Book Review: Natural Capitalism

Env-Econ reader Eric Husman provides this book review of:

Natural Capitalism, Hawken, Paul; Lovins, Amory; and Lovins, L. Hunter; Little, Brown, 1999; ISBN 0316353167 http://www.natcap.org/

Angel's Nest, near Taos New Mexico, is a completely self-contained living environment: there are no utility lines or pipes coming in to the house.  It collects its energy from photovoltaic panels and wind generators, and the household water supply comes from a roof that is designed to direct snow and rainfall into a cistern.  But there also are no sewer pipes leaving the building since the water is filtered and used four times: first, for drinking and washing water, then to irrigate the grey water "rainforest" inside the house, then as toilet feed stock, then to irrigate the black water rainforest in the outermost ring of the house.  Offending odors and dangerous organisms are safely and effectively removed by manmade filtration working in conjunction with the natural filtration capacity of the rain forests.  As a side benefit, the rainforests produce fresh fruit, spices, and oxygen.  Effective use of the two exterior greenhouse layers and passive solar methods means that the house can be kept comfortable in the winter and the summer in this high desert area known for its nearby ski resort.

The house is a great example of the principles described in Natural Capitalism, a book written jointly by Paul Hawken, Amory Lovins, and L. Hunter Lovins in 1992.  The name, Natural Capitalism, or "NatCap", has several meanings.  Amory Lovins is best known for his argument that the least expensive and most sustainable approach is to conserve energy rather than try to produce more.  NatCap argues that the production of "negawatts" (energy use avoided, as opposed to megawatts of energy produced) is not only less expensive, it is profitable.  Another meaning of Natural Capitalism is a reference to the productive capacity of natural systems.  In the same way that artificial capital (buildings and machines) are used to build cars and refrigerators, natural capital produces clean water, clean air, food, and fiber for clothing and housing.  In the same way that you would not fail to maintain industrial capital, they argue that we should try to account for and maintain natural capital.

The book's ideas revolve around four main principles: radically improve resource productivity, biomimicry, service and flow, and reinvestment in natural capital.  These are offered without argument as to why these and no other principles were used.  The authors argue that by simultaneously doubling production efficiency and conservation (for example, by using more efficient heaters and more insulation), resource productivity can be quadrupled.  Angel's Nest uses almost no energy to heat or cool because of passive principles.  Biomimicry seems to be the principle that every waste product (dead thing) is the input (food) for another process.  Rather than piping clean water in and waste water out, Angel's Nest uses rainwater four times in closed loops before it finally becomes part of a fruit tree.  The chapter on service and flow is largely (and explicitly) paraphrased from the lean manufacturing book, Lean Thinking (Womack and Jones), but they also emphasize business models in which services rather than products are sold; for example, by leasing rather than selling photocopiers.  Finally, they briefly touch on the idea that natural systems should be restored, but this is not emphasized.

For traditional environmentalists, much of this book is going to be too idealistic, since it does argue that capitalism should be embraced and harnessed rather than fought.  For classical liberals (libertarians), there isn't anything new here.  I expected to find something akin to Anderson and Leal's Free Market Environmentalism, but there is very little discussion of natural resource economics, endangered species, or property rights issues.  Instead, the book focuses on improving industrial and commercial processes and products and improving household efficiency.  The chapters which discuss existing applications and best practices are reminiscent of similar anecdotes in Julian Simon's The Ultimate Resource, a book reviled by environmentalists.

If there is one difference between NatCap and Simon's work, it is that economists are repeatedly and (nearly) consistently regarded with contempt in NatCap; the exception are the economists they quote to support their points.  NatCap argues that the "bad" economists, who are never named, only count dollars input and output, that they measure efficiency by cost, and that they don't understand or even like the real world.  One chapter is dedicated to proving that market solutions cannot be trusted because market failures exist.  This is bizarre for two reasons: first, the rest of the book argues that conservation is both practical and profitable and therefore will work in a market economy without reference to market failures, and second, that the market failures discussed are all the result of work done by … economists!  The anonymous economists in NatCap are a dangerous or naïve caricature of real world economists.  The value of this book is in its potential proselytization of radical environmentalists to embrace rather than to oppose market-based solutions to environmental problems, not in its theoretical or empirical content, its discussion of economic principles, or its pro-market stance.

Comments

"Offending odors and dangerous organisms are safely and effectively removed by manmade filtration working in conjunction with the natural filtration capacity of the rain forests."

In the land development world we have a name for this....its called a septic tank drain feild...but water used 4 times is interesting. Good luck getting that system by the Washington State Dept of Health and the Dept of Ecology. Iwonder if the owner has the water rights to the rain water trapped on the roof. :)

One other point....i really don't think enviornmentalsist want people living in residenaces that consist of a house on 20 acre parcel of forest land. This is directly contridictory to the many of the more blue states zoning laws and anti-sprawl/high density regulations.

[joshua corning]

opps i forgot to fill in the name and e-mail...the above post is mine.

[Eric H]

Joshua;

Yes, I gather that Michael Reynolds, the father of the "earthship" movement, spends a lot of time lobbying to change wastewater treatment laws to incorporate recycling provisions.

Yes, owners have water rights to the rainwater that falls on their roofs (but it is redirected to a cistern).

I think environmentalists have a lot of contradictions in what "they" want. Pointing those out is such a full time job that Tim and John started a blog to discuss those issues. Do they want wind power at any cost, or more eagles at the cost of many worthwhile human activities? I'm not really sure what you mean when you refer to "20 acre parcel of forest land" since Angel's Nest is in the high desert, and does not cover anywhere near 20 acres (though the owner may actually own 20 acres).

[joshua corning]

"Yes, owners have water rights to the rainwater that falls on their roofs (but it is redirected to a cistern)."

Perhaps in new mexico...but not in Washington state. I think perhaps you are assuming that if it is on your property then it is yours.

I was just trying to give you and others a perspective of how a I as a developer sees pie in the sky experiments like angel's nest.

great until you think about the regulatory hurdles that make it cost prohibitive.

[Eric H]

That's a surprising fact, Joshua. How can they possibly enforce it? After all, the cistern is completely hidden from view in Angel's Nest, and I can imagine a few covert ways of performing the feat with my own house. Since our codes enforcement people can't even seem to catch people watering on the wrong day (or even prevent the city from violating its own code and allowing median water to flow freely down the street), I don't see how they could hope to get all of "their" water off of my roof.

Natural Capitalism does include a few brief mentions of how laws thwart rather than encourage the authors' model of sustainability, but their anti-economist bent probably prevents them from making any significant study or movement in that area. Regulatory hurdles can be overcome at lower costs than complying with them ... by changing them! One of the better suggestions in NatCap is to give fast track approvals to contractors who exceed minimums (e.g. thicker wire conducts electricity with less heat loss, and since only 9.5% of the energy in coal makes it into your house as usable electricity due to such losses, this means >10x less electricity needs to be generated for each loss eliminated).