Relation between price and eco-friendliness

[Mr Skeptic]

What's the relation between the price of something and its eco-friendliness? If you calculate in the government subsidies (and I count free right to pollution as a subsidy), will the cheapest product be the most eco-friendly? Will very expensive to produce products be bad for the environment?

[SMF]

As posed your question could be answered accurately by yes, no, maybe, whatever, and/or it depends. Perhaps you could provide a little discussion about what "eco-friendly" means and what cost consists of before someone might be willing to discuss "price." SM

[JorgeLobo]

Difficult to compare costs in a quantitative sense when the determinants are subjective. If you were to define "eco-friendly" and "bad for the environment" in real terms, your question might be better explored .

[lemur]

I agree with SMF that it depends on the specifics of each product and how you trace its supply-chain genealogies of cause and effect. However, it's a big question in my mind why something that requires less fuel and/or steps to produce should cost more than something that requires more. Obviously, the reason could be that it takes more human labor per unit production, but then the question is what the human laborers are buying with the money. Generally, I think a tighter economy has to be more eco-friendly because people and businesses simply can't afford as much fuel and elaborate business structuring. They have to keep things as simple as possible and consolidate everything they can to cut costs. I've been told that this isn't the case anymore, but I always imagined that cheap goods produced in Asia were so cheap because the workers biked for transportation, ate simple meals using local ingredients, weren't obsessed with expensive clothing and other status-boosting materialism, lived in smaller and more energy-efficient dwellings with less climate control, etc. Simple living is eco-friendly AND cheapens labor, so why should eco-friendly cost more instead of less? (except that its scarcity may drive up the cost where demand is high - but why should demand be high if consumers are being eco-friendly and re-using and conserving their stuff?)

[Mr Skeptic]

My idea was that an object's price accounts for the resources (material or labor) required to make it, and so the price might be a proxy for the amount of resources used to build it. I'll see if I can figure a way to make the problem more well-defined.

[pippo]

Mr Skep, couldnt one try to plot on an x-y axis some parameters, products on the x axis and cost on the y axis. Then see if theres a correlation. Right?

 

I mena, yeah, the more parameters the more credible the graph may become and start to take on a shape......

[SMF]

Mr Skeptic, sometimes cost and price are two different things. I think that the resources required to make an object for sale should also include what economists call external costs, or “externalities.” It is hard to judge what something really costs us if there are associated costs that are not made apparent. Two prominent examples:

 

Costs for the portion of electricity, and those products that require electricity for production, that are generated by coal don’t show the additional expense of direct and indirect governmental subsidies or, more importantly the cost for environmental degradation. For example, some people complain about compact fluorescent bulbs because of the mercury they contain, but the much greater amount of environmental mercury pollution from coal fired plants is mostly ignored. There is also much more radioactive pollution than from nuclear power and a variety of other heavy metals in coal-electric plant effluent that is not paid for by the utilities that make it. We pay in health costs and clean up.

 

When accounting for the cost of petroleum for our transportation the direct and indirect governmental subsidies are not included in the cost. There are some who would tally the indirect cost for military action in the Middle East, the governmental costs required to protect shipping of, and make and maintain the ports for unloading of petroleum in the hidden costs of transportation fuel. Also, I don't see why our taxes should be going directly to companies that are making record breaking profits already because of market shortages of fuel. Here is an old paper on direct and indirect costs- http://www.annualreviews.org/doi/abs/10.1146/annurev.energy.26.1.361?journalCode=energy.2 and if you want the full text see here- http://www.mindfully.org/Energy/Fossil-Fuel-Subsidies.htm

 

 

SM

 

 

[lemur]

My idea was that an object's price accounts for the resources (material or labor) required to make it, and so the price might be a proxy for the amount of resources used to build it. I'll see if I can figure a way to make the problem more well-defined.

Compare two green peppers. One is farmed far away by people who don't drive cars or have air-conditioning. The other is farmed locally, and thus requires virtually no transportation costs/resources, but build into the price is the cost of local land, labor, taxes, etc.; all money that is likely to be spent driving around, running climate control, and funding elaborate consumerism. So, either price may stimulate more, less, or the same amount of fuel consumed and eco-unfriendliness, but they might just do it in different ways. I think it is all too common to make the mistake of only comparing the most superficial ecological aspect of a good instead of looking at the whole network of economic activity that goes into producing its various inputs, including the human-capital (nothing against humans - just pointing out that many humans can be pretty eco-unfriendly in their lives outside of producing eco-friendly products).

Edited March 12, 2011 by lemur

[Mr Skeptic]

Mr Skeptic, sometimes cost and price are two different things. I think that the resources required to make an object for sale should also include what economists call external costs, or "externalities." It is hard to judge what something really costs us if there are associated costs that are not made apparent.

