During the Vietnam War, American aid workers became concerned about the spread of disease resulting from a big increase in the rat population. Since the ongoing conflict prevented any serious attempt to systematically eradicate the rats, the aid agencies devised a clever scheme to enlist the help of the indigenous population. The aid agencies would offer a small reward to villagers in exchange for the corpses of rats that they had caught. Initially the scheme appeared to pay off. For a relatively small investment, the aid agencies were able to dispose of the corpses of large numbers of rats. And then it all went wrong. Rats are prolific breeders; and it is a darn sight easier to kill domesticated rats than it is to chase wild rats around your village. And so Vietnam developed a thriving cottage industry in rat farming.
The world is, in fact, littered with examples of this “Cobra Effect,” and it seems that we never learn its lesson. Cobra – not rat – because the same scheme had been tried a century before. Back in the days of the British Raj, the Governor of Delhi had decided to take radical action to purge the city of the infestation of cobras that were responsible for a spate of lethal snake bites. Behavioural economist Stephen J. Dubner of Freakonomics fame relates what happened:
“So [the Governor] had the bounty placed on cobras. And he expected this would solve the problem. But the population in Delhi, at least some of it, responded by farming cobras. And all of a sudden the administration was getting too many cobra skins. And they decided the scheme wasn’t as smart as initially it appeared and they rescinded the scheme. But by then the cobra farmers had this little population of cobras to deal with. And what do you do if there’s no market? You just release them. And so this significantly, by a few orders of magnitude, worsened the cobra menace in Delhi.”
The point is that poorly designed incentive schemes – and almost all schemes dreamed up by governments are poorly designed – lead to unforeseen consequences of this kind. However, governments are typically loath to cancel their schemes before a great deal of damage has been done. Consider another example offered by Dubner – limiting city car use using registration plate numbers:
“Bogota was not alone in trying this, trying to cut down on traffic by allowing certain cars on the road on certain days. Mexico City has done it, Athens, Beijing when it hosted the 2008 Olympics. But what do you do if you need to drive every day – or at least want to drive every day?
“You might think, as I first thought, that it’d be easier to just make or buy fake license plates – and indeed, we’re told that such a black market has existed in Bogota. But that’s illegal, and the penalties are apparently stiff enough to discourage fake plates. So what do you do? You do the perfectly legal thing – and buy a second car. Now, that’s not what Bogota had in mind when it introduced the license-plate scheme. And we don’t have enough data to know what effect it’s had. But there is good data from the license-plate-rationing plan in Mexico City. Turns out that a lot of people there also bought a second car to beat the system. And a lot of those cars were older models, less energy-efficient. So, the net result? After the license-plate regulation went into effect in Mexico City – the regulation that was designed to cut congestion? Total driving went … up.”
These days, limiting car use is too small an intervention to tackle the growing air pollution and climate change crises. Nothing short of a complete refit of the entire vehicle fleet to eradicate internal combustion engines will do. And so, around the world governments have begun to incentivise the purchase of electric and plug-in hybrid vehicles… what could possibly go wrong?
Incentivising anything, remember, is not a free lunch. If someone is getting something for nothing, you can be sure that someone else – and not the politicians – is paying for it. As one of the commentators on an earlier post pointed out in relation to solar panel subsidies:
“It’s just like solar panels which we installed many years ago. Here when you consider all benefits, today we receive 62p per kwh of electric we generate! This will also continue to increase by RPI for another 16 years yet even though our installation has paid for itself going on twice over already. How can this be justified and who pays for this?? Simple. It’s subsidised by those that couldn’t afford the cost of installation all those years ago. Same with electric car subsidies I’m afraid. They are effectively just another form of non-progressive taxation on the poor.”
At a time when we have record homelessness, fuel poverty and millions of emergency food packages being distributed, handing out government subsidies to those within the affluent class who are wealthy enough to afford an electric car is simply unconscionable; especially if there is a cobra cffect in play. Early evidence that there might, indeed, be such an unforeseen consequence comes from a report by Joe Miller at the BBC this week:
“Tens of thousands of plug-in hybrids (PHEVs) bought with generous government grants may be burning as much fuel as combustion-engine cars. Data compiled for the BBC suggests that such vehicles in corporate fleets averaged just 40 miles per gallon (mpg), when they could have done 130…
“The British Vehicle Rental and Leasing Association (BVRLA), which represents many fleets, said higher taxes on diesel cars incentivised companies to buy plug-ins, even if they had no intention of using their electric capability.”
Unlike purely electric vehicles, plug in hybrids also have an on board petrol generator that is meant to provide back-up in the event that a driver cannot get to a charging station. However, it is possible to run the vehicle entirely on electricity generated on board, even though this is less fuel-efficient than buying a smaller, lean-burn petrol or diesel vehicle.
The revelation by the BBC suggests that we should take statistics for the growth of electric car use with a very large pinch of salt. Commercial fleets are the main way in which vehicles enter the economy, since most make their way into the second hand market within a couple of years. But if commercial fleet managers are only buying the vehicles because of the tax breaks, and given that, used in the way they have been, their fuel consumption is higher than an alternative petrol or diesel vehicle, then there are going to be a lot of unwanted cars on the second hand car lots in a few years’ time.
One of the less obvious problems with government support for electric vehicles has been raised by car manufacturers. Battery-powered cars (with or without an on board generator) are just one potential solution to the growing environmental crisis. By imposing laws and offering incentives to switch to this type of vehicle, governments have effectively chosen to shut down other options that might have provided a better solution. For example, most car manufacturers have developed prototype hydrogen fuel cell-powered vehicles which, although no better than battery-powered cars in energy terms, have several infrastructure advantages over battery-powered vehicles.
Most obviously, using hydrogen as a fuel does not require a hugely expensive and politically explosive upgrading of the electricity grid. Hydrogen can be – and in some places is – delivered from an ordinary filling station with the full cost of the fuel charged to the driver. Most of the costs of running a battery-powered electric vehicle, in contrast, are included in the standing charge on everyone’s electricity bill irrespective of whether they drive an electric car or not. At a time when government has been forced into imposing a cap on energy prices, this is simply unsustainable. Nor, at a time when public services and public infrastructure has been cut to the bone, can government realistically turn its back on the £27bn annual tax income from fuel sales.
Of course, even hydrogen cars play into the myth that we can enjoy happy motoring forever. It might be that our true trajectory is toward a far more localised economy within which very few private vehicles are used. If – and the rise of nationalist movements around the world suggest this – the economies of the future are going to be more localised, self-contained and less material, then incentives and tax breaks currently being provided to the already wealthy purchasers of electric vehicles might be better used in enhancing public transportation systems and encouraging cycling and walking as the common modes of future transportation.
The fact that governments seem not to have thought any of this through suggests that we are about to see some pretty big and unpleasant cobra effects in the near future; and not just in relation to electric cars. It is likely that the entire “bright green” neoliberal approach to climate change over the last three decades is going to land us literally and figuratively in a lot of hot water.
As you made it to the end…
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