Monday, December 3, 2007

Does Increased Energy Efficiency Cause Sprawl?

A short and clearly written recent article by Jeff Rubin and Benjamin Tal entitled "Does Energy Efficiency Save Energy" is worth a look. It examines the seeming paradox: Energy efficiency gains have not resulted in declines in energy usage in the United States. Indeed, the opposite seems to be true.

The article first documents that the United States is making significant gains in energy efficiency. Energy use per unit of U.S. GDP, for example, has fallen by almost 50 percent since 1975. The transportation and residential sectors of the U.S. economy have led the energy efficiency charge. Energy efficiency in those sectors has improved 50% faster than the pace in the rest of the economy.

Yet, paradoxically, the overall energy consumed by these same transportation and residential sectors has increased more rapidly than in other sectors. In the transportation sector, greater fuel efficiency has prompted people to drive more and bigger vehicles greater distances. In the housing sector, the energy efficiency gains are more than offset by larger houses filled with more gadgets powered by electricity. The size of the average house, for example, has increased from 1,000 square feet in 1950 to 2,500 square feet today.

It appears that we have a situation where the energy efficiency gains in the transportation and housing sectors over the past three decades have been handed over to developers and consumers in the form of McMansions and sprawling exurban development. There are credible views that this is a good thing, a happy expression of democracy, capitalism and consumer preferences. University of Illinois-Chicago Professor Robert Bruegmann, author of the book "Sprawl: A Compact History," is a leading proponent of this view.

If, however, one views reduced energy consumption as the key to averting future environmental problems from rising levels of atmospheric CO2 and/or are concerned about the environmental implications of paving over more land, then giving up the efficiency gains in this manner represents a colossal missed opportunity. Had consumption of road travel, land and houses held steady at 1975 levels, then the efficiency gains since then would have yielded significant reductions in per capita energy consumption. The average's person's environmental footprint would have been significantly smaller than it is today.

In light of the Rubin/Tal analysis, environmentalists and transit advocates might think twice before celebrati recent news of a compromise in the U.S. House that opens way for a new federal law that will increase auto fuel efficiency standards by 40 percent by the year 2020. If Rubin and Tal are correct, these efficiency gains will just prompt people to drive more miles in ever more souped-up vehicles. In other words, the cost of living in auto-centric areas will go down as a result of the efficiency gains, making the exurbs even more attractive. At the same time, transit's advantage over the private auto when it comes to per passenger energy consumption and pollution will continue to shrink. (Here and here.)

One way to deal with the energy efficiency paradox that Rubin/Tal discuss is to treat energy efficiency gains as a public good. After all, such gains are often prompted by political action such as laws increasing car mileage standards or mandating tougher limits on pollution. These energy efficiency gains would be protected through taxes (e.g., tax on carbon) and/or user fees (e.g., highway tolls) designed to tamp down demand for use of these efficiency gains in ways that increase energy consumption.

So, for example, had the improvements in energy efficiency in the past 30 years been matched by a gas tax increase or much more extensive use of highway tolling, we might not have seen the efficiency gains be eaten up to the same extent by sprawl-like development with its greater per-capita vehicle mileage rates. Imagine how much money might have been generated for the Illinois Department of Transportation and transit agencies like the Chicago Transit Authority if the public sector had kept even a small percentage of the energy efficiency gains over the past 30 years through such measures.

Until we address the energy efficiency paradox in some some fashion, transit's comparative disadvantages in the transportation market will continue to increase as cars get more efficient. Likewise, urban regions will continue to sprawl because energy efficiency gains in transportation and housing make detached houses on relatively sizable lots all the more attractive.

Those who think that more money for transit and hectoring local officials to embrace transit-oriented development will be enough to tame sprawl may be fooling themselves. Until energy efficiency gains are preserved through use of taxes and/or user fees or some other mechanism, we will all be watching the energy efficiency paradox play out as our built environment and transportation network continue to sprawl.

Maybe Professor Bruegmann will then write a "Sprawling History Of The Demise Of Compact Urban Areas In America."

29 comments:

Jennifer said...

Won't food become astronomically expensive at some point when there just isn't any farmland left?

Moderator said...

Jennifer--

There is still lots of farmland and per acre productivity is still increasing. Bioengineering promises increased production from less land as well.

The free marketeers will tell you that sprawl will stop when the value of farmland exceeds the value of strip malls and the like. We're a long way from that point it appears because the relative plenitude of farmland versus land suitable for exurban development.

Anonymous said...

A large part of the problem is how America goes about improving its energy efficiency. Compare CAFE to a gas tax, for instance, as policies. CAFE implicitly encourages people to drive further, assuming gas prices hold steady. A gas tax escalator, as in the UK, both indirectly encourages better efficiency while also constraining the impulse to increase VMT.

Rick Powell said...

As one of the few posters here who lives west of IL 47 and south of I-80, I can assure you that we are in absolutely no danger of running out of farmland anytime within the foreseeable future. And as mentioned before, yields per acre on the farmland we have are increasing to a degree not thought possible before. This year's corn crop is up 25% over last year's, and it's not all due to swapping beans for corn. There is a lot of open land not being farmed that suddenly becomes attractive for farming at $3.50 bushel corn.

However, the price of farmland out here has definitely been affected by "1031 exchanges" where farmers sell out to developers taking advantage of capital gains deferrals by buying replacement properties of equal monetary value downstate. The market for tax shelter farmland has driven prices up to a point where rental income can't cover the monthly payment for the farmland investor who borrows their way into the business. More than half of IL farmland is now owned by absentee landlords, of which a great many are 1031 investors and many others are corporate farms or holding corporations.

