Waste today is on the cutting block. Businesses and consumers alike are being told to reduce waste, and for several reasons. One is the slowdown in the economy. With income and job prospects dimmer, at least in the near future, companies are trying to tighten their belts and eliminate “unnecessary” spending so profit margins can be maintained. Household budgets are feeling the same pressure, so many are cutting back on luxury and nonessential expenditures.
We’re also being told to eliminate wasteful use of energy to reduce our dependence on foreign oil and to moderate adverse impacts on the environment. Turning off lights when rooms aren’t being used, unplugging TVs and computers at night, and using more fuel-efficient cars and mass transit are all recommended as smart decisions for today’s green world.
In North Carolina we have the on-going drought, so conserving water has become a new theme. Public officials want leaky water pipes fixed, low-flow faucets installed, and drought-resistant plants put in our yards and landscapes.
So wasteful spending, wasteful energy use, and wasteful water use are now public enemies. But this raises a larger question. If wasting resources is bad now, shouldn’t it have been bad earlier? Shouldn’t businesses and households always be on the lookout for wasteful spending? Shouldn’t we always look for ways to cut back on energy and water usage?
Well, let’s see. First, think about this situation. In 1999, Hurricane Floyd hit eastern North Carolina. Reservoirs and rivers overflowed, and many communities were flooded. Did we worry about water conservation then? Of course not, our problem then was we had too much water. Leaky pipes and automatic sprinklers were actually good things because they helped reduce the oversupply of water.
Think about energy conservation in the 1960s. Few people worried about miles per gallon and home insulation. Why? Gasoline and electricity prices were low. It didn’t pay to install insulation or to buy a car that got more miles per gallon.
This is just the point. Waste is a relative term, and avoiding waste doesn’t always pay dividends. When the cost of reducing waste is more than the derived benefits, engaging in wasteful behavior can actually be the smart choice. So, if in 1968 it would have cost me $2,000 to add insulation to my home, but if by doing so I only saved $50 a year, adding that insulation wouldn’t have been wise.
In a booming economy, most business managers will find reaching new clients and establishing new accounts to be a more profitable use of their time, rather than monitoring the staff’s use of supplies and equipment.
What then motivates the company CEO, city water utilities, and you and me to turn away from ignoring waste to making the reduction of waste a No. 1 priority? The answer is simple — it’s when the resource being “wasted” becomes more valuable, thereby increasing the benefits from using less of it.
So, as electricity rates have climbed, adding insulation now pays off. As water has become scarcer, each gallon saved is more valuable. As new clients have vanished during the slow economy, managers have turned their attention to lowering their company’s operating budget.
This means our focus on eliminating waste can be a passing fancy. If rains restore our reservoirs, water will become more plentiful and we’ll use more of it. Or, if oil prices plunge to $50 a barrel, SUVs will make a comeback.
Still, the best indicator of when we should attack waste is price. The benefits of reducing waste increase when the price of the resource increases. So, higher gas prices are a signal to drivers to focus more on miles per gallon and trip efficiency. This is also why higher water prices are the best path to water conservation.
Dr. Mike Walden is a William Neal Reynolds distinguished professor at North Carolina State University.