Monday, 9 July 2007

Do Real Environmentalists Ride Bikes?

I have a friend named Frank who drove a Lexus LX. He got about 14L/100km on the SUV. Eager to lower fuel costs and help the environment he instead got a small car, a Toyota Yaris, which drinks about 6L/100km. By switching to the small car instead of the SUV he has more than halved his fuel consumption and fuel bill. He told me that the only reason why he got the Lexus in the first place was because he could afford it and because it was a comfortable car. He admits now that although the Yaris is not as luxurious as the LX, the difference is small.

Another friend of mine Bill said, "Why don't you ride a bike? That's what real environmentalists do."

This is what many people say. Why not go to the extreme? The reason is simple. It's too costly.

Bill needs to learn about a concept called abatement costs, defined by Investopedia as "a cost borne...for the removal and/or reduction of an undesirable item that they have created." When you reduce something bad, there is usually a cost. E.g. if you reduce your fuel bill (something bad unless you like paying more for fuel) then it comes at a cost because you are sacrificing space and luxury.

For Frank, downsizing from an SUV to a small car gave him the benefit of lowering fuel costs. It also meant he had to sacrifice space and luxury, but he said that the sacrifice in space and luxury was small and was more than compensated for by the fuel savings. However, if he downsized even more to a bike, he would incur even greater costs. He'd travel slower, which means he'd get to work later or he would have to wake up early, which meant he got less sleep or he loses leisure time. He would have to endure the noise of traffic because of lack of sound insulation. He would have to endure the cold, the rain, etc. For him, the marginal abatement costs of riding a bike to work is not made up for by the fuel savings.

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