 

Yeah, I know what externalities are. However, I'm not really able to put a price to many of them, including pollution of various specific toxins and CO2, or our tendency to use resources now with little concern for the future. The government interference is easier to measure, at least in theory: the externality is the extra tax needed to pay for the subsidies. But then it gets more complicated because the people paying the tax are also using fuel, at different rates and also indirectly and so are not really third parties. I've long thought that the government should ideally stay out of regulation and instead levy tariffs and subsidies to ensure externalities are paid for, so that the free market can solve those problems efficiently. To do that would require knowing the harm that is caused by the externality, although I suppose that to pass regulation would have a similar requirement.

 

OK, how about a completely theoretical version of the question: If all externalities were paid for, and there was a near-ideal free market, would the price of a product directly correlate with its resource plus environmental costs?

[ecoli]

OK, how about a completely theoretical version of the question: If all externalities were paid for, and there was a near-ideal free market, would the price of a product directly correlate with its resource plus environmental costs?

 

Yes, by definition in this case, all the information about cost (past, present and future) would be contained in the price. Strong efficient market hypothesis contains some of these ideas. Weak EMH says that current prices reflect the best available information.

 

Other pricing theories will differ though, if you believe in labor theories, capital theories or supply/demand theories. Supply and demand is more encompassing when you consider that scarcity is caused by production costs.

 

Compare two green peppers. One is farmed far away by people who don't drive cars or have air-conditioning. The other is farmed locally, and thus requires virtually no transportation costs/resources, but build into the price is the cost of local land, labor, taxes, etc.; all money that is likely to be spent driving around, running climate control, and funding elaborate consumerism. So, either price may stimulate more, less, or the same amount of fuel consumed and eco-unfriendliness, but they might just do it in different ways. I think it is all too common to make the mistake of only comparing the most superficial ecological aspect of a good instead of looking at the whole network of economic activity that goes into producing its various inputs, including the human-capital (nothing against humans - just pointing out that many humans can be pretty eco-unfriendly in their lives outside of producing eco-friendly products).

 

On the other hand, distance is not guarantee of fuel efficiency. You could imagine a situation where a farmer (company) can keep costs labor and fuel costs down, ship goods across the country and take advantage of economies of scale that local producers may not be able to match, thereby being eco-friendly, in this narrow sense. If a large farm across the country is well managed and uses fuel efficiently, it may very well be using less fuel than a multiplicity of smaller local producers. I imagine this would be domain specific, depending on the type of produce/meat.

[ewmon]

What's the relation between the price of something and its eco-friendliness?

If I may get picky about words ...

 

The "something" implies a "product", specifically one for human use/consumption, and the "something" is produced artificially -- that is, by "artifice" (ie, workmanship), which means "man-made" instead of naturally.

Can we imitate nature perfectly (eg, make enough potable water for everyone)?

Can we extract something from the environment without disrupting nature (eg, mining or even drawing water from a river)?

Can we make something or do something unnatural in a natural way (eg, build skyscrapers or transport people in airplanes)? (Obviously no.)

 

So, almost by definition, anything humans do above their "animal nature" (ie, with their so-called "intellect") will not be eco-friendly. Then the "price" of "something" reflects the effort that humans exert to make the man-made product or service as natural (ie, eco-friendly) as possible.

 

However, scientists could argue that, because the environment made humans (ie, evolution), they are part of the ecology, so nothing they do is eco-unfriendly. The ecology simply is what it is, including us and our desires, intellect and behavior. Hmm...

[SMF]

Mr Skeptic, I am presuming that your new version of the question-

 

OK, how about a completely theoretical version of the question: If all externalities were paid for, and there was a near-ideal free market, would the price of a product directly correlate with its resource plus environmental costs?

includes the various business and production costs along with "resource plus environmental costs." I am not sure if this addition has any importance, but I am thinking about it. That said, I think you have accounted for the overall cost of a product, but does price accurately reflect cost? In a near-ideal free market demand can vary for reasons independent of cost and shift the price. I guess I am still having a problem understanding what it is you are trying to get at relative to eco-friendly. SM

Edited March 13, 2011 by SMF

[ecoli]

Mr Skeptic, I am presuming that your new version of the question-

 

 

includes the various business and production costs along with "resource plus environmental costs." I am not sure if this addition has any importance, but I am thinking about it. That said, I think you have accounted for the overall cost of a product, but does price accurately reflect cost? In a near-ideal free market demand can vary for reasons independent of cost and shift the price. I guess I am still having a problem understanding what it is you are trying to get at relative to eco-friendly. SM

 

I think his point is that if the price of a good fully reflected the ecological costs, people would probably be smarter consumer because things would cost more.

 

I actually think this is an issue of property rights, which I will illustrate with an example.

