Posted by: Barrak Al-Babtain | October 24, 2010

What if?

What would happen if it costs 18KD to fill up your SUV? Would your life be ruined? I don’t think so. What will happen is that you will adjust your lifestyle to meet this new reality. You might reconsider buying a new SUV, and maybe get a car with better mileage. People might decide not to buy a car at all, and you’ll find that there’s less traffic on the street because people who can’t afford to drive are now willing to carpool and use public transportation. 18KD is a reasonable amount to pay because that’s the true price of the petrol.

What if you had to pay over 1000KD every year to pay for you electricity consumption? What would change? You would obviously think twice about leaving the air conditioning on all the time even when no one is home. You will think about how much a house consumes energy before buying it. You decide that maybe a small house with a bigger garden makes more sense than a three floor mansion. We might find that we don’t have blackouts anymore. The KOC will be able to sell more oil instead of burning it to make more electricity for Kuwait.

What if water cost you 50KD a month? Will you stand idly by as your driver sprays you car with a hose to clean it, when a sponge will do the same thing for a fraction of the water? Will you decide against a lawn and maybe plant more appropriate landscaping for the region?

If resources are priced according to their true value, without subsidies or manipulation, then human behavior will revert to a mode of living that is both efficient and ‘sustainable’. People will never change because of morality and the desire to feel ‘green’. That’s bullshit. The only way we can ever change is if it hurts us in our wallets if we don’t change. We’re not pricing in what’s called the negative externalities; the unpriced cost of traffic, pollution, blackouts and wasted finite resources.

This might seem politically impossible in Kuwait, but what if there was a way to make it work? What if all the savings and revenue generated was given back to Kuwaitis as a form of energy rebate? That way we can reward good behavior while we punish wasteful people by punching them with the invisible hand. We can have our cake and eat it too.


Responses

  1. To begin with, expect riots in the streets!

    We Kuwaitis have been coddled and spoiled for far too long and any change to the status quo will be met with fierce – maybe violent – resistance.

    I’m with you re ‘going green’. Nothing works better than a direct assault on one’s wallet and bottom line

  2. Well, yeah it would probably be violent, but here’s the thing: What if everyone gets money every month in return for all this? A rebate.

    Lets say the average Kuwaiti will spend 200KD for energy under this new system. That person would get an extra 200KD on top of their salary. That may seem like we didn’t do anything, but we did.

    The people that waste more than average would spend for example 500KD, but would still get only 200KD in return, they spent 300KD that month for energy.

    Someone that didn’t waste energy, and was below average in consumption, would have maybe spent 50KD. That person would still get the 200KD energy rebate and would have made a profit of 150KD for doing nothing, basically. It’s an incentive to reward good behavior and punish bad behavior.

    If you’re average, nothing will change. The only people that should get angry about this are the people that waste energy, and we really shouldn’t be guiding our policy based on the needs of those people.

  3. Also, this really has nothing to do with ‘being green’. I couldn’t care less about the environment, personally. It’s about building a solid economic foundation for our country beyond oil revenues. It’s about finding sustainable ways of fixing traffic congestion and lowering pollution. It’s about creating options for people to live alternative lifestyles (giving them the option to live without a car). That sounds like a stump speech… Sorry.

    Anyway, I’m not a hippy!

  4. This post is pretty incredible ^_^
    I’m not well versed in the fundamentals of economics but I can understand the basics of what you’re saying, and I must say, you sir, are correct.

    Yesterday I was telling my friend about how survival would take place if it ever came to it. And without much thought, I came to the conclusion that those with the basic skills and knowledge of survival, will outlast those with PhD’s and seats in overly luxurious places.

    I believe this concept goes, to a certain degree, hand in hand with your analysis! ^_^

    Again, excellent post! ^_^

  5. Well said, but it’s not entirely B.S.; some people do change because of morality or to feel greener. It’s a matter of conscience.

  6. Hamad: Thanks a lot! Well, the notion behind what I said is that the energy economy in Kuwait is artificially manipulated. This was actually the first post I ever made on this site, more than a year ago. I just want to make it free again, a free energy market. Only then will people change their behavior to reflect the true value of the energy we consume.

    D.: Oh, absolutely! I’m not arguing that some people act “green” honestly and with all the best intentions. What I meant was that there will never be enough of those outliers to do anything about the root of the problem. They will never reach a critical mass where most people suddenly start living within their means and conserve more than they waste. But maybe i’m undeservingly pessimistic about this…

  7. No you’re not. You’re right… I was thinking about what you said today while driving back home. I don’t think we’ll really learn until we feel we actually have to pay a sum for it. Even my dad says he’ll probably think twice before opening the water hose if he has to pay 50 KD a month. We are spoiled I guess:/

  8. The problem with Kuwait (I am in construction) is that the infrastructure is so dilapidated most of the structural accidents, environmental (i.e. Mishrif) or water leakages (literally hundreds of thousands of wasted gallons ) gas pipe explosions, of water due to outdated, broken or badly maintained pipes.

    The state is its own worst enemy when it comes to saving. when they build something, they usually offer it to the cheapest tender and one or two companies in construction get the project and usually do a average job at best – so basically something is built not up to par and *then* neglected or not maintained.

    The state is breaking down. Whether we save water or not, or pay high prices for energy (can you even trust Min Elec. Water bills? They usually average the cost per month, its never exact).

    Water meters are broken or missing from thousands of homes and buildings (govt. has yet to replace them) bills are innacurate etc. It’s a mess.

    Not the environment for any Utopian ‘Green’ society.

    • Well, you’re right. I think it’s a mess because there’s no incentive here for anyone to make (or lose) money during the operational phase of infrastructure projects. It’s just there, neglected once it’s built. The way people make money out of it now is to basically, like you said, bid the lowest and do bad work and forget about it. But if someone was trying to make it efficient, if you introduce a profit motive in the form of high, non-subsidized recurring fees, then things will have to get better. If a competing private companies were running the water utility, then they will have a profit motive to make sure that pipes were working and as little waste was happening, as well as charging as much as they can for the service.

      Would privatizing the utilities help at all? I think so.

  9. I absolutely agree. Privatization is the way to go. The government cannot run services. Even if a citizen is loyal and wants to ‘pay up’ they make it very hard.

    I think what California is doing with solar power and grreen incentives, they’ll even throw in cash to help you set up solar panels, for example is the way to go.

  10. I’d love to see this in Kuwait: a 1800 megawatt solar power plant.

    http://www.bloomberg.com/news/2010-10-25/u-s-to-approve-california-solar-thermal-plant-world-s-largest.html

  11. v true, great article!

  12. Great article, it really comes down to common sense, the “status quo” isn’t sustainable, ultimately there will be change, albeit sudden and drastic…i would rather we gradually get into the mindset of accountability…the government needs to enforce basic concepts like “pay your bill!” even before pushing concepts like energy saving

  13. […] is a post from re:kuwait, which I could not help, but […]

  14. So rightly said.

    Well, wouldn’t we be all very conservative, if we had to pay the ‘true’ price of the products and services? Things which are given ‘almost free’ tend to be overconsumed, just for the fact that you are not paying ‘too much’ for it. We would not be ashamed to be called ‘misers’, had we been paying thru our noses for the ‘true value’ of the service.

    Well, its no longer the ‘green’ factor, but has to be the ‘conscious’ factor, that should determine the consumption pattern of people.


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