sustainability

Going Off the Grid Is a Lot Harder Than You Think

Philip Brewer — Thu, 15 Dec 2016 11:30:12 +0000

The term "off the grid" has taken on an expanded meaning of late. It used to be used in a literal fashion, to refer to disconnection from the grids supplying power, gas, water, and telephone services. Lately it's come to mean something broader: disconnecting from what whatever parts of "the system" seem objectionable to you.

Some people want to disconnect from the financial system. Some people want to disconnect from the surveillance state. Some people want to disconnect from the globalized economy or industrial agriculture or consumerism. Any of these choices have both costs and benefits.

Take a look at some of your options.

Off the Grid on the Low-Tech Path

To go fully off the grid is to become self-sufficient — to produce all the things you need for daily living. This is only sort-of possible. That is, the technology to produce everything you need to live is very low-tech indeed — pretty much everybody lived that way for the past 100,000 years — but there are two problems, one of which is insurmountable.

The Surmountable Problem: It's a Hard Way to Live

There are two historical routes along the low-tech path. The more recent is subsistence farmer.

You can't just decide "I'm going to be a subsistence farmer" and expect to succeed at it. It takes capital (in the form of land and tools). It takes skills (that your grandfather may have had, but that you probably don't). And if you can acquire both of those things, it then takes long hours of year-round backbreaking work to eke out a meager existence.

You can live at a much higher standard of living if you work for money (whether at a job or at your own small business) and then use that money to buy the things you need. Even if you don't make much money at all — part-time work at minimum wage, or whatever you can make as a freelancer at this or that — you're still going to be able to live as well as a subsistence farmer.

Oh, the subsistence farmer will get better food. It doesn't get any fresher, more local, free-range, or organic than the stuff you grow yourself. The subsistence farmer also gets the huge satisfaction that comes from supplying your own needs with your own two hands. But if you really want to produce everything yourself, you're going to have to do without a lot.

You have to make a lot of choices about how pure you want to be. Each thing you want to learn how to make yourself — nails, let's say — means another big investment in tools (forge, anvil) and skills, and another huge amount of work that you have to do to produce enough nails for a project. And each thing you decide not to make for yourself — cellphones, let's say — draws you into the money economy, meaning that you need to produce a surplus, so you have something to sell beyond what you need to live on.

Although it would have been a lot easier in your grandfather's time (his parents had and could teach many of the skills that you're going to have to learn from YouTube videos), it's probably easier now than it was in the 1960s, when a lot of hippie types gave subsistence farming a serious try. At least you've got the YouTube videos.

There is a lot of stuff out there to help, if you're serious about giving something like this a try. You might start with my review of The Self-Sufficient Life and How to Live It here on Wise Bread from a few years ago.

Just for completeness, I should mention the even older low-tech path: The lifestyle of the hunter-gatherer.

As a practical option, this one probably doesn't even exist. Virtually all the land that is suitable to support hunter-gatherers is more valuable for some other use, and so it has been taken for that use. (Hunter-gatherers couldn't win fights with farmers even before firearms were invented.)

I suppose a wealthy person could buy a hunting preserve on a tract of land big enough to provide enough fish, game, and plants to support himself. If he did his hunting with primitive weapons and processed the carcasses with primitive tools (and kept to himself), he could probably get away with violating the rules on hunting seasons, fishing licenses, and the like. But it would just be a fantasy of living as a hunter-gatherer. As a landowner, he'd still be on the grid. (As a rich person, he'd no doubt be on the grid in all sorts of ways.)

Having said all that, hunting and gathering are both useful as ways to improve whatever lifestyle choice you end up with. Anything you can take from the wild is something that you neither need to grow nor buy. I talk about that in my post Foraging: Not Insane, Useless, or Impossible and Andrea Karim has posts looking at hunting and fishing for food and at gathering edible weeds. (Of course those barely scratch the surface of what hunting and gathering can do to supplement your diet in modern times.)

The Insurmountable Problem: You're Still on the Grid

A farmer needs to own land, and all kinds of grid attachments come along with that. You have to pay your property taxes, so you have to earn some money, so you're probably going to have to file an income tax return as well. If you need to earn money you're probably going to have to be able to market your products, so you need a truck, which means even more money, and even more grid attachments (license, plates, safety inspections, dependence on foreign oil).

There are other ways you can't get off the grid. The state is going to check and make sure your kids are getting a proper education. You can teach them yourself, but you need to be on-the-grid enough to do the paperwork. You need to have health insurance even if you don't want to avail yourself of modern medical care. Zoning regulations will affect how you can use your land. Federal marketing orders and agreements affect what crops you can grow, and the EPA regulates what you can do with wetlands on your property.

Because of these issues (and a hundred more like them), I've become enamored of late by the possibility of a different sort of path to off-the-grid living.

Off the Grid on the High-Tech Path

If you accept the fact that there simply is no way to live completely off the grid — if you abandon the purity aspect of the notion — another option opens up: You can go off the grid a la carte, picking and choosing where connecting to the grid is worth the cost, and where disconnecting is the bigger win.

The question you need to ask is "Why do you want to live off the grid?" If you understand the answer to that question, you can decide where to put your effort.

The Satisfaction of Providing for Your Own Needs

If this is what moves you, you can start right away. Think about what you need and start producing it.

Food? An intensively worked suburban plot can provide a large fraction of all the food a family needs, but you can start with just a garden. If you can have chickens where you live, you can easily be self-sufficient in eggs. You can certainly raise a few rabbits and substantially augment your household meat supply.

Clothing? Learn to sew. Learn to knit. Learn to weave. Learn to spin.

Shelter? Look into the "tiny house" movement. (There are several tiny house articles on Wise Bread.)

Producing your own stuff is only sometimes cheaper than buying it, but stuff you produce yourself can also be better than what you can buy (once you get good at producing it).

