Except for pollution the cheaper one really is better for the environment. This is actually a great heuristic, but pollution is only part of the story. A more

Except for pollution the cheaper one really is better for the environment. This is actually a great heuristic, but pollution is only part of the story. A more general (and correct) statement would be "excluding externalities (including pollution) the cheaper one really is better for the environment". Externalities are basically costs or benefits (to society, the environment, etc.) that aren't reflected in the price paid for an item. One really important thing to note is that externalities extend far beyond pollution and can be both positive and negative. Pollution is one of the more visible negative externalities that get discussed, but there are plenty of others (for example, driving a car involves a host of negative externalities in addition to pollution such as increased road congestion (longer commute times, more fuel burned in traffic, more accidents)). There are also plenty of positive externalities that often get ignored. Take windmills, solar panels and hybrid cars. The positive externalities associated with manufacturing these items include lower future manufacturing costs for such items (and lower prices and environmental costs as a result) and investment in R&D aimed at making electricity and/or transportation cheaper (both in terms of environmental and financial costs). So even though solar panels may currently be losing proposition environmentally, there are positive externalities that make buying solar panels today (and thereby moving the industry forward) a Good Thing for the environment.