Markus Stocker bio photo

Markus Stocker

Between information technology and environmental science with a flair for economics, the clarinet, and the world of soups and salads.

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There are different rental lease models w.r.t. the structure of your monthly bill. Typically, I have been having the model where a fixed monthly rent was separate from a variable bill for the utilities, e.g. gas, electric, water, cable. In two occasions, including the current rental agreement, the total rent is fixed and includes the variable cost for the utilities. At first, this sounds convenient and it might look “cheaper,” as “there are no utility costs.”

There are a number of problems with the all-inclusive lease, though. Of course, utility costs have to be covered. I suppose, the property management distributes the expected costs according to the square meters to the individual apartments. You bet, the management won’t underestimate the costs. Further, with this model the frugal typically subsidizes the prodigal.

The bigger problem, however, is that with the all-inclusive model I have no incentive, at least not monetary, to do anything to reduce consumption. An example. In the cold of the northern winter a hot morning shower is even more enjoyable and I think, without having any data, my average time under flowing water increased significantly compared to my standard in warmer climates. Knowing how much my longer showers cost me and shorter showers having a positive effect on my monthly bill are likely the only two conditions that may motivate me to step out of the shower quicker, knowing that outside it is subzero. Even though I’m wasting time and resources, the thought of “just another few minutes” typically wins over all environmental concerns. Knowing magnitudes and the ability to influence spending, however, might trigger my self-interest more effectively. I think, this is perfectly fine and the rationale of most [1] of us wealthy. But to do so I need (a) to know how much my habit is costing me and (b) a lease model that reflects my true consumption – and doesn’t “penalize frugality.”

I think, this holds for a number of resources, not just water. It also holds for waste. The town council where I grew up charges a fixed tax for waste management. Other cities I lived in tax the single trash bag. The incentive not to throw almost everything – from kitchen waste to cans and newspapers – to trash is, to a considerable degree, greater if your trash bag is taxed.

[1] “The vast majority of Americans who have taken steps this year to make their homes more energy efficient, 71%, say they did so mostly to save money rather than to improve the environment.” (GALLUP, December 8, 2009)