Friday, December 25, 2009

Economics 26/12/2009: Green differences - EU vs US

An interesting piece of research came across my desk recently from Quant Express (can't find any links to this) which sites nVision Research data on attitudes to environment. The most interesting aspects of it, from my point of view, is the slightly psychotic nature of analysis which first accuses Americans of being environmentally backward relative to Europeans, then shows that they are actually environmentally ahead of the average EU27 and within the top performers in the EU15... Enjoy...

Chart above is claimed to represent just how far behind American consumers are from their more environmentally conscious European counterparts. But here is an interesting thingy - do these answers actually support such a conclusion?

Take question 1: Companies should be penalized for failing to care for the environment. Since no conditioning references are given to the legal nature of such a failure, one can assume two possible meanings - (A) "Companies should be penalized for failing to care for the environment over and above the confines of the law" and (B) "Companies should be penalized for failing to care for the environment within confines of what is allowed by law".

In case (A), the question asks whether companies should be penalized for carrying out legally permissible actions, in case (B) for carrying out legally prohibited actions.

If you live in a society with well-protected legal rights and directly accountable judiciary, you would be more likely to lend no support to case (A) while case (B) will be trivially true. If you live in a society where that which is not prohibited explicitly is permissible, as the US, you would say No.

In EU, where judiciary is far less directly accountable and laws are often more arbitrarily and less transparently imposed and politically intertwined with ethics and even aesthetics, a person would more likely to assume that the question refers to case (B), which supports an answer 'Yes'.

How great is the margin of difference between two? Is it enough to erase most of the difference shown so 'conclusively' in the graph? I don't know.

Take question 3 which also links up to question 6. If air travel is a more accepted mode of transport
  • within a given geography (which, of course, is a function of geophysics - more conducive to supporting air travel over larger territories, like the US than over more compact and less internally mobile regions, such as Europe)
  • as well as cultures (with the marginal value of time higher in the US than in Europe), and
  • demographics (younger countries are more mobile),
both questions will warrant fewer 'Yes' votes. Has this anything to do with environmental attitudes? Or has it more to do with balancing out the cost to the environment with the cost to quality of life? Is it a decision on the margin or a decision on the absolute?

Why does air travel warranted two out of six questions in the entire set? Because it contributes more CO2s than other? No, airlines account for roughly 2-3% of the total global CO2 emissions. And this combines domestic air travel and international air travel. And yet they managed to get 33% of the entire questionnaire.

The key here is the idea of the airlines as being a perfect target for a tax. The logic here is to charge passengers to change their behaviour.

There is problem however, with the question as it assumes that higher taxes mean lower emissions. This might be what passes for prohibitions-based economics in Europe and the UK, but it might not be consistent with what Americans might think about positive and negative incentives.

Americans generally think of going for the Big Return measures/investments first, and only later for the marginal measures. Hence, the lack of support for Kyoto in the US, given that it excludes some of the world's largest polluters - like China. Europeans always prefer going for the 'cute' policies - the Alessi Environmentalism of cute and loud NGO-supported and advanced-marketing measures.

And Americans might be right in their approach. Switching, say, 20% of China's electricity production into nuclear might actually do more good to the environment than banning all air travel outright. Americans would know this. Europeans (save for the French) would not, as anti-nuclear hysteria of the 1980s has spelled taboo on public debates on nuclear energy in most of Europe throughout the previous two decades. Or switching world coal powered stations to clean coal. Or using advanced capture and sequestration technologies to remove CO2 emissions, or using smart approach to managing existent systems rather than blindly building windmills and setting excessively populist targets. All of these more efficient applications are spearheaded by the US. Not by Europe.

There is another aspect to the questions - as a younger society, America is much more mobile than Europe. And it is the younger generations that hold power in determining mobility-focused legislative initiatives there. In Europe, older generations are immobile and they hold political power. So taxing younger Italians and Frenchmen and Spanish women moving between their jobs and home or to study abroad is kosher for European populace, because life in Europe is about preserving status quo of wealth distribution (old hold all, young hold none, when it comes to capital and income).

How do I know that the above figures are simply bonkers when it comes to assessing the environmental attitudes of Americans relative to Europeans and Britons? Well, the same research group found that:

"From a list of twelve behaviours – including washing clothes at lower temperatures and avoiding products with excess packaging – we have defined a consumer as behaving in a distinctly green manner if they do at least six. Under this definition we find that 43% of Americans are seriously green compared to 53% of Britons and just 29% of Europeans. In fact, the whole environmental trend has held together well over the course of the downturn with slight increases in the propensity to engage in green behaviour in Britain and America and flat
growth in Europe."

So let me run through this quickly - charts above show Europeans to be about as 'green' as the UK, with Americans lagging far behind. The numbers above show this to be untrue. And despite the US consumers changing their behavior most dramatically during the downturn, their propensity to behave green has not diminished.

"Our European figures mask significant regional variation. For example, 59% of Danish consumers qualify as green under our definition compared to just 13% of Hungarians. The
proportion of 43% in the United States means that the popularity of environmental behavior
there is most similar to that found in the Netherlands or France." Ahem, so environmentally lagging Americans are just as good/bad as environmentally sound Netherlands and France?..

And this is more than just words. "If we examine whether or not consumers who say they are environmentally friendly do actually behave in a green way, we see some interesting transnational patterns. The map below shows the proportion of consumers who say they are concerned about what they personally can do to help the environment who also behave in a green way under our definition."
Note: I have no idea as to how they managed to mark Ireland as the best-performing country in the entire sample. I guess they thought our travel tax (and DAA extortionate charges), plus Carbon Tax and VRT - all of which have nothing to do with the environment and everything to do with fueling the Exchequer coffers - mean that we are 'green'...

"As you can see, the British Isles and the Nordic nations lead the way in terms of “practising
what they preach” but the United States is not too far behind. It is most of Central, Eastern
and Southern Europe that really lag behind; in Spain, for example, only 13% of those who
claim to be motivated by eco-concerns actually go beyond this and behave in a measurably
green fashion."

So what's the EU average 'greeness', then? Above the US or below? Given the US is not far behind the leaders within the EU?..

Hmmm... it all started with telling us just how environmentally backward Americans are...

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