Skip to main content

Blog Article

E-Commerce: Environmental Friend…or Foe?

From energy and design to logistics and land-use, e-commerce is revolutionizing our everyday lives. But will its impact be more positive or negative?

Published January 1, 2001

By Fred Moreno and Jill Stolarik
Academy Contributors

Image courtesy of ArLawKa via stock.adobe.com.

Without a crystal ball it is impossible to say what kind of impact the Internet and wireless communications will have on the environment. Its effects are unlikely to be limited to the ways in which we communicate. More likely, it will bring about a profound change in our society and culture and therefore the way in which we interact with our environment.

In an attempt to probe this issue The New York Academy of Sciences (the Academy) and the Tellus Institute (a Boston-based nonprofit organization) convened over 100 experts on e-commerce and sustainable development for the first symposium of its kind to address the potential impacts that e-commerce may have on the environment. The roster of international participants from industry, government, non-profit organizations, and academia discussed how e-commerce is affecting, and will affect, energy consumption, resource management and land use.

Areas of Promise and Concern

The two-day symposium highlighted some promising environmental trends that appear to stem from an information-based economy, especially in terms of overall energy consumption and reduction in the waste of raw materials by manufacturing industry. Yet it also identified a number of areas for concern: the possibility that ecommerce may eventually lead to increased power consumption, have a detrimental effect on land use, and promote rampant consumption both in the U.S. and overseas leading to an unprecedented drain on threatened natural resources.

Because the participants were breaking new ground, the symposium highlighted many of the difficulties that will be faced in forecasting the environmental impacts of a new, pervasive, information technology like the Internet. Several speakers made predictions based on empirical energy data, others tried to model impacts based on potential changes in business practices driven by e-commerce, and some hypothesized impacts that must be studied experimentally.

The consensus of most participants was that there is a greater need for research into the interactions between a complex, networked economy and the environment. Some participants warned however, that while it is necessary to take whatever action seems appropriate now, it will be impossible to predict what the information age will bring.

E-commerce and Energy

In terms of basic energy consumption, the relationship between e-commerce and the environment may turn out to be a beneficial one, according to Skip Laitner, senior economist with the US Environmental Protection Agency’s Office of Atmospheric Programs. Between 1997 and 2000, energy intensity—the amount of energy consumed for every dollar of economic output—dropped by more than three percent.

This means that despite the unprecedented growth in the economy—especially ecommerce—during that period, less energy was needed to create that growth than in previous years. If that trend is combined with efficiencies brought about by e-commerce in sectors like paper and cement manufacture and transportation the outlook could be even rosier.

However, while many studies in the energy area may be encouraging, their results should be treated with caution, according to Braden Allenby, vice president of Environment, Health and Safety at AT&T. The correlation between a decrease in energy use and an increase in economic productivity is undeniable, but to attribute this strictly to e-commerce is not accurate.

E-Commerce and Product/Process Design

“E-commerce should make use, re-use, and recycling more efficient because it is in this area that the use of information is currently zero,” said Valerie Thomas, a research scientist at the Center for Energy and Environmental Studies at Princeton University.

Thomas’s research focuses on the use of electronically labeled products that can instruct recyclers on exactly how to re-use components in the complex products of the information age, like cell phones. This “trash that thinks” could have huge benefits for the environment.

Once a product has reached the end of its useful life it is currently far too expensive to disassemble it and sort out the recyclable, or toxic components from the disposable parts. But electronic tagging of components, linked to a web-based database for recyclers could make the process simple and efficient enough to become economically worthwhile.

E-commerce also has the potential to create enormous efficiencies in the manufacturing process, meaning that fewer raw materials, and even unwanted products, end up getting wasted. Mark Greenleaf, e-commerce strategy manager in material planning and logistics at the Ford Motor Company, predicts that Ford can improve the management of its raw materials by 30 percent using e-commerce practices.

“There’s a lot of waste in the supply chain,” said Greenleaf. His studies have shown that it can take anywhere from 14 to 28 days for word of a change in demand for raw materials at the factory to get back to the producer.

E-commerce and Logistics

Whether it’s hauling raw materials cross-country, or planning a round of errands in the station wagon, logistical decisions can have a serious impact on the environment.

Transportation means using already saturated networks of roads, railways or flight paths and produces pollutants. On the industrial scale, any slack in the logistical system means that extra warehouses must be built, existing warehouses may stay empty, and trucks spend as much of their time driving around empty as when they’re full. Ford’s Greenleaf reported on his plans for the automaker’s logistical system. He envisions a digitally scheduled and networked “e-supply chain hub,” to remove inefficiency from the

logistical system. What’s more, carmakers are discussing sharing logistical networks because their raw materials needs are similar, just as cereal manufacturers Post, General Mills and Kellogg’s currently share their supply chain.

Katherine O’Dea, Director of the sustainable commerce program for Business for Social Responsibility, a non-profit organization based in San Francisco warns that as more and more people shop online, they may not necessarily be cutting down on trips they make in their car. Many consumers rely on stores to “experience” products they may end up ordering online, behavior which places an increased burden on supply systems and therefore the environment, first for the trip to the store, then for the delivery of the product.

E-Commerce and Land Use

Despite the impact of land use on the environment, this is an area where the future is hardest to predict as e-commerce-driven changes in land use will happen more slowly and are harder to define. Tom Horan, executive director of the Claremont Information and Technology Institute at Claremont Graduate University is studying how the mix of building and business types, as well as commuting, shopping, and shipping patterns, are altered by e-commerce. and thus, how they will impact land use.

“On the micro scale, buildings will change in form as their function changes,” said Horan. An example of this would be a large downtown bank changing into a more streamlined multi-service bank of today. On a larger scale, many high growth tech areas are setting up shop out of town, contributing to urban sprawl; others are locating in inner city areas and impacting people’s daily commute.

An Uncertain Future

The e-commerce revolution is not yet well enough established for anyone to make predictions about its future, and therefore its future impact on the environment.

Yet the consensus of opinion at the symposium was the stakes are too high to just sit back and see what happens. One observation made by a majority of participants at the conference drew attention to a long-term danger that e-commerce poses to the environment. So far the e-commerce revolution has been services-based—providing things like online shopping, day trading of stocks and shares and B-to-B trade. These services simply make doing what was always possible before easier, quicker and more reliable.

But if e-commerce shifts from a services-based industry to one that encourages increased consumption, all predictions for an environmentally benign future of e-commerce could be in jeopardy. “If you really do achieve efficiencies in information as an input to the economy, you’re quite liable to increase consumption overall,” said Braden Allenby of AT&T. “One final study that desperately needs to be done, is to understand where people are getting their perceived quality of life and whether the basis of that is shifting from a material to a services base. If that’s not happening there’s going to be increased material consumption.”

Also read:Technology is Revolutionizing Wall Street


Author

Image
Contributing Author