And, moderator, I think we've reached a kind of equilibrium in areas like Kendall County and western Kane and McHenry counties where farmland can't be had anywhere for less than $20-25k an acre or more due to the proximity to development as well as 1031's, yet there isn't enough housing demand to make it all flip into subdivisions overnight. Much of it is not yet served by water & sewer, which also slows its development potential. It's very expensive open space, and much of it will take a decade or 2 to turn...not a good deal for the short term investor. It's like oil, where there is a premium way over the residual value being built into the price by speculation.

It is problematic that some of the better farmland happens to be in the path of development (there is also a lot of it that is not). Maybe a farmland extraction tax could be considered, or developers could haul off the A Horizon soil to rural areas where it could be put to good use to create higher yields on marginal farmland.

As for food becoming astronomically expensive, it will be the expense of energy, not a shortage of land, that may come into play. High energy prices hurt rural America way more than the cities or suburbs. But eventually this will translate into higher food prices which affect all areas unless alternative energy sources, that are reasonably priced and can be used by agriculture, are found.

NoGiftsPlease said...

1. Energy use per gross domestic product decline could be attributed to increased efficiency, it could also be attributed to a change in the mix of gross domestic product where services grew the most and make up a much higher percent. Manufacturing may have become marginally more energy efficient but we've unloaded labor intensive, energy consuming and polluting industries to other countries. In addition, many of the products we purchase are manufactured overseas so the energy used for manufacturing shows up there. Energy use per "product consumed" has not necessarily declined.

2. However, in 1975, what percent of households had microwaves, answering machines (always on), remote control televisions (always on), remote control radio (always on), washers and driers, cell phones charging, plasma tvs (huge consumers of electricity) etc. Most of these are manufactured overseas.

3. I think even if the consumption of roads, land, and houses had remained steady per capita, the increased buying power provided by our expanding gdp and cheap imports would still have us well into the increased energy consumptions through use of all the other electricity consuming devices that have become a part of (and improved, in my opinion) our lives. I think of my home in 1975, a single black and white tv and a record player and how that compares to my life today as a middle class person. Our lives are quite different.

4. We don't move to the suburbs because energy is cheap. We move because our expanded gdp gives us increased buying power and the freedom not to live cheek by jowl with other people. I would move today if I didn't work downtown. Living close to other people (never mind in multi-unit buildings!) is a huge pain in the @$$ -- people will complain about anything, your grass length, your dog barking, your kids playing noisily in the neighborhood. The farther away my neighbors are, the happier I am.

Get off the sprawl bandwagon and consider population reduction instead. The problems caused by a shrinking labor force would be easier to solve than trying to get people to live in ways they don't want to. Negative population growth has happened naturally in many parts of the world already. Negative population growth, clean electricity and zero emissions vehicles is where we should focus our investment. Do you think that the increase in world population from 1.65 billion to 6 billion over the century has no impact on the earth? One way to decrease human impact is to decrease each of our comsumption patterns. The other way that nobody talks about is to decrease our population. Most of europe is in a state of declining population, USA would be too if not for immigration. If we can get the "developing" nations educated (the best form of birth control), they should start down this path, too.

Anonymous said...

No Gifts-

I appreciate your points, however Old Eurpoe, with its declining native population, is facing pension and social spending issues due to an aging population that is not being replaced, as well as having to import workers from the Middle East and other areas to keep its economy going. The culture clash is not going too well in places like the Netherlands and France. It is very tricky to manage the change from a growth economy to a shrinking economy.

edna welthorpe said...

From the user's POV, sure, energy efficiency reduces the cost of travel, and so helps cause sprawl--to the extent that there's no change in the other variables that makes the outer 'burbs a relatively attractive choice.

But those other variables are the big ones. Transportation choices derive from housing options, job options, and the available transportation network. Fuel costs have to be pretty high to swing the overall equation, and so far, they haven't.

Rick Powell said...

Edna-

There's plenty of housing options in the exurbs, but limited choices for low to moderate incomes. I don't see that changing anytime soon.

Transportation is highly available, as long as you have a car or cab fare. The roads in exurbia are getting congested, but it could be argued that suburban DuPage, Cook and Lake are worse.

The jobs/housing ratio stinks, but it's a funny thing. Go 15 miles east and the jobs are there. Go beyond the exurbs and the jobs are there, too (see the following paragraph). Even so, the exurbs are bound to attract more jobs as the increasing population creates a diverse potential labor pool and employers start taking advantage of it.

Personal observation near home: La Salle County is likely to be a net exporter of jobs over the next 20 years, as it has access to 2 interstate highways, rail, river, and air transport, and companies are looking to be "moving beyond congestion"). We are starting to see numerous reverse commuters and suburban/exurban "refugees" here, which we hardly ever saw before.

NoGiftsPlease said...

Pension problems ought to be a more tractable problem than reversing global warming. Cultural, economic and technical changes have changed nations and economies frequently in human history.

If you want to say that cheap energy increases sprawl, you could equally say that the success of the economy increases sprawl, as it also provides us with increased income. In fact, I've often said that there's one thing that could solve our roadway congestion problems quickly -- that's another great depression. The same could be said for what could stop sprawl. Let's see what happens to the rate of development expansion if we go into a recession in 2008!

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