The Upside of Downturn

Could a tanking economy be great for the planet?

   

IMAGINE WAKING UP on a clean, bright day in postrecession America. Nobody uses disposable anything, everyone bikes everywhere, sprawl is a thing of the past. You pad outside in your hemp slippers to find your neighbors gathering eggs and heirloom tomatoes.

What a blessing! they say. Can you believe it took a recession to shake us out of our consumption frenzy? Look at how often we drove our cars—we could have cooked the planet!

All right, maybe that's a scene from an alternate universe. But as the economic clouds continue to rain frogs, regular earthlings have been asking: If construction and consumption falter, will the environment finally get a break?

The theory got some airtime earlier this year, when "10 Ways Recession Can Help the Environment," a post by Fion MacCloud on the site FinanceMarkets.co.uk, was covered by The New York Times and The Wall Street Journal. Less consumption, MacCloud suggested, could mean less waste in landfills, fewer greenhouse-gas emissions, and less pressure on resources. Nice try, came the response in online discussions—but recession could mean quite the opposite. Investment in green technologies could dry up, corporations could abandon eco-initiatives, and pricey green products could sit on shelves.

So which is it? As oil reached $112 a barrel in April, I started stalking some of the country's sustainability leaders to find out. I talked to Paul Hawken, co-author of the 1999 book Natural Capitalism; his co-author Amory B. Lovins, chairman of Rocky Mountain Institute; Joel Makower, co-founder of the green-tech research firm Clean Edge and editor of GreenBiz.com; James Howard Kunstler, author of the 2005 depiction of a post-oil crash, The Long Emergency; Rohit Aggarwala, director of the New York Mayor's Office of Long-Term Planning and Sustainability; and Yvon Chouinard, founder of Patagonia.

The first thing I learned was that "the environment" is a pretty meaningless term when you start talking economics. It helped me to slice the big green pie into four smaller pieces: natural resources, consumer spending, the greening of the business world, and the burgeoning "clean-tech" investment sector.

While reducing consumption is obviously essential, nobody spent much time on the idea that a recession could help the physical environment—the forests, rivers, and air. One word there: China. OK, two: China and India. While a dip in American appetites would help, worldwide demand for resources is not going down.

Consumers are harder to predict. Maybe we'll buy Nilla Wafers over Newman-O's. But we may also choose qual­ity over price. "Every time we've had a recession," said Chouinard, "Patagonia has thrived. Because consumers have stopped being silly and they don't mind spending more for a product if it's going to last a long time." What about bigger-ticket items? There are already signs of the credit crunch holding up installation of home solar panels, which are often financed with home-equity loans. What about cars??"Could hybrid cars be affected negatively,"?asked Makower, "because they're more expensive to buy, or positively, because they're cheaper to operate?" The writing is on the wall there: In 2007, the Prius surpassed the Ford Explorer in U.S. sales.

So where does this leave businesses? One thing I heard in stereo: Companies that have already invested in money-saving green technologies will have a serious leg up. "Anything that reduces costs gives cities and businesses a fiscal edge," said Aggarwala. "A struggling economy increases the imperative to make efficiency investments." And, he added, initiatives like retrofitting buildings will create both jobs—from energy auditors to laborers—and demand for green materials.

All this is not to laugh off an economic downturn. "A recession does tend to focus your mind more on controllable costs," Lovins said. "It also reduces the irrational exuberance that is sending so much dumb money up in smoke in the frothing capital markets."?Where Lovins and others see smarter value is in the booming clean-tech sector. Look at the overall economy. No, wait—don't. Now look at the green economy: According to Clean Edge's Clean Energy Trends 2008 report, cowritten by Makower, revenues in biofuels, wind and solar power, and fuel cells went up 40 percent in a year, to $77.3 billion. And while the Dow Jones is floundering, Standard & Poor's Global Alternative Energy Index returned 50.27 percent in 2007. Despite fears of short-term credit problems driving green start-­ups out, venture capital is not drying up. And even with the economic slump, said Lovins, "the private-capital market put $117 billion last year alone into global investments in clean energy."

The big overall worry is how well our economy can compete globally. The U.S. is home to "stunning innovators," as Hawken put it,but we've given too much away. While the Japanese and Germans are making a killing in renewables and solar technology, some of which we sold them years ago, our policies still favor fossil fuels, not efficiency or innovation.

During the 1973 oil embargo, Chouinard said, "the Japanese and the Europeans immediately slapped huge taxes on their petroleum. All we did was lower the driving speed on the highways. They invested in high-speed trains; we invested in airplanes and automobiles." Now, he said, "even though the Japanese have no petroleum, they're much better set up to cope than we are."

Some, like Kunstler—whose prophecies of a post-oil apocalypse suddenly don't seem so outlandish—don't see a quick rebound. "The idea that we're going to turn around and make massive investments in so-called green projects is pretty unreal. We're going to be desperate to keep our shit together." (His special shout-out to Outside readers: "The future is not gonna be about snowboarding." ) If we're so messed up, why don't we change?

"There's a saying at Alcoholics Anonymous: Your best thinking got you where you are today," Hawken told me. "Our best thinking got us here, and part of that is our addiction to growth. We do need to grow, but the question is, Grow what? When we're adults, no one wants to grow physically, but we do want our wisdom, our understanding, our compassion to grow. Those same things are true of the economy. We do need to grow—we need to reimagine mobility, we need to reimagine our agriculture, we need to reimagine our cities, we need to reimagine our buildings as systems. Do we need to grow our Starbucks? No."

So while I still can't tell you the difference between a margin call and a liquidity put, one thing is clear: I had it all backwards. The question isn't how a recession would affect the environment. It's how the environment—from investments in alternative energy to government incentives for innovation—can help us out.

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