According to behavioral finances, we often make decisions based on approximate rules of thumb and not strict logic, we rely on emotional filters to understand and respond to events, and that creates market inefficiencies. That’s why monetizing the risks and risk management tools can be very effective. Regardless of the solution, the first reaction is the question how much it will cost. The behavioral economic theory states that people make decisions based on the potential value of losses and gains rather than the final outcome, and losses hurt more than gains feel good.
Profitable sustainability includes four major factors: economic, political, social and environmental. All are strictly interconnected with a human factor.
Energy decisions are influenced by all four factors. Access to low-cost energy has been fundamental to modern economies but limited supplies, uneven distribution, and rising costs of fossil fuels create threads to energy security and the need to switch to more sustainable energy sources. Threats to energy security include the political instability, manipulation of energy supplies, attacks on supply infrastructure, accidents, natural disasters, and terrorism.
In addition, volatility in energy prices create enormous concerns and impact global markets. It is quite significant that the latest research by the World Energy Council reveals that for the first time energy price volatility creates greater concern than climate change framework. It goes beyond just oil and gas prices but includes the coal-to-gas switch in the US; growing use of coal in Europe and thus higher emissions; the drop of solar module prices; and shifting interests of the infrastructure companies to Asia.
Despite the extensively pronounced declarations of adopting social responsibility and sustainability, as well as social and environmental well-being, economic aspects remain one of the most important factors, unless imposed otherwise by law, regulations or public censure. Economic viability also provides a commonly acceptable excuse. Public outreach, engagement, and education have been found to serve as an effective interaction between communities and multiple levels of government, creation of local jobs, and inclusion of stakeholders. Our doubts and concerns are often based on assumptions and lack of understanding. Communities that have close ties and access to the information are more capable of social transformation and create impactful relationships.
Humans are at the same time a strong and a weak link of any activity.
People behavior, perception, and needs vary based on regions, locations, social norms, culture, mentality, and organizational structures. The most advanced technologies, the strictest procedures, the best training and education may be vulnerable to any human-induced risks.
Most of us agree that saving energy and water, especially in California, is fundamental. To grasp the magnitude of the global problem and see the big picture, it is imperative to set our mindsets right and develop a culture, similarly to our efforts toward safety.