Neo-classical environmental economists have a strange relationship with our ecological economics brethren. The ecological economists seem to believe that natural capital is the ultimate limit to sustainable growth while neo-classical economists posit that new ideas and innovation can continuously allow us to avoid "limits to growth". We believe that through endogenous innovation that capitalism helps to accelerate the discovery of new ways to produce basic things we need such as food and energy services. In a salute to Paul Romer and other growth thinkers, we believe that new ideas can and will arrive that will save the day so that we do not starve and do not suffer in a changing world.
Today's NY Times has an example of ecological economics that I understand. The ecological economists are eager to turn waste (an output) into a productive input. Such general equilibrium flows would lead to a more efficient capitalism. As this article highlights, computers are major producers of heat. We all know that computers get hot and that big firms must run air conditioners to keep them cool. This NY Times article posits that a "win-win" would be to lock such computers in people's basements so that their furnace would no longer be needed. Instead, people would get their heat from the electric furnace (the computers). This is a groovy idea but it raises a couple of issues.
1. How would the home's electricity consumption be disaggregated into that which is consumed in the basement versus that which is consumed by the occupants of the home?
2. What do you do to minimize the probability that the basement floods? How do you minimize the probability of vandalism by outsiders?
3. What happens to the family ping pong table?
4. How does the family who lives in the home guarantee that no teenagers will break in and play around with the computers? How will two sided liability work?
5. Is there fire risk from all of these computers? How often would nerd technicians be entering the home to tinker around to make sure that the data centers are safe and clean?
But, I do like that the nerds are thinking outside the box of how to turn waste into a productive input. If energy prices rise, this would be even more attractive for households who want some heat coming up from the floor boards. Perhaps the ecological economists and the NBER economists can make the peace!