The Safety and Security of Providing for Your Own Needs

One downside of "the grid" is that you're so terribly dependent on it. If the power goes out, you're sitting in the dark. If a backhoe takes out the wrong cable, you've got no landline (or no Internet, or no cable). If the water company starts piping in water that's contaminated with lead, you're drinking from bottles until they clean the system.

You can replace most of these things in a grid-free fashion, although it often takes capital.

You can put solar panels on your roof and produce your own electricity. If you live out in the country, you can drill your own well and pump up your own water. You can even set up a biodigester and produce your own methane gas (although it might be simpler to harvest the occasional tree and burn wood rather than gas).

There's really no way to go grid-free for telephone and Internet, because the connection is the essence of the thing. But if you wanted to do it, the technical chops required to set up your own local network — one that covered your home or your neighborhood (or your walled compound) — is not beyond the capability of an ordinary person. Throw in some access points capable of establishing a meshing network and a server with ample disk space and you could offer folks very local networking that was completely independent of the larger grid, providing voice access to everyone within your local network and offering whatever you wanted to spin up on your server. (A local copy of Wikipedia wouldn't take up much room at all.)

The Morality of Providing for Your Own Needs

Things that you produce yourself can be produced in accordance with your own values.

You can be confident that no produce from your own garden was harvested by poorly treated migrant labor. You can be confident that no garment that you sew yourself was made by slaves or prisoners. Eggs from your chickens can be cruelty-free, cage-free, free-range, and organic to exactly the extent that you choose — and will certainly be extremely local.

Using power produced by your solar panels funds no overseas terrorist organization, drains no cash to money-center corporations, nor does it enrich the shareholders of the firms endangering our air and water with fracking, offshore drilling, or poorly maintained pipelines.

Where morality is not implicated, you can choose to stay on the grid. I don't live in a tiny house: I live in a town house — but it's a town house owned by a cooperative that I'm a member of. In essence, I rent it from myself. It's on the grid, but it's very much in accordance with my values.

Living large on a small budget makes it easy to live light on the planet, and that often goes hand-in-hand with high-tech, off-grid living.

The Flexibility of Providing for Your Own Needs

The technology of the digital nomad makes it possible to go off the grid in a very different way.

On the one hand, the digital nomad needs regular (although not necessarily constant) access to the Internet. That's as grid-connected as can be.

On the other hand, once you've arranged your life to allow you to be location-independent, you can be pretty indifferent to exactly which bits of the grid you choose to depend on, and you can shift around based on the circumstances of the moment.

You can live out of a suitcase and laptop bag, using the power and Internet available wherever you happen to be.

You can outfit an RV (or a van) with some solar panels and some batteries, add a few gigabytes of data to your cellular plan, and live and work anywhere you choose.

You can connect to the grid, work for as long as seems appropriate, and then disconnect whenever you want.

Being able to make these choices — and then make different choices when the circumstance (or your thinking) changes — is what I mean by the high-tech path to off-grid living.

High-tech or Low-tech, Capital Makes a Difference

There's a big trade off between self-sufficiency and self-reliance, and the more of what you need you can produce for yourself, the more options you have.

The grid is part of this. Replacing it requires a lot of capital. Doing without means taking a hit to your standard of living. This means a lot of hard choices, but each additional chunk of capital can turn one more hard choice into an easy choice.

I mentioned at the beginning that a subsistence farmer needs capital for land or tools. Many of the other strategies I've mentioned — such as getting your power from a solar array — involve substituting capital up front for monthly bills (and a reliance on the grid).

There is the option of going big on capital. If you've got enough money, you can be as local and off-grid as you want in sourcing your food, power, water, and so on.

If you lack capital, you're going to have to pick and choose which aspects of grid you chose to unhook from. Or else, you're going to have to accept a very low standard of living indeed.

In the end, it comes down to your values. Why do you want to live off the grid? What lifestyle choices support those reasons?

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This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Easy Ways to Start Green Investing

Christa Avampato — Wed, 15 Apr 2015 11:00:12 +0000

We'd all love to invest our money in a way that benefits our finances while helping to build a better world. If that sounds like a pipe dream to you, it's not. Impact investing is a growing trend, and there are plenty of ways to do well and do good with your money. Here are five classes of green investments that are kind to the Earth:

1. Green Bonds

Green bonds are a perfect entry point for someone interested in making a social investment. Like other bonds, you pay a certain amount of money for the bond now to get a larger amount of money at a specific future date. With green bonds, your up-front investment is used to finance environmentally friendly projects. They're relatively low-risk and provide critical funds that are urgently needed in the short-term for these green initiatives.

2. Green Mutual Funds

Chances are that if you have any type of retirement account, at least a portion of it is invested in mutual funds. If you'd like to use that money to support green projects, choose green funds when allocating your investments. Broadly speaking, these investments are also included under the umbrella of socially responsible investments.

3. Green Stocks

As an investor, you also have the option to invest directly in companies that have a green mission, product, or service. This means you can buy stock in a publicly traded company that produces renewable energy products such as solar panels, or any other "green" mission of your choice.

4. Green Startups

One of the riskiest (but perhaps one of the most potentially lucrative) green investments you can make is in a green startup. There are plenty of entrepreneurs who are founding companies in the environmentally-friendly space. They range from new composting techniques, to energy-saving products, to innovative concepts such as carbon credits that are bought and traded to compensate for energy consumption.

5. Sustainable Product Stocks

Many companies are taking up the green mantle by transforming their products and using renewable resources. Some also pledge a portion of their earnings to environmental nonprofits, and support green efforts in the communities where they operate. These companies can contribute enormously to protecting the environment, and supporting their efforts with your investment dollars and purchases can help encourage them to continue and enhance these practices.

As always, it's important to make informed investment decisions. It's best to educate yourself about these options by reading about the ins and outs of green investing. I also suggest seeking the advice of a professional financial advisor before making any investment decisions. Together, we can build a bright future for ourselves and for the planet as a whole through our investment dollars.

