Hearing Kermit the Frog say, “It’s not easy being green,”
Mexican environmentalists might agree. Since March 2009, Mexican
households have been offered cash payments or subsidized loans
for replacing refrigerators and air-conditioners that were more
than 10 years old with new energy efficient appliances. The goal
was to diminish electricity usage and carbon dioxide emissions.
So far, 1.5 million households have participated. Surprisingly,
refrigerator savings were less than expected and air-conditioner
use increased. Researchers believe that newer refrigerator
models were larger and had extra features like ice makers that
somewhat offset their energy savings. For air-conditioners,
people just used them much more. Energy savings programs are
tough to design and evaluate. As with refrigerators and air-
conditioners, changing incentives can have unpredictable
consequences. In addition, even if an energy savings program
does not save energy, it still could provide considerable
benefits far beyond its costs because