Saturday, August 8, 2009

Fireside Chat: Carbon, Energy, and the U. S. Postal Service

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Achieving fiscal sustainability of U. S. Postal Service (USPS) operations may be achievable by correcting its business model and thereby also contributing to environmental sustainability. Traditionally, the USPS business model has included charging for services not delivered, and delivering services not charged. Specifically, USPS customers are charged for post office boxes, essentially for opting out of mail delivery to their home or business address. In contrast, close to 150 million home and business addresses receive mail delivery each day, at no charge, and at significant cost to the USPS for labor and energy, and to the U. S. (and planet) for the huge ‘carbon footprint’ associated with use of fossil fuel by postal vehicles.

USPS operations, despite rapidly increasing postal rates in recent years, now cost more than income generated from postage. This imbalance has resulted in fiscal losses, and stimulated proposals to cut USPS costs by reducing service, specifically by reducing the number of mail delivery days from six per week to five. This USPS fiscal problem will remain intrinsic to its business model as long as labor and energy costs are recovered by charging mail senders but not mail recipients. The energy cost of postal delivery operations can be and should be recovered via a USPS charge for home and business delivery of mail. This can be achieved via an incremental charge, or by reducing charges to senders while imposing charges on recipients to recover labor and energy costs for home and business delivery.

Accordingly, USPS need not cut home and business mail delivery from six days to five per week. Instead USPS may cut unpaid service from six days to zero days per week. Charging postal customers for home or business delivery potentially can go a long way toward balancing the USPS budget, essentially by requiring them to internalize labor and energy costs that they traditionally have externalized at USPS (and public) expense.

In this scenario, the charge to mail senders would cover the traditional service of USPS delivery of mail to addressees’ post office, where it typically is sorted to a box. Post offices would open all boxes to the public lobby, rather than just those boxes that are paid for by post office box customers opting for in-person pick-up of their mail. Post office boxes would be available for free to all customers. Instead of charging customers for box rentals, USPS would charge for home or business delivery, thereby recovering (at least) the labor and energy cost of delivery.

The resulting charge might be deemed unacceptably onerous for people in the lowest income brackets. Low-income customers also might be especially dependent upon USPS services, because they are least likely to have access to computers and e-mail. This regressive aspect of a home or business delivery charge can be addressed, for example via a tax credit granted annually to low-income customers in the amount of their annual postal delivery charge.

In this manner, USPS customers can decide whether or not the cost of home- or business-delivery is economical in their individual circumstance, or whether in-person mail pick-up is more economical. In-person pick-up might be preferred, for example by people who can walk to their post office, or by people who routinely drive by their post office on their way to or from work. Economics would be enlisted to optimize energy efficiency, in some cases by continuing home or business delivery, in other cases by discontinuing it in favor of in-person mail pick-up.

Copyright © 2009 by The Center for Health Risk Assessment and Management, a Division of RAM TRAC Corporation