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This article is from Christa Avampato of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Fundamentals of Socially Responsible Business

Tom Harnish — Thu, 29 Dec 2011 18:51:37 +0000

Link:

http://www.openforum.com/articles/the-fundamentals-of-socially-responsible-busin...

Sustainability is a hot button topic today. Even venture capital firms are betting on corporate social responsibility (CSR), as the broader topic is called. People are building on, and buying into, the premise that businesses are part of society and have a responsibility to create a better future.

If you’re starting a new business and intend to base it on a socially responsible model, it will pay you (literally) to fully understand the concept. You should also know, though, that some people don’t like the idea. Keep reading, and we’ll help you understand both sides of the story and offer five tips for starting a socially responsible business.

What Is Corporate Social Responsibility and Sustainability?

In Corporate Social Responsibility: Making Good Business Sense, the World Business Council for Sustainable Development defines the strategy as, “…the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.”

One of the key themes of social responsibility is support for practices that meet the needs of the present without jeopardizing the future—sustainability. A business strategy based on sustainability is designed to balance profit, people, and planet (economic, social, and environmental) demands to create a desirable “triple bottom line.”

But general agreement on what sustainability really means doesn’t exist yet. Indeed, some environmentalists consider sustainability an oxymoron because, to them, sustainability and development are contradictory.

The Argument in Favor of CSRs

“Doing good” seems desirable, in principal, but is it a worthwhile business model? Although linking profits to abstract variables is tough, a meta-analysis of 52 studies concluded, “...corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is rewarding in more ways than one.”

Market forces, researchers found, don’t penalize companies that are high in corporate social performance, and the strategy can have a distinct positive impact on market analysts, public interest groups, or the media. In other words, CSR does find its way to both the triple bottom line and the traditional bottom line.

The Argument Against

Using corporate resources for social purposes is a irresponsible waste of shareholder profits, some experts claim. Indeed, at least one critic thinks CSR is nothing more than socialism with a modern name.

Nobel Prize winning economist Milton Friedman was a vocal opponent of CSR. In a New York Times article he wrote:

“...businessmen believe that they are defending free enterprise when they declaim that business is not concerned "merely" with profit but also with promoting desirable "social" ends; that business has a "social conscience" and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are—or would be if they or anyone else took them seriously—preaching pure and unadulterated socialism.”

Other critics suggest that even when companies make donations to charity, they’re really just giving away shareholders’ money. Still others claim that CSR helps companies avoid regulations, inappropriately gain legitimacy, and wheedle their way into markets and the minds of decision makers. Some cynics even suggest that CSR lets businesses create bad solutions to social and environmental problems and then shift the blame to consumers—it’s easier to spin than to change.

How Do You Start CSR Business?

If you’ve found the argument in favor convincing, you don’t have to have a business idea based on green energy or saving an endangered species to start a CSR. Do what you do best and keep the environment, work-life fit, poverty, healthcare, equality and other issues in the forefront. Be honest and transparent.

Decide on what you’re going to do. Take a hint from 3M. They started making “cool roofing granules” which are four times more reflective than conventional roofing material so their product reduces heat absorption and, as a result, cooling costs.
Educate yourself. You don't have to have a college degree, but you do need to understand who your customers, competitors, and suppliers are. Talk to people who do what you want to do. Even consider working for them to learn the ropes. Join industry associations, and learn everything you can from them.
Create a business and marketing plan. Most entrepreneurs can describe their product in great detail, but don’t have a clue who they’re going to sell to, or how. Think through a marketing strategy that defines your target consumer and how you’re going to reach them. The important part of your plan is the thinking, not the document.
Find money. Your best bet is savings, friends and family, bank loans, “angel investors,” and formal venture capital sources—in that order. You might even find a grant. Finding Money Advice, a website I helped create, has the essentials.
Execute. Businesses usually fold because owners and managers fail to execute. Great ideas are a dime a dozen, but success is the result of making them happen.

CSR Business Plan Considerations

It’s difficult to differentiate yourself merely with CSR. The barrier to entry is low; anyone can claim social responsibility.

Your CSR efforts have to be aligned with your business or you will be seen as insincere.
Consistency is crucial. Don’t send mixed messages. Most of all, practice what you preach. You can’t claim environmental friendliness, for example, and pollute at the same time.
Make sure your CSR strategy is feasible. Walmart, with low prices and narrow margins, didn’t lobby for higher minimum wages out of social responsibility; it was a competitive strategy to make it harder on the Mom & Pop stores they compete against. Instead, they promote their efforts to “go green” by cutting energy costs and pressuring suppliers to be more fuel efficient. Some would say both seem predatory. You don’t want to go there.

Finally, follow the William James Foundation socially responsible business plan competition. They work with entrepreneurs at the idea and early venture stage to build social and environmental goals into their business. As they put it, “there is no business to be done on a dead planet… By encouraging entrepreneurs who can both create their own success and show others financially viable paths to a more sustainable world, the William James Foundation is creating opportunities around the world for individuals to support for themselves, their loved ones, their community, and their planet at the same time.”

This article is from Tom Harnish of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Celebrate Earth Day

Janey Osterlind — Fri, 22 Apr 2011 10:24:05 +0000

Earth Day is a day when businesses and individuals show their commitment to preserving the environment and promoting sustainability around the globe. The idea for the occasion came to U.S. Senator Gaylord Nelson after observing the devastation following the Santa Barbara Oil Spill in 1969 (it was the largest oil spill in the U.S. at that time, and is the third-largest after the 2010 Deepwater Horizon and 1989 Exxon Valdez spills). Senator Nelson was inspired by anti-Vietnam War protests to create another movement, this one focused on engaging the public in caring about the preservation of air and water quality. Nelson recruited Harvard graduate student Denis Hayes as national coordinator of the Earth Day campaign.

The first Earth Day was held on April 22, 1970, and it was marked by some 20 million Americans demonstrating in enormous rallies from coast to coast. The occasion was unique in its support from both Democrats and Republicans, rich and poor, union workers and corporate leaders alike. The first day is credited with paving the way for the creation of the U.S. Environmental Protection Agency in December 1970 and the passage of the Clean Air, Clean Water, and Endangered Species Acts.

