Sustainability Babel Fish

in Applications to Firms, Sectors, and Industries
July 16th, 2012

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Nalin Kulatilaka


Authors: Ory Zik and Nalin Kulatilaka

This paper proposes a quantitative measure of sustainability. Using primary energy as a metric, it enables decisions to be made across different activities such as electricity, fuel and water use. By relying on bill data, we eliminate the need for new measurements and readily connect to economics through market prices. We choose the energy content of a gallon of gasoline as the basic unit, which turns out to be the right size and appeals to common intuition. We highlight that there are no ‘one size fits all’ rules governing sustainability decisions. Rather, the appropriate choices depend on location, time, and personal attributes.