Increased energy costs and reduced externalities will not cause a relocalization of agriculture.
Commenting on an [excerpt from chapter 10 of Charles Eisenstein's Sacred Economics] [0]: [0]: http://blog.p2pfoundation.net/on-the-necessity-to-internalize-costs-in-a-true-cost-economy/2011/09/30 (Blog post by Michel Bauwens, “On the necessity to internalize costs in a true cost economy”) > “Externalized costs are costs of production that someone else > pays. For example, one reason vegetables from California’s Central > Valley are cheaper to buy in Pennsylvania than local produce is that > they don’t reflect their full cost. Since producers are not liable > to pay the current and future costs of aquifer depletion, pesticide > poisoning, soil salinization, and other effects of their farming > methods, these costs do not contribute to the price of a head of > lettuce. Moreover, the cost of trucking produce across the continent > is also highly subsidized. The price of a tank of fuel doesn’t > include the cost of the pollution it generates, nor the cost of the > wars fought to secure it, nor the cost of oil spills. Transport > costs don’t reflect the construction and maintenance of highways. If > all these costs were embodied in a head of lettuce, California > lettuce would be prohibitively expensive in Pennsylvania. We would > buy only very special things from faraway places. This reasoning seems very weak to me, as if Eisenstein had a preconceived conclusion that food production should relocalize, and was seeking reasons to justify it. The reason he suggests is not at all plausible. ### Non-transport costs are irrelevant to buying local. ### First, if we're trying to figure out whether Pennsylvanians will eat Pennsylvanian lettuce or Californian lettuce, the externalized cost of the farming practices is mostly irrelevant. If those costs are fully internalized, perhaps food production will become centralized in areas where environmental impacts are lower, so Pennsylvanians might eat lettuce grown in Cuba and Venezuela rather than California. But it certainly won't cause Californians to eat Californian lettuce and Pennsylvanians to eat Pennsylvanian lettuce. So we are left with only the shipping costs. ### Transport costs are very small because transport is very efficient. ### Second, the shipping costs are currently minuscule. A kilogram of lettuce costs perhaps US$15 at retail, according to netgrocer.com, but different grades of lettuce vary in cost by more than a factor of 3. Trucking, the least fuel-efficient form of transportation in common use, costs [2400 kJ per tonne-kilometer] [1] in the US. At an approximate rate of [42 GJ per tonne of oil] [2], that's 5.7 × 10⁻⁸ kg of oil per kg-meter. Transporting each kilogram of lettuce the 4400 km from California to Pennsylvania thus costs about 250g of oil. At an approximate rate of [6120 MJ per barrel] [3], that's 3.9 × 10⁻⁷ barrels per kg-km, or 0.0017 barrels per kg for 4400 km. At US$81 per barrel (currently reported by [Bloomberg] [4]), that's US$0.14 per kg, about 1% of the retail price. [1]: http://en.wikipedia.org/wiki/Fuel_efficiency_in_transportation#US_Freight_transportation [2]: http://en.wikipedia.org/wiki/Ton_of_oil_equivalent [3]: http://en.wikipedia.org/wiki/Barrel_of_oil_equivalent [4]: http://www.bloomberg.com/energy/ Some figures from truckers say it cost them about [US$1 to US$2 per mile to operate] [5] in early 2008, of which about US$0.75 per mile was fuel. That's for a truck with a gross weight of 80 000 pounds, which might carry 26500 kg of cargo (the [typical capacity] [6] of a forty-foot cargo container). That works out to US$0.001 per kg-km, or US$0.12 per kg for the 4400 km from California to Pennsylvania. This is quite close to the figure derived above from energy efficiencies and oil prices. (Most, though not all, of the costs of road maintenance, are included in the fuel costs paid by the truckers.) [5]: http://www.truckersforum.net/forum/f6/how-much-does-cost-per-mile-you-operate-2396/ [6]: http://en.wikipedia.org/wiki/Teu#Equivalence #### Energy costs will not go so high that transport costs dominate. #### So suppose oil prices --- as a result of shortages or internalization of currently-externalized costs --- increase by a factor of 5, to US$400/bbl. This raises the cost of shipping a kilogram of lettuce from Pennsylvania to California from US$0.14 to US$0.70, raising its retail price by 56¢, from about US$15 to about US$15.60. Given that many people already pay US$45/kg or more for better-quality lettuce at retail, it seems implausible that an increase from US$15 to US$15.60 would cause a mass shift from buying cross-country trucked produce to buying local produce. So, how much might full internalization of costs raise the prices of oil? Eisenstein doesn't attempt to consider the issue. I think it's implausible that removing pollution, cleaning up oil spills, and maintaining roads would increase the price of oil by a factor of 5. And wars, of course, do not produce oil, nor are they a result of its consumption; they simply determine who benefits from the oil and who does not, at a terrible, useless cost in human life and economic damage. My best guess is that internalizing all transport costs would increase the cost of transportation by 50% or so, a factor of 1.5. ### Higher energy costs would make transport more efficient. ### Third, if energy costs were to increase greatly, a market economic system would shift toward using more energy-efficient means of long-distance transport, such as trains and ships, so lettuce prices would rise even less than the figure I've listed above. -- To unsubscribe: http://lists.canonical.org/mailman/listinfo/kragen-tol
