As a matter of straight-up economics, wrecking the environment has always been a pretty sweet deal — for people anyway. Whether it’s draining sewage into rivers and streams, converting useless valleys into landfill sites or simply gathering up whatever’s growing or buried or swimming and selling it off as quickly possible, the environment — unlike labour unions, tax brackets and infrastructure — asks little in return.

But when nature starts getting greedy, economists start getting nervous, and certain political parties begin hammering on the big gong of fear. Already, the current election is beginning to resemble an end-times battle between the environment and the economy. Stephen Harper and the Conservatives are touting their moral aversion to taxes as a legitimate excuse to ignore impending environmental catastrophe. Though their platform may not be perfect, the Liberals (and most of the other parties) recognize that investing in the environment is worth more than a little extra spending cash for the average Canadian family.

Conversely, economists can easily apply supply and demand logic on an ecological level. Like when shark fins are worth more than the fish they’re attached to, any number cruncher assumes that certain fishing industries are going to try and hack off as many dorsals as they can, at least while the supply lasts. Even though biologists warn that we’ve already hit Peak Fin, there are apparently enough wealthy soup-lovers to justify the unflagging demand and the inflated price — not to mention the extinction-courting slaughter.

The same cannot be said for more useful fluids. As the price of oil creeps closer to that of caviar, there’s a near-universal call for relief at the pumps. Drivers and the auto industry and airlines plead with governments and Big Oil to somehow prolong the salad days of affordable fuel. But this petrol fantasy is in direct opposition to supply and demand. In reality, expensive oil provides the perfect opportunity for everyone to come to terms with the Darwinian aspects of economics: that the natural selection process of price increase might actually benefit the environment. Call it the economics of change.

This phenomenon has already taken effect in the auto market. Just ask anyone trying to get decent resale value for their SUV to see how impractical status symbols will fare in a fuel crisis. Or don’t; it’s perfectly acceptable to snicker to yourself while cycling past at $0 per litre. The worthlessness of SUVs in relation to their fuel efficiency only proves the conventional wisdom that the surest way to alter people’s behaviour is to put a price on it.

Unsurprisingly, no one wants to apply that same logic to essential services like garbage collection, or larger environmental efforts like carbon reduction. Want to guess why? Because consumers are trained to despise price increases. But this is not always a bad thing. Take cigarettes, for example. Studies have shown that when the price of cigarettes is doubled overnight, the number of people who give up the habit is far higher than if the price doubles through incremental increases. So how do you popularize an unpopular solution when the reason it’s effective is its unpopularity?

Toronto city council’s garbage plan has been mired in this riddle for quite some time now. Last year they decided to charge residents for the trash they toss ($209 a year plus up to about $150 additionally depending on what size of garbage bin they anticipate needing). Introducing a pay-as-you-throw scheme for trash removal struck many people as an unfair arrangement as most taxpayers were fairly certain that their property taxes already covered that service. The Toronto Star’s city-hall maven Royson James deemed the fee “a scam, a tax grab, a duplicitous design masquerading behind a pretty good Green Plan.”

But as Richard C. Porter argues in his book The Economics of Waste, a pay-as-you-throw system is less about who removes the garbage than it is about who is throwing it away. Internalizing the collection and disposal costs makes people accountable for their trash, he explains. Oddly enough, the National Post may have said it best, even if they were arguing against the tax: “The Mayor’s goal … is to reduce the amount of garbage the city has to dispose of … by making it expensive to throw out garbage.” This shouldn’t be a problem because, after all, there are alternatives to garbage.

It’s pretty clear, however, that simply having alternatives — like green bins and recycling — isn’t enough. According to the city’s stats, residential homes diverted 42 per cent of their waste to blue/grey and green bins, while apartments and condos recycled a paltry 13 per cent of theirs. Making garbage expensive won’t mean that city hall is suddenly getting high off the trash-hog, unless of course people are inclined to treat excessive waste as a wasteful excess. It means that residents will be financially motivated to use the services already available to them.
Implementing the plan remains problematic. Though the city has issued large plastic garbage bins to some residents, which look just like the big blue bins that were rolled out back in the spring, they’re already fielding complaints about bin sizes and the additional cost of each. And then there’s the apartment and condo conundrum: how do you monitor pay-as-you-throw for the half-million people who live in multi-unit buildings? As it stands now, buildings will be charged for their total output and then it is up to the owners to pass that cost on to their tenants.

