Why buying local is not always best for the environment.

After some random comments ... I`m going to explain why buying local isn't always the best thing for the environment, including a very minor theoretical modification of a very standard economic argument to show that international trade over long distances can even be good for the environment. Then I'm going to briefly explain why I’m wrong, and then I'm going to turn back around and say why I`m right anyways.


Y'know, I sometimes get offended when people talk about how environmentalists have a lot of stupid ideas. Really and truly, environmentalists have a lot of brilliant ideas. Nonetheless, it is still necessary to run through a whole whack of brilliant ideas before you come across one that appeals to people.

This can be accomplished by spending enormous amounts of time, energy and money trying to change people`s mind, or by finding brilliant ideas that are compatible with, or appealing to, the present social milieu. Hernando de Soto argues that property laws enforced from above generally fail, whereas those that reflect to some degree, an existing informal modus operandi, have a chance to effectively bring diverse property systems under a general framework.

While environmentalists are one hundred percent correct to point to overwhelming scientific evidence of numerous environmental problems, we cannot force people to think like us. Revolutionary change in social values and economic practices is absolutely needed. However, environmental solutions must be geared towards allowing human ingenuity to make breakthroughs starting from here and now, the present social reality.

Unfortunately, the critics are also sometimes right that some environmentalist spend too much effort promoting things that are simply bad ideas (the most famous being ethanol). Among so many brilliant ideas there are sure to be a few of questionable value. A brilliant idea that appeals to tree huggers all too often fails to account for the social, economic and political reality that surrounds them. Those who only move in green circles then become deluded into thinking that their arguments may be appealing to the general public.

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One such argument is the `buy local` movement among greens. In principle, I think it's a great idea. Fantastic. There are only two major, MAJOR problems that this movement has to face. First, there are some international products that I am simply not willing to give up (and I'd estimate that my lifestyle choices put me in about the greenest one or two percent of Canadians), and more importantly, it completely ignores the principle of comparative advantage.

The first problem I mention is a more social one. Humans like variety. It`s a simple fact. Have you ever eaten cabbage soup and potatoes for an entire winter? Well, me neither. But I ate rice and lentils for nearly a month while hiking through the Himalayas. I was so hungry every time I didn't care, but WOW was it nice to have ANYTHING ELSE after just a month. The people of the mountain villages, of course, had never had much variety and so didn't mind it.

I know what variety is, and I like it. You`re never, ever, ever, going to convince me that I should stop eating bananas or oranges, or that peanuts are hereby off limit. Simply not going to happen. I mean, I know that local produce is often inherently better when in season. The problem is that it's not in season for long, and I might want it at some other time of the year.

I want a shirt made in Bangladesh, a bike made in China, computer components made in Malaysia, recording equipment made in Singapore, shelves made in Sweden, pickles made in Poland, shoes made in Thailand, etc, etc, etc … And I feel great about it. People there deserve jobs too. To which, a die-hard green might say … “You’re not really green. You can’t be, with a list like that.”

In any case, some will tell me that the increasing cost of transportation in the long run will mean that I won’t have these choices, and I should start acting ethically now. (I should point out that the recent collapse of the price of oil couldn’t possibly last more than a year or two, unless we really and truly are heading into a global depression that lasts for years.)

This is the first problem. 'Buy local' campaigns are not going to get far unless there is a pressing, immediate impact on the pocketbook. People like variety and people like to buy what’s cheap.

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Up until now, it simply sounds like I just don’t give two hoots. Wait until I argue that buying local could even be bad for the environment! Anyone who’s ever heard of comparative advantage can probably skip the rest of this and figure it out on their own, if they haven’t already.

The principal of comparative advantage says that people can always gain from trade. I’m going to restate the theory of comparative advantage as follows – not counting for transportation, two groups can always reduce their environmental impact by trading. The limits are obvious, since transportation is the ONLY consideration that is made by the ‘buy local’ argument, but I’m going to flesh this out anyways.

OK, imagine this. Two regions and two villages that are very far apart. The citizens of each village are unwilling to move to a more productive region (for the sake of simplicity). People in each village eat bread and cheese. Let’s say that this only requires wheat and dairy cows. Village one produces 2 loaves of bread per person per acre or 1 block of cheese per person per acre with 0.5 bags of inorganic fertilizers per acre. Village two produces 1 loaf of bread per acre and 0.75 blocks of cheese per acre, but the soil is poor and so these each require 1 bag of fertilizer per acre. However, transportation between the two villages costs the equivalent energy of producing 5 bags of fertilizer for each 100 loaves or blocks of cheese. Finally, the families in each village insist on consuming a fixed quantity of bread and cheese regardless of how much land they have to bring into cultivation.

