Loaning Out the Green

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Here on LGBG we talk, rather frequently, on the intertwined relationship of the green movement and housing development. What we have not mentioned however is how to finance potential green improvements to your home. That is, not until now.

I recently came across an article in the English paper The Telegraph which detailed how some U.K. residents are taking out “Green Loans” to improve energy efficiency and reduce the carbon footprint of their homes. In the United States, homeowners often take out a Home Equity Loan in order to make improvements to their house, which ultimately may increase the value of the house when it comes time to put it on the market. Home Equity Loans are typically used to add an extension to your house, or to create a finished basement. Now however, one has the ability to obtain a Green Loan in order to reduce emissions, and create greater energy efficiency while subsequently adding to the aforementioned value of the homeowner’s residence; so long as the house is inspected by a Green Deal assessor.

These assessors, who work for the government, “…Provide home owners with reports containing a list of possible improvements, and how much these will cost against estimated annual savings on gas and electricity bills.”[1] The rationale is that, despite having to pay for the home improvements (which may cost tens of thousands of dollars) homeowners are better off in the long-run as energy usage will be more efficient, and the resulting green friendly label of the house will aid in boosting the building’s value.

I have no doubt that obtaining a Green Loan to improve the carbon footprint of one’s house is, on the whole, mutually beneficially in the long-run. Yet, banks and lenders also have a responsibility not to take advantage of would-be borrowers by charging exorbitant interest rates, or making the terms and conditions of the loan onerous to pay. Governments can positively influence green behavior by providing subsidies for borrowers who are looking to green-proof their homes directly (which already happens to a certain extent when homeowners purchase solar-panels for example and receive a tax credit) or indirectly to banks by providing them incentives, such as lowering reserve requirements, to lend out money at a low interest rates. Similarly, checks and balances need to be put in place so that borrowers are indeed using the loan to modify their house in green ways and not to pay off other debts or in ways otherwise non-tangential to improving energy efficiency in one’s home. In this way, both banks and borrowers win in the mutual goal of reducing homeowners’ carbon footprints, while also helping to promote a future in which we all live green, and be green.

[1] http://www.telegraph.co.uk/property/greenproperty/9924717/Eco-living-could-you-take-out-a-Green-Deal-loan.html

Green Farming To Counteract Climate Change

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We all are aware of the breaking environmental news regarding current drought conditions in the United States.  Presently, more than half of the United States is suffering from the worst drought conditions since the Dust Bowls, the last of which occurred 50 years ago.  We are witnessing wilted crops, particularly corn, dried-out, cracked soil and devastating forest fires caused by parched woodlands.  It is important to note that the current drought levels have not reached those of the Dust Bowl where 63% of the country experienced severe drought; however, today’s statistics do place this occurrence in the top 10% for the past century. 

Comparisons of statistics for severe droughts in the 1930’s and 1950s have resulted in some assumptions, especially by some politicians and talking heads that the current drought is not caused by global warming.  One such argument notes that carbon emissions were lower in the 30s than they are today, so the problem must have been due to some other natural occurrence.  Tree-ring data often have been cited to suggest that North American droughts are part of a natural cycle tied to La Nina events.  Environmental scientists now are compiling compelling evidence that rising temperatures are making droughts more common, and this phenomenon is less likely attributable to natural causes. 

The primary focus now must be on measures to address the problems of climate change.  John Antler of Montana State University has published a paper, which proposes that the government shift policies to adapt to climate change, i.e., providing subsidies for crops such as corn and soy to prevent adaptation by locking in current farming patterns. (http://www.rff.org/news/features/pages/climate-change-forcing-farmers-to-adapt.aspx)  Tom Philpott recommends a stronger push towards organic farming.  Recent research concludes that while organic farming yields smaller crop production, the organic farming process holds retains more water and performs better during droughts (http://www.motherjones.com/tom-philpott/2012/07/what-organic-ag-teaches-us-about-feeding-ourselves-while-planet-heats).

Currently, the United States has not been impacted as severely as many other nations by drought and destruction of food supply.  However, we see the effects of droughts in terms of increasing prices for food and increasing disasters, such as forest fires and parched land.  Droughts are becoming difficult to avoid, and steps must be taken immediately to protect our land, population and food sources.  Our very existence depends on this.  To save our world, let’s live green, be green.

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The Palmer Drought Severity Index mid-century.  A reading of -4 or below is considered extreme drought.  (Source:  National Center for Atmospheric Research).