Following the celebration of the first Earth Day, Denis Hayes founded the Earth Day Network to promote environmental education, further environmental policies, organize national and local Earth Day events, and promote activism and environmental protection. In honor of the 40th anniversary of Earth Day, the Earth Day Network created multiple worldwide initiatives that succeeded in rallying the support of 1.5 billion people in 170 countries. Learn more about the initiatives for Earth Day 2011 on the official Earth Day website.

How to Celebrate Earth Day

Perhaps you are a committed environmentalist who wastes nothing. Perhaps you have never cared, or thought, about your impact on the environment before. Or perhaps, like me, you are somewhere in between. Whatever the case, you can do something to show your commitment to preserving the environment and learning more about sustainability. (See also: Save the Planet: Work at Home)

Give Money

Donate to the Earth Day Network or other causes related to sustainability and the environment. One cause close to my own heart is EARTH University in Costa Rica, which promotes sustainability in the tropics (I studied in Costa Rica during my undergraduate days and worked on a marketing project for EARTH). Find something close to your own heart related to the environment or sustainability, and help that organization achieve its goals with a show of support.

Commit to Protect the Environment

Whether you do it publicly by pledging it through the Earth Day Network’s A Billion Acts of Green® or by simply adding a “take the recycling out” line to your family’s chore chart, every bit helps. Try making a small pledge to act this Earth Day, and follow through.

Take Action in Your Community

Check out your community events calendar for Earth Day activities, or take a look at this map of Earth Day events to find ones in your area.

Think Politics

The first Earth Day led to the passage of several critical pieces of environmental legislation. Continue that trend by researching environmentally friendly legislation that you believe in and writing your congressman or congresswoman this Earth Day. If you agree with the proposed HOME STAR green energy jobs bill currently in the Senate, sign the online petition urging the passage of that bill.

Take Action in Your Own Home

In addition to making a pledge to act, try adjusting your lifestyle in small ways to conserve energy, reuse, and recycle. Fortunately for you, Wise Bread reader (and frugal genius extraordinaire), using less of anything also often translates into saving money. Try these tips for using less heat or these for reusing common household items we often throw away.

Learn More About Green Living and Sustainability

Intrigued by the concept of sustainability? The following websites are great resources for learning more about it:

Environmental Protection Agency’s Definition of Sustainability
The Go Green Initiative
The Clean Water America Alliance
EarthShare.org

How are you going to celebrate Earth Day this year? What environmental causes are important to you? Share your thoughts in the comments!

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This article is from Janey Osterlind of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Frugality, Simplicity, and Sustainability

Philip Brewer — Wed, 13 Jan 2010 14:00:03 +0000

The frugality blogosphere was buzzing last week with an article by Katherine Hibbert about how she was getting by in London spending just about nothing. People were arguing about whether her lifestyle was really frugal, simple, or sustainable.

You ought to read her article My free and easy life, which is excellent, but, very briefly, she gets by through a combination of living in vacant buildings (squatting) and dumpster diving (called "skipping" in the UK). The questions in the blogosphere, though, had to do with the extent to which her example can serve as a model for the rest of us.

(I should mention that the laws on squatting are different in the UK. The article goes into some detail on that topic.)

In all three spheres, the disconnect had to do with where you drew the line around the activity before deciding whether it was frugal, simple, or sustainable.

If you drew the line just around Katherine Hibbert, her lifestyle was obviously very frugal — she got by on less than £1 a day! It was simple, too — once she got past being stressed over knowing that she might be evicted at any time, her biggest problem was boredom, and she solved that by studying and doing volunteer work.

But if you drew the line a bit wider, the frugality and simplicity became a lot fuzzier. All over London people are maintaining vacant buildings; that's how she and her friends found places to squat. All over London people were pitching perfectly good stuff into dumpsters; that's how she and her friends found their food, their furnishings, and the stuff they sold to pay the bills that they needed cash for (such as her mobile phone contract). That's not simple and it's certainly not not frugal.

It's true that people were already doing that before she came along and made use of the buildings that were sitting idle and the stuff that was on its way to the landfill. In fact, part of her motivation is to draw attention to the fact that these resources are going to waste. (The results of her efforts are sometimes perverse, though — she points out that perfectly good food is being pitched into the dumpster and merchants respond by puncturing the containers so as to ruin the food, or by locking the dumpsters to keep people out.)

And here is where sustainability comes in. Some number of people can get by on the detritus of western consumer society. In fact, quite a few people. I have no doubt that the food, clothes, and consumer goods thrown away every month in the United States, if distributed among the very poor, could bring every American up to a decent standard of living. But that's only true because so many people are trying so very hard to live better than that.

If ordinary people decided to live the way I keep recommending — building a frugal lifestyle grounded in careful thought about what they really need — the cornucopia of surplus goods would dry up pretty quickly. Whether you call it dumpster diving or skipping, it doesn't scale.

Now, in one sense that's a theoretical point. I don't think we need to fear that millions of working-class and middle-class folks will suddenly abandon the rat race and decide to get by on what they can scavenge. But, I think it's more than a merely theoretical point, because there are a lot of pressures against the present model.

None of the people producing the excess stuff that ends up in the trash is doing so because they want to. In fact, they're all trying actively to waste less — and as they get better at reducing waste, the waste stream will tend to dry up. At the same time, social pressure to divert the waste stream to the truly needy will tend to dry it up as well, at least as far as people like Katherine Hibbert are concerned — the "surplus" food will end up at food banks instead of dumpsters. That's a good thing, but it'll be tough for people who used to get their food for free.

Of course, to the extent that people are choosing this lifestyle in order to make a point (rather than because they're lazy slackers), it's all to the good — it'll mean that their point has been heard. But to the extent that they've chosen this lifestyle because it appeals to them, I don't think it's got a long term future. It only works because cheap energy and cheap money have made us all temporarily rich; that's not going to last.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book review: Game Over

Philip Brewer — Sun, 11 Jan 2009 18:45:29 +0000

Game Over: How You Can Prosper in a Shattered Economy by Stephen Leeb.

