Willingness to Pay

May 6, 2013
Denise Mullen

The conversation of late in BC has been about energy and resource development with a “hair on fire” commentary from many quarters and a whole tranche of people who think energy and mining are two evil incarnate activities. Energy and the products of mining produce a vast range of goods and services that we take for granted and that have enabled a rising standard of living for billions of people. We have created some amazing technology and the ability, for the most part, to live a life that is quite comfortable (at least in developed countries), primarily because we have been able to harness energy in its various forms to do work and create things.

By way of a short refresher for those who have forgotten how we got to today, early man lived a hand to mouth existence. It wasn’t until the discovery of fire that we could transform protein to usable calories, which led to a bigger brain and a desire for a better life. We used our brains to experiment and discovered metal forging, in particular bronze, which created the impetus for the expansion of Egypt. Iron, the 4th most abundant element on earth, was discovered due to a shortage of bronze. At the same time, we realized that cutting trees for charcoal to make metals was affecting the forests so there was a push to find a replacement. That happened to be coal, which then birthed the industrial revolution and the consumer age by changing how we did work and where we lived, as people flooded from rural to urban centers, along with the 1875 invention of steel that allowed cities to go up rather than out. The discovery of oil in 1901 as a replacement for sperm whale oil largely used in lighting also sped up the development of the internal combustion engine and led to modern transportation methods, even larger cities and more demands. Disputes over oil stimulated the discovery of nuclear energy and may lead to more emphasis on renewable energy.

The main point is that whether we like to talk about it or not, people all want the same things – stuff and services - and that takes energy, the products of mining, use of water, human ingenuity and labour. Harnessing energy, regardless of form, does have environmental impacts. These need to be acknowledged, managed and minimized. Even renewable energy needs fossil energy (at the moment) and the products of mining to create the machines, wires and infrastructure that enable the capture and transformation of diffuse renewable energy forms.

What is most concerning and vexing is the striking disconnect among some who are vocal opponents of traditional economic activities between their stated views on resource development/exports, on the one hand, and their own demand for energy (cheap and reliable), their consumption of things (cheap and easily sourced with strawberries all year round), their expectations of a high standard of living and an expansive and expensive social safety net, and their willingness to pay. In study after study on willingness to pay, the results are the same - there is a significant gap between what consumers say they are willing to pay and what they actually want to (and actually will) pay.

We have built our current economic system on relatively inexpensive and available fossil fuels. That is also a fact. Any economic system is not just about business it is about people and the system of the exchange of goods and services that we have collectively built and rely on. This is often forgotten. It is not an “us versus them” proposition. Business really is not separate from us but is integral to us, created by us and co-dependent on us, just as we are dependent on nature’s bounty for all the stuff we demand. If we want renewable energy and different products, generally, then we have to be willing to pay and also to alter our habits as consumers, not just theoretically but in reality, and not just when it is convenient.

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