Addressing overconsumption through the combination of pricing and regulation

Although I support the concept of a carbon tax, like that implemented in British Columbia in 2012, I feel that taxing may not be the most effective way to address carbon emissions.  I see overconsumption as being at the root of the carbon emissions issue and I see a combination of pricing and regulation as being the most effective route to lowering consumption.  A combination of mandatory efficiency measures and prices/rates that better reflect the full cost of ‘energy’ would better lead to widespread efficiency. 

 An example that illustrates this point are the regulatory measures and price structures that are put in place in Southern California to manage water consumption.  Regulations include forbidding watering lawns at certain times of the year/day and serving water in restaurants without a request.  People that do not follow the regulations are subject to fines.  The LA DWP use a tiered rate structure that allow households to use an allotted amount of water at a low rate (Tier 1).  This rate varies by the property size, location climate, and household size.  Tier 1 amounts are meant to take care of basic needs, thus insuring that all households regardless of income, have basic needs met.  Once a household uses more then the Tier 1 allotment, the water used after that is priced at the higher (Tier 2) rate.  Tier 2 rates are about 2x the amount of Tier 1 rates and are meant for things like long showers and maintaining pools.  According to Austin Troy, since LA implemented this co-system of regulation and pricing in 1993, LA’s water consumption rates are as low as they were in 1979, despite the city as a whole growing in population by one million people. 

 Pricing has forced people to change their behavior, and ultimately has produced huge savings in water without really drastically inconveniencing anybody.  Zev Yaroslavsky says, “The trick is to find a way through the pricing mechanism to incentivize people to conserve without fundamentally changing their quality of life.”   

 It seems like this combined pricing and regulatory structure could be applied to energy consumption in a more widespread way then currently.  Austin Troy writess that in the case of building energy, individuals are a lot more effective at reducing costs on their own initiative than at following government rules.  It’s all about money.  One could hypothesize that if energy prices rise to better reflect the true cost, companies/home owners may seriously change the way that they consume energy and look towards better, ‘cleaner,’ more efficient ways of doing business and carrying out tasks in their daily lives.    

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