Game Over makes that case that we're running into resource limits on every front--energy, metals, water--and that this problem is going to affect everything we do. Then, it looks at what can we do about it, as individuals and as a society.

The book breaks down into four sections.

The first lays out the case that we're running into resource limits on every front. The second suggests that we, as a society, may well be able to do something about this--but only if we're clever and foresightful. The third looks at some issues related to the way we've been running the economy for the past few years. The fourth suggests a bunch of things individuals might do, to position themselves so that their finances don't get too beaten up by the problems.

Peak oil (and peak lots of other stuff)

Part one begins with peak oil, but then expands on that issue by pointing out that we're hitting limits with many other resources as well--metals, water, etc.

It's no surprise that we're hitting so many limits at once. For almost any resource there are partial substitutes. The end result of going down that path, though, is that the substitutes get used wherever they're adequate--meaning that eventually they'll hit a limit as well. If you aggressively substitute the cheapest alternative in every case--which is exactly what happens in a free market--pretty soon all your resources will be pushing up against their own limit.

Leeb lays out the case for peak oil pretty well. At some point--roughly at the point when half the oil has been produced from a field--that field hits a peak: it produces more oil than it has ever produced before or will ever produce again. This is clearly true of individual fields--we've seen it over and over again, all over the word. It is also clearly true of countries. The United States hit its peak in 1970. Since then, even with the addition of oil from Alaska, we've never produced as much oil again. It is true of the world as a whole as well--add up all the production from all the fields, each one eventually hitting its own peak, and at some point the planet hits a peak. Every year after that, the world will produce a bit less oil than the year before.

Besides laying out the case for peak oil, Leeb introduces another concept that he calls "absolute peak oil," by which he means that point at which it takes more energy to produce a barrel of oil than you'll get by burning the oil. It's an important concept, although I don't think Leeb develops it very well.

The concept he's referring to is the "energy return on energy invested," usually abbreviated EROEI. When your EROEI is less than one--when the energy produced is less than the energy it took to produce it--whatever you're doing is no longer an energy source. Of course, that doesn't make it worthless. Batteries, for example, have an EROEI of less than one--it takes a lot more energy to construct a battery and deliver it to you than your battery-powered device will ever get out of it. But that's okay. Batteries are an energy delivery mechanism, not an energy production mechanism. As long as people will pay more for a battery than it costs to make it, people will keep making batteries.

Peak oil will start to bite long before we hit that point. Once we hit the peak, the world as a whole will have to burn a bit less oil each year than the year before. The consequences for how people live will be enormous.

Alternatives

Part two talks about the development of alternative sources of energy, and the key message is that many alternatives that look possible simply don't scale, because of limits in other resources.

Wind, for example, could replace most of the energy that we get from oil. The EROEI for a wind turbine is pretty good. But there's a huge capital investment--you need to build towers, turbines, and generators. You can build hundreds of wind turbines no problem, but if you tried to build enough wind turbines to replace the energy we get from fossil fuels, you start running out of things like steel to build them out of.

All the alternatives have similar issues. Try to replace oil with ethanol and you start running out of land and water (and, in the shorter term, food). Try to replace oil with tar sands, and you run out of natural gas and water.

The key take-away from part two of Leeb's book is that there are many possibilities for alternative energy production, and that many of them will work to some extent, but that we need to look very seriously at which ones can be scaled up to produce enough energy to make a difference without hitting other resource limits.

I should add that this part of the book has Leeb's worst misstep. He talks about conservation as part of the basket of choices to get us through the rough patch where resource limits really start to bite--and then thoughtlessly dismisses the notion on the grounds that our conservation probably just makes the energy cheaper, so other people will use it up all the faster.

The point he misses (and he's certainly not the only person to make this mistake) is that the goal of conservation is not to "stretch out" the depleting supply for a while longer. The point is to find a balance between the production of energy and the use of energy.

It's sad that he couldn't take this step, as it follows rather directly from his previous point--that if we try to build enough windmills to replace the energy we get from oil, we run out of steel. Suppose, though, we could build some windmills--enough to replace a fraction of the energy we get from oil. Suppose we could also get modest-but-significant amounts of energy from other renewable sources (photovoltaics, biofuels, geothermal). The point of conservation is to find a way to live comfortably using only that much energy. Duh!

Inflation

The third section talks about the economy, making the case that inflation will be the big economic problem over the next few years, and that it won't be easy to deal with.

The central banks have made the determination of late that inflation is the safer risk. We know how to end inflation, so it's safe to risk a little inflation in an effort to avoid a depression. Leeb says that this isn't going to work. Yes, we know how to stop inflation--but only by causing a recession. If the economy is already in a recession, the central banks will never make that worse just to end inflation.

There is, of course, the key counter-example of the policies of the Federal Reserve under Paul Volker in the late 1970s and early 1980s. Leeb's analysis, though, is that we were in better shape then to tolerate the disinflation, but that we're not now.

Personally, I hope he's wrong--and I think there's a good chance he is. In a recession, the pain hits some much worse than others--business owners suffer, workers who lose their jobs suffer. In an inflation, the pain hits everybody, but it especially hits people with money. To the extent that "people with money" have power within society, I think eventually the pain of a bad inflation will push policy maker's to grind the inflation out of the system, even at the cost of a recession.

Investments

The last section of the book is on investments. It's informed by his thinking on inflation, so one key suggestion is gold. He suggests a variety of companies that should make money as we try to build out alternative energy production facilities, and he suggests some companies that will thrive as developing countries (where they use less energy than the rich countries do) continue to grow.

On balance it's a good book. Certainly it's right about the problem. It also has a thoughtful (if limited) look at the range of possible solutions. His economic analysis is different from mine, which leads to different investment suggestions than I would make, but that's really the least important part of the book (and time may yet prove that he's hit closer to the mark than I).

