Environmentalism as business proposition

In an excellent piece from the New York Times on the costs of retrofitting large buildings to be greener, there’s this peculiar passage:

Some residential buildings might also consider installing solar panels on the roof, to provide a nonpolluting source of electricity to light the hallways and run the elevators. Experts recommend doing this only after more glaring energy inefficiencies have been addressed, because in a large apartment house, solar panels are not going to produce enough energy to replace Con Edison.

Solar requires patience. It could take up to 15 years to break even on $19,000 spent on solar panels, and that is after subsidies and tax breaks offered by the state and federal governments. Mayor Bloomberg has proposed an additional subsidy for installing solar panels on buildings in New York City.

[Ashok] Gupta of the Natural Resources Defense Council contends that environmentalists often sell themselves short by focusing too much on payback periods. “Nobody asks what the payback period is for a marble lobby,” he said. But if a lot of large commercial and residential buildings installed solar panels, he said, that could go a long way toward reducing the city’s overall impact on global warming.

“From a societal perspective, the benefits are huge,” Mr. Gupta said.

True, but that misses the point in exactly the way too many environmentalists have for too long: convincing people to sacrifice for the common good is often a losing strategy, or at least not one that wins often enough to make enough of a difference. Talk of payback periods is a way of getting people’s attention. Even if the period is long, it conveys the important fact that there is one, that going green is an investment with, ultimately, direct benefit to the investor.

A marble lobby makes people feel good because they live in luxury and can show it off to their guests. What’s the payback period? It’s unquantifiable, but assuming you’re aiming at the right market niche, you know you’re going to make your money back.

The assumption with green retrofits is that they’re costs, undertaken out of the goodness of the landlord’s heart. Solar panels invisible on the roof of an apartment building, especially when the measurable proceeds flow to the owner rather than the tenants, are nearly worthless to those tenants, and aren’t likely to boost desirability (and therefore rents) very much. Emphasizing payback periods for those solar panels, though — that’ll get a business-minded landlord’s attention.


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