You Decide: Can Efficiency Save Our Natural Resources?

Dr. Mike Walden

North Carolina Cooperative Extension

North Carolina could add 3.5 million people over the next 40 years. That’s a 40 percent jump from today’s total. While there are questions about where the new people will live, what jobs they will have and how they will commute within the state, perhaps a bigger question is their impact on our natural resources – specifically water and energy.

Of course, we need water to live, clean our clothes, raise our crops and livestock, and run our factories. Many of us also use water for recreational enjoyment, like fishing and swimming. The droughts that struck North Carolina a couple of years ago showed us how difficult it is to do with limited water.

While energy – specifically electricity – isn’t a natural resource, it is created from natural resources, like coal, oil, natural gas, water (hydro power), uranium (nuclear power) or solar and wind sources. Questions arise when any of these sources are expanded to generate more electricity for a growing population. The carbon sources (coal, oil, natural gas) create issues about pollution. Nuclear power brings forth questions about safety. More hydro power means more artificial lakes that can disturb the natural ecology. Solar and wind power have limited storage capabilities.

So if North Carolina’s population grows by 3.5 million people by mid-century, then how are we going to provide them water and fuel for their lives?

One option is to do what we’ve always done: build more capacity. For water, the big problem with this solution is cost. Using current rates of water usage and ranges of construction expenditures, I estimate a total bill of between $25 billion and $60 billion (in today’s purchasing power dollars) for the construction of new reservoirs necessary for serving 3.5 million more people. This is enough money to fund the entire state budget for one or two years.

The total cost would be equally high – if not higher – to build more electric power capacity using traditional fuel sources. Of course, many want to move to more non-traditional sources like solar, wind and biomass. I do think these will become a more important part of our energy future. But in addition to storage and competitive cost issues – both of which will likely be dramatically improved over time – each of the emerging sources has its own unique challenges. Solar must deal with intermittent cloudiness and space requirements; wind power can impede wildlife and is best suited for the coast; and biomass can take substantial acreage.

However, there is another way of meeting our future water and fuel needs that many futurists think will be a major part of the answer to serving our larger population. This is to increase the usage we receive from each gallon of water and unit (BTU) of energy. In other words, if we can increase the efficiency of our use of water and fuel, we can stretch what we have to accommodate more people.

Actually, we have already been doing this. Water usage (per dollar of income) in North Carolina has been cut by 50 percent in the last thirty years. Also, energy consumption per person in the state is down 30 percent since 2000.

There are good reasons to think these resource efficiency improvements can continue, especially using developing technology. Advances in sensors monitoring problems in electric transmission lines and leaks in water pipes will reduce waste in moving resources to users. The appliances we use, the vehicles we drive and the electronics we rely on for work and entertainment all will run on less power per hour of usage. Methods are also being developed and applied to recycle and reuse water – perhaps within our own homes. Early applications show these techniques could reduce water usage by up to a third.

Then there’s the matter of pricing. As consumers, we are very sensitive to prices — meaning that when the price of something rises, we look for ways to use less of that product. Peak load pricing of electricity means we pay more for each unit during times when more people use electricity, and we pay less when fewer people use electricity. Implementing peak load pricing motivates consumers to shift use from peak times to off-peak times, therefore reducing the capacity levels utilities must build.

There are similar pricing innovations for water use. Tiered water rates mean consumers pay more per gallon the more gallons they use. Such a pricing system is a motivation for consumers to be more frugal water users. Communities which have implemented tiered water rates – including some in North Carolina — have realized reductions in water use per person of between 10 percent and 20 percent.

The 3.5 million additional people expected in North Carolina by 2050 will obviously need to use water and energy. One way to supply these resources is to build more reservoirs and more energy generating capacity. However, this option is very expensive and has potential adverse effects for the environment. An alternative is to get more “bang per gallon and per kilowatt” – meaning we use our existing resources more efficiently. What we decide will have big impacts on our wallets, our lives and our planet.

Dr. Mike Walden is a William Neal Reynolds Distinguished Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of North Carolina State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks.

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