If you're interested in learning more about how limits in energy and other resources are going to affect us, and how we might address those problems both as individuals and as a society, Game Over is a good place to start.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book review: Farewell, My Subaru

Philip Brewer — Mon, 22 Dec 2008 20:39:42 +0000

Farewell, My Subaru: An Epic Adventure in Local Living by Doug Fine.

There are a number of books now by people who set out to live a more local, more sustainable life, and wrote a book to document their experiences. Most of them approach the problem with the perspective that living a lower-carbon lifestyle is going to entail giving up some of the things that modern Americans have come to expect. Doug Fine, though, would rather not. Especially not ice cream.

There's a fundamental trade-off that you can't really escape. All that carbon gets released producing energy, so if you want to release less carbon, you've got two options: You can make do with less energy or you can find a way to get the energy without burning carbon. The first option requires sacrifice; the second typically requires either doing large amounts of hard work or else spending large amounts of money. Unlike some of the other authors of recent books on low-impact living, Fine is inclined toward the second option--going to great effort and spending large amounts of money to get his modern American lifestyle with less carbon burned.

The book is basically a series of funny stories of Fine's first year or so trying to live more sustainably on forty-one acres of rural New Mexico. The humor is largely of the self-depricating sort--Fine bumbles about making beginner mistakes, but through a combination of perseverance, help from friends and neighbors, a modest amount of good luck, a lot of hard work, and the expenditure of a whopping amount of money, manages to set himself up to be successful.

The book actually ends before we see a lot of pay-off from the hard work. It would have been nice to hear about the ice cream that he was going to make from his goats milk. But that doesn't make the funny stories about his hard work any less funny.

There are two things this book isn't.

First, it isn't out to convince you that living a low-carbon lifestyle is the right choice. The audience for this book is largely people who have already decided that--but are daunted at the prospect of the changes involved in living in accordance with their values. (People who don't think low-carbon living is necessary to save the biosphere could possibly be amused to watch Fine go to all this trouble for no good reason that they can see, but I doubt if they'd really be interested.)

Second, it most definitely isn't a how-to manual. Although the author talks about raising goats and chickens, and installing a solar-powered pump and a solar hot-water heater, and getting his truck converted to run on used cooking oil, he just tells the funny stories of his mishaps. It may give you some ideas and it may make certain choices seem more (or less!) reasonable, but this is not the book that's going to tell you how to do any of those things yourself.

Probably the best thing about the book is the way it provides a worked example that doesn't seem too daunting. Instead of trying to achieve sustainability through the sort of extreme simple living that amounts to a repudiation of the modern American lifestyle, Fine tries to achieve it through a large investment of time, effort, and money. Where the other books leave you thinking that their writers are capable of superhuman feats of self-deprivation (admittedly alleviated by the opportunity to eat lots of great, local food), Fine's book gives you nice crisp stories that emphasize his foibles and leave you with a sense of "If this clown can do it, I can certainly do it."

Sometimes his tone bugged me. One example was in talking about trying to go hunting. His other stories sounded like the efforts of someone trying (and eventually succeeding) in some endeavor despite a certain amount of ineptitude--which make them fun to read. The story of his hunting endeavors, though, ends in failure. His ineptness is great enough in this case that it seems almost willful. That, combined with giving up right away, makes it less interesting to read about than the endeavors where he perseveres. That's a minor complaint, though.

If you're interested in living a lower-carbon lifestyle, but you're not quite ready to make the leap yourself, Farewell, My Subaru packs a nice mix of inspirational and cautionary tales into one funny little book. I enjoyed it a lot.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Learn techniques for sustainable living

Philip Brewer — Mon, 11 Aug 2008 14:23:27 +0000

In the long run, we'll all be living sustainable lifestyles. Many of us are already moving that way--positioning ourselves to live more sustainably--at a pace of our own choosing, rather than waiting until circumstances force our hand. Some who are further along are trying not only to live more sustainably, but also to pass on what they're learning.

I was on vacation this past week in St. Croix. Along with snorkeling along the reef, resting in the shade of the cabana (enjoying the trade winds), and (very frugally) drinking duty-free rum, I went to see the Virgin Islands Sustainable Farming Institute's Creque Dam Farm.

It's a fascinating place. Along with operating an actual working farm, VISFI's mission is a combination of research into sustainable farming techniques, outreach to make what they learn available to the community, and education in the form of classes, workshops, internships, and apprenticeships.

They're precise about what they mean by sustainability. In particular, they're not really striving for self-sufficiency (although they are self-sufficient in many areas, with solar power, their own well, fruit trees, vegetable crops, chickens and rabbits).

Things that they don't produce themselves they try to acquire locally. When that isn't practical, they try to acquire them from sustainable sources. And, although they're very serious about sustainability, they don't seem to insist on purity--they understand that different students and interns are coming to sustainability at their own pace. (So, things like peanut butter and mac and cheese are on the menu.)

I've talked about self-sufficiency and self-reliance before--about the trade-offs involved and the need to be clear about what you're trying to achieve--so I was pleased to find the folks at VISFI are thinking clearly.

I had shown up in the late morning, because that's when my brother was free to drive me up to the farm. They were fixing an early lunch and kindly invited us to join them. After a fascinating conversation about the many activities at the farm, they took us to see the chickens and rabbits, then gave us a brief tour of the orchards and fields closest to the community center.

If you want to learn more about sustainable farming, or want to learn the skills involved, you might want to consider an internship or apprenticeship at VISFI. They seem to have the right combination of a serious attitude about their mission (without which there's not always anything to learn) and a laid-back attitude about accomplishing it in the near-term (without which a place can be hard to live at for long enough to learn it).

I know of other places for learning techniques of sustainable living, but this is the only one I've visited. Anyone else with first-hand experience at any of the others?

