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.