Let’s say that village one trades 180 loaves of bread for 100 blocks of cheese from village 2. Village 1 gains because they would only get 90 blocks of cheese if they gave up production of 180 loaves of bread and thus gained 10 blocks of cheese, while village 2 gains because they could only produce 133 loaves of bread if they gave up production of 100 blocks of cheese and thus gained 47 loaves of bread.

In principle that’s no different whatsoever from the theory of comparative advantage. The significant thing to add, is to say that village 1 can take 10 acres out of production due to their gain of 10 blocks of cheese, while village 2 can take 47 acres of production due to their gains of 47 loaves of bread. The energy equivalent of 14 bags of fertilizer was used in transportation, but 52 bags of fertilizer were saved by trading (half a bag per acre in village 1 and a bag per acre in village 2). Of course, I’m just making up the numbers. If energy were sufficiently expensive, it is absolutely true that we reach a point where transaction costs, including transportation, become too energetically expensive and exceed the benefits of trade under comparative advantage.

Two more important points here – comparative advantage benefits both trade partners even if one trade partner is more efficient at producing both goods, and also, that this logic can be applied directly towards energy savings.

The main difference with my interpretation is that it’s normally assumed that the efficiency gains would simply be exploited to produce more, rather than to consume fewer resources.

Optimizing this situation to include final prices with flexible consumption habits and so on is a matter of some relatively simply calculus with a few more pieces of information such as ‘utility functions’, but let’s just rest on this – the point is made that trade CAN save energy, and CAN therefore be good for the environment.

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The major hole in my argument can be spotted quite easily. Village one should eat relatively more bread, while village two should eat relatively more cheese (even if they still trade just a bit), which would be better for the environment because you save the transportation costs.

It’s ridiculous in the example, but a more realistic example would be the hundred mile diet. Eat what’s grown locally and save the transportation costs.

That’s why my argument is wrong. People can look out for the environment by consuming locally, as long as they are only interested in consuming goods that the region has a comparative advantage in.
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Unfortunately, Nova Scotians like beef, Albertans like fish and Quebecois like bread. This is not going to change. The idea of the hundred mile diet sounds really cool to me. Awesome. Sure. But it’s never, ever going to fly with 90% of people at this very moment.

As for making beef in Nova Scotia, growing wheat in Quebec, or fishing in Alberta … we might just all be doing the environment a favour to produce what our surroundings are most suited to, then engaging in trade.


As Saul Williams said – “There is nothing more powerful than an idea whose time has come.”

The other side of that is, while preparing the ground for future moves is important, an idea whose time has come will be one that fits with the social, political and economic reality of the day. That certainly does not preclude revolutionary change, but it typically does.

A standard analytical tool in economics is ‘marginal’ decision making. This means considering things one unit at a time. People may find the idea of a 100-mile-diet luxurious for a Sunday dinner. However, the theory of comparative advantage manifests itself too strongly in economic reality, and so it simply gets too expensive (or has too little variety) to practice on a daily basis.

Environmental action is most immediate at the local level, but I suggest that discussion of trade and the environment will never gain favour among a significant portion of society if it doesn’t a) commit to framing the issue in a manner that is appealing to a significant cross-section of the status-quo (which is an ever-changing target) and b) recognize that comparative advantage means that international trade CAN be good for the environment.


Call this my opposition to green opposition to international trade. Trade can be good for the economy AND for the environment. I haven’t even cracked into the topic of exchange of environmental technologies yet, which was one of the last picks to be eliminated when narrowing down my research interests (feedback cycles between conflict and soil degradation). International trade of goods and trade in environmental technologies are absolutely inseparable issues, since negotiators do, and should, consider the full picture of national interest, in both absolute and relative terms, when negotiating international agreements that seek to improve outcomes at both the national and global level.


Finally, it seems particularly relevant to share what I think is the most important thing that I learned from the most recent winner of the Nobel Prize in economics. Just because trade is always better than no trade, does not mean that even freer trade is always better than the status quo.

In the present context, the obvious limitation is that, while trade CAN always improve environmental and economic outcomes, it does not mean that MORE trade will ALWAYS improve environmental or economic outcomes. Still, the point has clearly been made that there is room for environmental and economic outcomes to be simultaneously improved through international trade.