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Welcome to Container City - How Shipping Containers Are Recycled into Green Dwellings

Xin Lu — Thu, 15 May 2008 06:54:25 +0000

At any port you can probably see hundreds to thousands of empty shipping containers just sitting around waiting to be loaded. In recent times these containers have not only transported goods across oceans but have also been transformed into energy efficient dwellings with some great design and ingenuity.

In the past decade many habitable container projects have been completed around the world. At fabprefab there is a selection of these projects for shipping container enthusiasts. The picture used here on this article comes from a funky development called Container City I in at Trinity Buoy Wharf in London, England. The Container City site explains that shipping containers can be linked together to create strong steel modules that can be used to create many different types of accomodations. This type of construction takes very little time to build and the cost is low because 80% of the materials used is recycled. The shipping containers can be painted with insulating paint and use energy efficient appliances. Additional earth-friendly features could include water harvesting, solar panels, and green roofs.

In America at least two shipping container complexes recently made the news. One is called the City Center Lofts in Salt Lake City, Utah. The plan is to erect a seven floor residential building that includes an art gallery. Another project is slated in Detroit and the plan is to create a 17 unit condominium project at a cost of 1.8 million dollars. The condos will range from 960 square feet to 1920 square feet and will be priced at $100000 to $190000 each. That might be a little expensive for Detroit since homes were selling for less than cars there .

I think it is awesome that people are creating new homes from recycled industrial products. However, another recent news report states that the United States is having a shortage of shipping containers since the weak dollar is pushing up the demand of exports from the United States. Perhaps the next commodity bubble is in shipping containers?

This article is from Xin Lu of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How low interest rates might save the world

Philip Brewer — Mon, 03 Sep 2007 11:39:38 +0000

Low interest rates generally lead to inflation, which is bad for everybody. But if inflation were really low, then low interest rates would tend to follow, and in that situation, low interest rates just might save the world.

Present value

This article is really about present value. (It's about saving the world, too, but first it's about present value.) Present value is the way economists think about the value today of something that you're going to get in the future. Money that you're not going to get for a while is worth less for a whole list of reasons:

You can't spend it now
Inflation might make it worth less before you get it
There's some risk that whoever is supposed to give it to you won't
If you had the money now, you could invest it and earn some return

So, how do you calculate the value today for some money that you're supposed to get in the future? You calculate the present value of the money.

The calculation is rather complex. That's not a big deal--any financial calculator and many web sites include a present value calculator--but it's worth understanding the basics of the formula. The gist of it is in that last bullet item there--if you had the money now, you could invest it and earn some return. The formula essentially figures out how much money you'd need to have now in order to be able to invest it and get whatever you've got coming to you later.

Let's say some rich uncle died and the lawyers tell you that you can expect to receive $1000 once the estate settles in six months. Further, let's say you could get 5% on the money in your internet savings account. Plug those numbers into a present value calculator (6 months, 5%, and a future value of $1000) and it will tell you that the present value is $975.36. (That interest rate, by the way, is called the discount rate, because it's used to figure the discount of the present value to the future value.) An economist would tell you that you should sell your right to receive that money if anyone would offer you $976 for it. Likewise, if whoever is inheriting the money offers to let that economist have the inheritance in exchange for $975 today, the economist would no doubt jump at the chance to pick up a free 36-cent profit.

In the real world, of course, the second-to-last bullet point also comes into play. The 5% that you could earn on the money is all well and good if you've got great confidence in the lawyers, the estate is large, and the will clearly gives you $1000 off the top. But oftentimes things aren't so very clear. Maybe the estate is overly invested in subprime mortgages. Maybe there's an illegitimate son out there with a claim to the whole thing. Anything that adds uncertainty to the payment increases the discount rate.

Economists, of course, don't like to dirty their hands with figuring out what the discount rate actually needs to be to account for the fact that there might be another heir out there. Instead, they just tell you to use the "appropriate" discount rate.

Decision-making and present value

To an economist, not having to pay money is the same thing as getting money, so the present value formula lets you answer all sorts of questions about paying money now to save money later.

If you can buy a cheap widget today for $100 and have it last 10 years, or you could buy an expensive one for $200 and have it last 20 years, which would you pick? It's not even a toss-up: buy the cheap widget. The cost of the replacement widget ($100, 10 years from now, 5% discount rate) has a present value of only $61.39. If you had the $200 you could buy the cheap widget, invest the $61.39 (which would be worth $100 when the time came to replace your widget), and have the $38.61 to spend or invest in some other way. On the other hand, if the longer-lasting widget only cost $160, that would be the way to go.

Of course there's a lot of issues that need to be handwaved away for this to work out so simply: the risk that the cheap widget will fail at a critical time, the risk that the replacement widget might not be so cheap, the value of your time spent widget shopping twice instead of just once, and so on. But the principle is sound.

People make these sorts of calculations all the time. Why do roads need to be repaved every 3 years instead of being made to last 20? Because the present value of repaving an extra six times is less than the present value of making a road to last.

Choosing a discount rate

As I said, economists just tell you to choose an appropriate discount rate and leave the dirty work to you. It's a big deal, though, because which rate you chose has huge implications for what makes sense and what doesn't.

Suppose the appropriate discount rate were only 2% in the widget example. All of a sudden the right amount to pay for the better widget is $182. On the other hand, if the appropriate rate were 9%, you it wouldn't make sense to buy the better widget unless you could get it for just $142.

The main things that factor into the discount rate are the general level of interest rates in the economy (because you could invest whatever money you don't spend now--or alternatively, have to borrow whatever extra you need, which is the same thing to an economist) and any unique risk factors related to this particular transaction (such as the risk that they might not even make widgets ten years from now).

High discount rates in action

Ever see somebody who makes seemly irrational financial decisions, such as borrowing from payday lenders or skipping routine car maintenance that ensures much higher repair bills later? Without speculating on what is actually in the mind of such a person (feeding their family, perhaps), you can model their behavior by treating it as indicating a very high discount rate.

