one school at a time trumps any cost-benefit analysis. Each signatory completes an initial “Implementation Profile” summarizing what tactics of GHG elimination the school plans to use, a “Climate Action Plan” detailing these actions,  periodic “GHG reports” chronicling the campus’s environmental improvement (usually accompanied by a massive thousand-cell “Inventory Calculator” to gauge impact and a supplemental “Inventory Narrative” kindly interpreting the data), and finally a “Progress Report” to summarize all consequent environmental enhancement, student and faculty activism, and community outreach. Of these six documents, only the Progress Report asks schools to estimate the money spent and saved through sustainability measures.  That Progress Report has five sections. One-half of one section, or one-tenth of the report, deals with finances, and the questions there are optional.

What does sustainability cost? Nobody knows exactly, and  Ronald Liebowitz, along with the rest of the ACUPCC, apparently doesn’t care. Marginal analysis seems to have gone with the wind. Maybe it was blown there by the wind turbines. Then again, perhaps the campus “sustainatopians” disregard Jevons on principle; he did, after all, devote his most influential treatise to the dirty topic of coal. 

 

Image Credit: 401(K) 2012, cropped.

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