Spokane beverage company shows power of economics to do environmental good

September 19, 2011

“Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”

The comment by the former head of the economics department at the London School of Economics holds an important insight for those of us who care about the environment. Environmentalism, at its core, is a concern about scarce resources. Economics is the study of the use of scarce resources.

Indeed, many of the best ideas for improving environmental sustainability come from free market economics. The newest example is in Spokane.

A new company called Zip 2 Water offers a better way to deliver water at public events – reducing the number of plastic bottles needed and the need to haul large amounts of water.

Bottled water has become a poster child of environmental waste. Companies in a free market, however, have found several ways to address concerns about plastic bottles.

As I write in my new book Eco-Fads, consumers have a range of options to address those concerns when buying bottled water.

The first is to fill a reusable bottle at home from a Brita water filter. Brita aggressively advertises that use of its product reduces the number of plastic bottles we use. People still buy bottled water, though, so water filters aren't the answer for everyone.

Arrowhead water has another option. Their new “eco-shaped” bottle reduces the amount of plastic by using folds and an arch in the bottle to keep the bottle strong while using less plastic. Did they do this because they care about the environment? Maybe. They also did it because it saves money.

Economics drove them to reduce resource use. But the bottles are still plastic and for those worried about oil scarcity, there is another option.

Coke has now figured a way to use renewable resources to make their Dasani water bottles. The PlantBottle uses sugar cane for 30 percent of its PET bottles. The Coca-Cola Company now says it can also make the other 70 percent from renewable resources, offering a bottle that can be made of 100 percent renewable resources.

These are all good options, made possible by the free market. Zip 2 Water seeks to do them one better.

The founders of Zip 2 Water note it “takes one-fourth of a bottle of oil to produce, fill and transport a disposable bottle of water.” Rather than driving water bottles around, which are heavy and use fuel to transport, Zip 2 Water is a portable filtration system that hooks up to local water. The systems are designed to dispense water so people can fill their own bottles. On some of the systems, there is even a drinking fountain.

The inventor, Spokane resident Bruce Gallaher, notes that they are already finding ways to refine it. “We sit back and watch how our Zip 2 Water stations are being used,” and they make adjustments.

This is the free market at work – making a product more effective and efficient.

For the environmentally conscious, such a system is an improvement as well, using fewer resources while cutting costs.

Of course, the Zip 2 Water system is designed primarily for large events, so it doesn't meet the needs of the everyday person who wants water on the go. It does fill a niche and cuts costs by cutting resource use because fewer water bottles are needed.

As Zip 2 Water systems have started popping up at more and more outdoor events, Gallaher notes, thirsty attendees have come to rely on them to refill their water bottles “away from the tap.”  Event organizers report up to a 90% reduction in plastic bottle waste and cleanup costs.  

That is the power of the free market. By providing incentives to innovate, economics can significantly improve how we use resources, improving sustainability while increasing prosperity.

While politicians are seduced by trendy approaches that sound good but have little impact, innovations like the PlantBottle, Brita water filters or Zip 2 Water are making the real difference.

If Spokane, Washington State and America are going to make real progress on environmentally sustainable solutions, we must look to the market, not politics for solutions. The evidence is all around us.