When would it make sense to borrow $100 today and have to pay back $115 in two weeks? It makes sense if your discount rate is over 365%. If it is, then $100 today is worth more than $115 in two weeks. Note that it doesn't matter if the borrower is actually making such a calculation--surely almost none of them are. But they're acting as if they were.

The effect of high discount rates is to make future results insignificant compared to the present. And the reverse is also true: If the future is insignificant (such as, for example, if you're dying of a terminal illness), then making decisions as if the appropriate discount rate were very high makes a certain kind of sense. So what if spending $30 on your car today could save you a $1400 repair bill next year if the car is sure to be repossessed long before then?

Roofing beams

Now we get to the saving the world part.

Here's a story I've heard more than once. Sometimes it's about Cambridge, sometimes it's about Oxford, but either way it goes like this:

The facilities guy comes to the head of the college and says, "The huge oak beams that hold up the roof in the great hall are almost 400 years old. They're wearing out and need to be replaced. I don't know where we're going to find replacements, and if we do find them, they're going to cost a fortune."

The head of the college gets advice from various people and eventually finds himself talking to the college forester. (Old colleges have odd positions like college forester.) He explains how the oak beams are wearing out and that they're trying to figure out what they can use as a replacement.

The college forester, of course, says, "No problem. When they built the great hall 400 years ago, my predecessor planted a grove of oak trees. They should be just about ready."

Now, this is a wonderful story about planning ahead and about the value of continuity--only a really long-lived institution, such as a college, could make such a thing work. It's also about sustainability. It just makes sense to do things this way

But think about this story in terms of the discount rate. Suppose 400 years ago beams for the roof cost a total of 1500 pounds sterling (back when a pound was really worth something). Someone doing the net present value calculation at the time, trying to figure out whether to devote the land necessary to grow a whole grove of oak trees to provide replacements, would have found that (at a 5% discount rate) the future value of 1500 pounds in 400 years would only be worth 0.00001 of a pound. In other words, you couldn't even justify the cost of the acorns, let alone the cost of tying up the land for 400 years. If the discount rate were only 2%, the present value of the oak beams 400 years later would be 0.54 of a pound--easily enough to pay for the acorns, anyway. If the discount rate were 1.1%, then the present value would be nearly 20 pounds--very possibly enough to make it worth tying up the land (especially since other trees can be grown alongside oak trees).

In other words, sustainable behavior makes economic sense if the discount rate is low enough.

How to get low rates

The government manipulates interest rates all the time. In the US the Federal Reserve raises rates to head off inflation and then cuts them again to protect the financial system from the harm done by high rates.

Setting the rates too low produces inflation--and leaving the rates low after inflation has begun to rise makes savings grind to a stop. (If your money is worth less every day, why hold onto more than you need just to transact daily business?)

The only way to get lasting low rates is to have very low inflation. During periods when people had great confidence in their money, such as in England and the United States during the gold standard, people made just the sort of long-term decisions I'm talking about. Planting oak trees to be harvested after 400 years is an extreme (and probably apocryphal) example, but there were plenty of real-world examples of investments made and stewardship undertaken that only made economic sense if the discount rate were 2% or less.

A few years ago the inflation rate got down close to zero and the Fed panicked. They're much happier with an inflation rate that runs between 1% and 2%, because they worry that they don't have the tools to stop deflation once it starts. The problem with not driving inflation down to zero, though, is that long-term sustainable behaviour will never make sense when interest rates are high.

If you're going to get $100 after 50 years it doesn't make sense to invest even $9 today, if the discount rate is 5%. If the discount rate is 2% then you might invest $37, and if the discount rate is 1% then you might invest nearly $61.

To make sensible sustainable activity also make economic sense, you need to have very low interest rates. And the only way to get very low interest rates is to have very low inflation.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Save the World and Save a Dime: Eat Locally

Tannaz Sassooni — Tue, 27 Mar 2007 01:01:55 +0000

Paul Michael's recent post on processed foods and Andrea Dickson's on the Manhattan family trying to live without impacting the environment got me thinking. One one hand, Paul's exposing us to some very real perils in the industry responsible for pretty much everything we consume. On the other, Andrea tells us about a family going to very extreme measures to address these perils and more. It's admirable what the Manhattan familiy is doing, but living without toilet paper, or composting inside a city apartment are a bit much for most people. But there's a group of bloggers who offer a more feasible challenge, designed for sustainability, deliciousness, good stories, and now, even for saving a buck or two: eat locally.

The Eat Local Challenge can mean different things to different people. For some, it's a 100-mile radius, while for others, anything that comes from within their state is fair game. There may be exceptions, like soy sauce, or black pepper. It might be a commitment to reshape your entire diet, or just a single dish made exclusively from local foods brought to a Thanksgiving dinner. But the idea is, you start thinking about the food you're consuming. You ask questions from the employees at your local grocer, or at the farmer's market (a real haven for diverse, fresh local goods). You boost your local economy and eliminate the environmental costs of long-range transportation and packaging, even more effectively than by eating organically.

It is a true challenge, but the payoff is an oasis from many of the issues introduced by food processing, not to mention delicious new taste experiences. Eating locally means you can't have everything all the time, but instead you get a feel for seasonality -- fruits and vegetables at the peak of flavor and ripeness. Plus, local produce is certainly fresher than pears shipped from China or cucumbers from Mexico (unless of course, you happen to be living in China or Mexico).

The folks at Eat Local Challenge have been churning out a variety of challenges over the last couple years, and the latest focuses on budget: The Penny-wise Eat Local Challege. For one week in April, they will be eating locally, but also staying within the budget of the average American, which according to the Department of Labor, this could be as low as $121 a week for a single-income household. No doubt there will be trying moments, but that's part of budgeting, right?

Here's some more info:

The official announcement of the Penny Wise Challenge

Nuts and bolts details of the Penny Wise Challenge

10 Reasons to Eat Local

Tips for Eating Locally

Time Magazine Article on the 100-mile Diet

This article is from Tannaz Sassooni of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: