Environmental elixir found?

Planet Wisely is not dead. Far from it. I’ve just been on a long sabbatical from the blogosphere, much to the benefit of good living. Now as a mudfish returns to the replenished waters of a once barren creek, I return to the Web, ready to live life in the true pursuit of happiness.

In my quest to get better and freer, I believe I’ve found the elixir to the vast majority of this country’s environmental ails. Nestled in the writing of Barry and Martha Field, lies a gorgeous method, an analytical paradigm, rather a brilliant way to see the world known as normative economics. Normative economics studies what happens to society if you use effective incentives to tip the scales in favor of socially accepted enterprise. It favors math over rhetoric and changes human behavior based on rational decision making over moral imperatives.

This is going to get a bit textbooky and I’m sorry about that, but there’s a harmonious example of normative economics that gets to the powerful simplicity of effective incentives.

In New Hampshire, the city of Dover had to close its municipal landfill in 1979 because it had run out of space. The city of Dover entered into a contract with a private hauler to take its trash to a different landfill while adopting a new payment scheme for its residents.

Under the original payment scheme, residents paid a flat fee for refuse collection, and the city covered the cost of the fee. There was no limit to the amount of trash residents could throw out and there was no incentive to recycle.

Under Dover’s new payment scheme, residents pay for trash and the city pays for recycling. Dover’s residents are incentivized to recycle and generate less trash, which are both positive results for the city of Dover. In 1979, residents of Dover disposed of 11,000 tons of refuse and in the 90s the tonnage fell to 3,900.

Read more about Dover’s Pay-As-You-Throw system .

That’s one example of how simple incentives can drive massive change. If you look at Washington DC’s five-cent bag tax, you see another example of normative economics making a tremendously positive impact. DC city officials estimated that before the bag tax residents used about 270 million bags a year at grocery and convenience stores, whereas in 2010, residents tracked around 55 million bags.

Our nation is long overdue for a cap and trade system and we need to figure out a way to better incentivize renewable energy, but these are problems that should and can be solved with normative economics and it will be exciting to see how are nation pushes forward on these frontiers.

In the meantime, normative economics you are my holy grail, and I hope you fill me up one day with your vast possibility. Until next time.