Case study: Nega-litres - the soft path for water
In 1976, Amory Lovins proposed a new approach to energy management and called it the “soft path”. According to his vision, the soft path was an approach to energy policy that recognized efficiency and renewable energy sources could steadily replace a centralized “hard path” energy system based on fossil and nuclear fuels. Lovins’ ideas had a significant impact on debates about energy and environmental policy.
The soft path recognizes that ecosystems are finite and we must find “nega-watts” – rather than building new nuclear plants to generate “megawatts” – by using the resources we extract from the earth more efficiently and conserving. In contrast, the hard path in energy policy has gradually compounded many economic and environmental problems, increased pollution and exacerbated energy insecurity by promoting a centralized distribution system. Nearly always, the hard path is made possible by massive government subsidies, market distortions, and complacency on the part of regulators and the public.
Lovins’ ideas also helped open the door to a related concept – avoided cost. In 1978, the U.S. federal government enacted the Public Utility Regulatory Policies Act, which required energy producers to use of the concept of avoided cost in calculating fair prices for energy, and was intended to promote economic efficiency and environmental protection. In economic terms, avoided cost is the marginal cost for the same amount of a resource – energy or water or some other commodity – acquired through another means, such as construction of a new coal or water treatment plant or purchase from another supplier. For example, the avoided cost of a litre of water – a nega-litre, according to Lovins – is the relative amount it would cost a company or a customer to acquire this water through the development of a new treatment facility or acquisition of a new supplier. As a general rule, experience in the past decade suggests that investing in conservation is much cheaper than building new capacity.
While the concept of avoided cost has never been fully integrated into Ontario public policy, the ORTEE highlighted some of the benefits of conserving resources and avoiding the costs associated with new water treatment plants in its 1992 report “Restructuring for Sustainability”. Moreover, many U.S. jurisdictions are looking at using the concept of avoided costs in other realms of resource planning and management.
| This is an article from the 2006/07 Annual Report to the Legislature from the Environmental Commissioner of Ontario. |
Citing This Article:
Environmental Commissioner of Ontario. 2007. "Irreconcilable Priorities: The challenge of creating sustainable communities in southern Ontario." Reconciling our Priorities, ECO Annual Report, 2006-07. Toronto, ON : Environmental Commissioner of Ontario. 25.
