A mostly theoretical debate is raging in politics about the right approach to solving our environmental problems. The hot item these days is cap-and-trade; all three presidential candidates are for it. Under this system, arbitrary limits are set by the government on allowable carbon emissions, mostly for business (the “cap”) and then the businesses can work out the details of who goes over their limit by purchasing credits from another party that got under theirs (the “trade”). Another approach is government-sponsored research into technology solutions like carbon sequestration, low-carbon manufacturing and transportation, fuel cells, renewables like wind, tidal and solar, etc. The government is supposed to step up as a buyer of these risky technologies (a sort of “anchor tenant”) and funder of basic research (a green “Manhattan Project”). A third approach, little discussed, is aggressive conservation. This would involve social engineering (possibly through very high taxes on hydrocarbons) that would give the population very strong incentives to stop wasting energy. Consider the behavioral change that would immediately follow $10 per gallon gasoline, or a $5,000 annual vehicle registration fee, or a $1,000 monthly electric bill.

Two of these solutions involve market forces, moderated by politics. Cap-and-trade starts with government setting the caps and then the market takes care of the rest. The aggressive conservation approach starts with government setting very high taxes selectively, and the market takes care of the rest. The middle approach relies on the wisdom of government grant approvals, a process with a mixed history. True the government did build the atom bomb in four years, and later created the Internet. But a lot of waste happened in between, and still. Most people have more confidence in market forces, given a choice.

Of the two market approaches, why is cap-and-trade favored so heavily over conservation (in the media)? I suspect it is because conservation is essentially negative – doing without things we already have. Cap-and-trade is a newfangled thing; conservation is literally as old as the human race (dating back to the first famine or drought). Economists also argue that conservation will destroy the economy. They maintain that without growth in our traditional industries like auto manufacturing, we will face certain decline. I am not so sure.

Let’s suppose that gasoline prices went up to $10 per gallon (with or without government intervention) and stayed there, with the result that sales of new cars virtually stopped and miles-driven dropped by two-thirds. Used car values for gas guzzlers would fall to near-zero and something like $1trillion in economic value for American households (our cars) would be destroyed. Possibly 1 million people would lose their jobs as the auto industry clamped down. Shareholders could lose another $1 trillion. Economic Armageddon. Or is it? This is the easily measured impact of a negative change, which tends to be the focus of economists (they don’t call it the dismal science for nothing).

It takes more creativity to see the silver lining in this cloud. What good might come from such an upheaval? Who benefits? How about a fairly immediate improvement in public health? Elimination of millions of annual cases of asthma hospitalizations (nearly all attributable to air pollution) saves more than $40 billion dollars. Another $230 billion saved in car crash deaths and injuries. Another $100 billion in highway construction and maintenance. How about the money currently unproductively spent on parking? There is surely a social cost of obesity, of anti-social behavior, of stress caused by our frantic pace of life. How much is quietness worth to you? Being able to let your children play outdoors without worrying about being hit by cars?

Keep in mind that these benefits are perpetual, while the costs are one-time. Once we’ve gotten past the loss of our assets (the now-worthless car in the driveway, the Ford Motor Company stock), and once the unemployed have been re-employed — then we will be left with just benefits. Our taxes will be lower, our health will be better, our cities and towns will be more appropriate for human beings than machines.

So let’s do the math. I believe that this is a case where less truly is more.