But what incentive will there be for diligent diverters if they’re just going to have to pay for their wasteful neighbours? Parkdale/High Park councillor Bill Saundercook, who pioneered the blue box back in 1987, wasn’t 100 per cent supportive of the garbage plan, saying that he thinks the city is being a little too heavy-handed. Still, to make it work, he explains that it’s a matter of education. “We need to be working with the owners of the buildings and condo board of directors and explain to them that the cost of disposing your garbage is going through the roof,” he says, “but composting, recycling and reducing will result in savings.” Putting the task ahead into perspective, he adds, “It’s going to be hard to convince 50 per cent of the city’s population to do better.” 

It seems that the only real obstacle when using price to influence environmental habits is making sure everyone pays accordingly. Obviously this is difficult to achieve on an individual basis. You might think it would be easier to do the same for an entire industry. But in trying to control carbon emissions, using price to effect change is like arguing evolution with intelligent-design adherents.

Admittedly, you could assume that the price of fuel is doing its part to help curb carbon production, especially on an individual basis. But as the Economist predicted back in 2005, rising gas prices usually have little effect in the short-term as people’s fuel consumption is pretty inelastic — “people still have to go to work, however much it costs.” A recent Stats Canada report indicates that, in fact, gas consumption increased over the past five years, despite the exponential rise in price.

As University of Toronto geology professor Andrew Miall explains, “The recent rise in fuel prices is making people think about it, almost to the point where we’re letting the marketplace do its work. However, the price is changing too fast for intelligent response.” Besides, much like garbage diversion in apartment buildings, the biggest producers are the most difficult to change.

The bigger picture requires some form of control on carbon emissions, either through a carbon tax or carbon trading. A carbon tax, like the Liberal Green Shift plan, would simply see the government impose a per-tonne levy on all fossil fuels (like coal, gas, diesel, etc.) and then all fuel providers and the industries that use them would be affected across the board. Carbon trading (or cap-and-trade, as it’s commonly called) is a bit more involved, as governments would set limits on carbon emissions, and then industries would either acquire carbon credits if they reduce emissions or else have to buy credits from their carbon-conscious neighbours if they blow over.

Politicians like carbon trading as it purports to be revenue neutral — that it won’t cost taxpayers anything. There is, however, the matter of setting up a structure to oversee the trading and to monitor carbon emissions, which is no small task. Miall admits that such a system was apparently successful for managing specific chemicals (to reduce the effects of acid rain for example) but carbon comes from so many different sources that this would be very complex.

But the system itself is really secondary to the fact that carbon trading offers no direct incentive for everyone to reduce emissions. As Guardian columnist George Monbiot questions in a chapter from his book Bring on the Apocalypse, why should some industries force the rest of the economy to reduce their emissions? And what happens when one industry (in his case the airline industry) “outstrips the cuts the other industries can make?”

Say what you will about the federal Liberals, their Green Shift plan is one of the few pieces of policy gnawing (or rather gumming) at the carbon bone. Though they had initially proposed a cap-and-trade system, the deaf ears onto which this idea fell prompted Stéphane Dion and Co. to scrap the plan for something that would effect more immediate change (or, at least, more immediate dismissal from Mr. Harper). The Green Shift, as with the Green Party’s like-minded policy, proposes a tax on carbon emissions. The money generated by this tax would then be used to reduce other taxes.

While the Conservatives continue thumping the policy and Dion like an election pinata, their own policy calls for a reduction only three per cent below 1990 levels (less than the Kyoto’s recommended six per cent — not that Harper cares). But these goals will only be harder to reach as Harper seems to be encouraging fuel consumption by proposing to cut the tax on diesel. Even though they’ve given up being carbon deniers, the Conservatives are still treating the problem with future-tense solutions like “tough emission reduction targets” that won’t take effect until maybe 2010, and haven’t even been drafted yet.

While we have yet to see the garbage plan’s effect on waste diversion, one can assume that the homeowners already striving to do their part will only get better — if for no other reason than to keep their money out of city hall’s hands. As for apartment buildings, the situation can really only improve. This might be a crazy notion, but we might be better off if federal policy-makers could be as bold and innovative in their bull-headed environmental economics as Toronto City Council.