'Cash for Refrigerators' Kick-starts Appliance Sales

March 26, 2010
The program includes nearly $300 million to encourage consumers to dump older appliances in favor of newer, energy-efficient models.

Americans are lining up to snap up rebates for "cash for refrigerators" and "dollars for dishwashers," as part of a government program aimed at both economic stimulus and reduced emissions.

The effort, modeled after the "cash for clunkers" auto trade-in program, includes nearly $300 million to encourage consumers to dump older appliances in favor of newer, energy-efficient models.

U.S. officials say the effort, a small part of the nearly $800 billion economic stimulus measure enacted last year, will help reduce the U.S. carbon footprint because of the heavy electrical consumption of big appliances, and at the same time pump money into the economy that can create jobs.

One one level, the program, which is being administered by individual states, appears to be succeeding in jump-starting sales. In Iowa, which offered rebates up to $500 on refrigerators, washing machines and

Minnesota needed less than three days to give out $5 million in appliance rebates. In Ohio, which launched its program on March 26 with $10.5 million, the state agency administering it said it "anticipates the rebates will be exhausted in a few weeks."

As of this week, New York still had $5.6 million remaining from its $18.7 million even though some waited in line on the opening weekend. "It's been a boon to consumers and retailers," said Francis Murray of the New York State Energy and Research Development Authority.

The biggest of the state programs will be launched in California April 22, with $35.2 million.

And more states will be launching rebate programs in the coming months. To qualify for rebates, consumers must buy appliances which meet energy standards set by the federal government and are up to 30% more efficient than existing models. Some states are offering extra rebates if consumers recycle old appliances.

Some see the program as a natural follow-up to the "clunkers" program, which boosted new car sales, and in turn lifted auto production and jobs to help pull the U.S. economy out of its slump.

However, University of Delaware economists Burton Abrams and George Parsons argue that both the clunkers and appliance programs are lemons for taxpayers, mainly because they are destroying otherwise productive assets. The auto program, the economists say the societal loss was as much as $2,250 per vehicle because "the value of resources used exceeded the value of resources created. In effect, we shrank the economic pie to improve the conditions of some workers and perhaps some sectors other than labor."

For appliances, they say the overall loss is more modest, at $6 for every $100 invested.

"In essence, the taxpayers... are putting $100 into the pot on behalf of society as a whole," they concluded. "Society gets back $9 in environmental benefits. People who buy refrigerators, on average, get $85 in value from the cash transfer. The other $6 is lost to everyone."

Copyright Agence France-Presse, 2010

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