 

Let say I'm in the wooden furniture business and my neighbor has a really nice spruce forest that would make great deck chairs. I can sneak into his property and steal the wood, though he would probably catch me so that would be dumb. If I buy the lumber from him, I'll have to raise my prices in order to maintain my profit margin, because the trees are not free from my property like I usually have.

 

In the real case, my neighbor's property is the stuff we take from the environment but don't pay for outright.

 

The complication is, we could have carbon taxes and pollution taxes, but how do you price those things in a way that accurately reflects the cost? Carbon trading tries to do this, but I don't think it's been terribly effective (in part because western-style economics and governance is largely built around private property law - so do we treat government as the owner of public property? I have philosophical issues with this.)

[SMF]

Ecoli. I found it funny that under the Science list that when your post, just above, was the most recent in this thread it read as "relationship between price and...ecoli. I am easily amused, especially by non sequiturs. I will await Mr Skeptic to answer for himself, but I certainly think it best to make all contributions to prices apparent. I also would like to think that this would help people make sound eco-friendly choices. An example is my photovoltaic solar power system. People tell me that it was just too much money, but it will pay itself off long before the panels wear out, and then my electricity is free. Further, the price I paid, amortized over the life of the system is fixed, while electric rates are only going to go up.

 

Regarding the role of government, I believe that its primary function is to manage problems for all of us that are difficult for individuals and individual groups. Issues associated with the problem of "the tragedy of the commons" comes to mind. Even your tree example requires our collective will embodied by government. Without government your neighbor's only recourse to theft of his timber is a gun. I believe that the current obstruction to intelligent government is that the robber barons have gotten a little ahead of us again and will eventually have to be beaten back with laws like in the past. SM

[lemur]

On the other hand, distance is not guarantee of fuel efficiency. You could imagine a situation where a farmer (company) can keep costs labor and fuel costs down, ship goods across the country and take advantage of economies of scale that local producers may not be able to match, thereby being eco-friendly, in this narrow sense. If a large farm across the country is well managed and uses fuel efficiently, it may very well be using less fuel than a multiplicity of smaller local producers. I imagine this would be domain specific, depending on the type of produce/meat.

While there may currently be examples of long-distance shipping that are more fuel-efficient than local production, I think it is in the interest of creating long-term eco-friendly economics to work on building up efficient local farms and other enterprises. The reason I say this has to do with long-term cultural patterns. If/when people get in the habit of thinking that it's more efficient to produce vegetables 1000s of miles from where they are consumed, it promotes cultures of large-scale distribution. As fuel becomes increasingly scarce and thus expensive, those large-scale distribution assumptions are going to lead to the belief that local agriculture and industry are impossible, let alone sustainable. In reality, it should ultimately be possible for people to live close enough to farms and factories to walk, if necessary, to work and get food at the farms. This way, they can be totally fuel-independent as needed.

 

I think the major hurdle to achieving more fuel-independent economic productivity is that people are accustomed to certain lifestyles where they simply take for granted that food will be processed and brought to supermarkets, restaurants, and other distribution venues and that they are doing their part by working their office job to make the money to fund those means of food-distribution. In reality, it would use a lot less fuel if people would directly pick up their food from farms, and actually they should even live near and work on those farms as well to prevent the need for migrant agricultural labor and commuting. This is practically unimaginable for most people securely situated in elaborate modern divisions of labor, but it may be the only means possible as fuel grows increasingly scarce/expensive.

 

The exception, as far as food goes, imo are things like grains that are grown and harvested on a massive scale very efficiently. It doesn't really make sense, I think, to grow wheat, oats, corn etc. locally when these crops can be more efficiently dealt with by large machinery and can be shipped as dry-weight and relatively compact. Compare shipping a truck loaded with bags of dry flour compared with one loaded with bags of potato chips. The number of calories per unit-fuel would be many times higher for the flour. Now think of what it takes to ship refrigerated containers of wet, fresh, frozen, and/or prepared food around. And yet locally grown fresh vegetables are more expensive! Why? Because the people who grow them have to charge rates that generate the same levels of revenue/income as everyone else gets for doing eco-unfriendly stuff. Why? Because they have to pay the same price for property, taxes, and whatever else they consume.

 

 

[ecoli]

Regarding the role of government, I believe that its primary function is to manage problems for all of us that are difficult for individuals and individual groups. Issues associated with the problem of "the tragedy of the commons" comes to mind. Even your tree example requires our collective will embodied by government. Without government your neighbor's only recourse to theft of his timber is a gun. I believe that the current obstruction to intelligent government is that the robber barons have gotten a little ahead of us again and will eventually have to be beaten back with laws like in the past. SM

 

No, I agree with you here. My point was a little more subtle: in order to incentivize conservation, and force corporations and individuals to bear a fuller sense of the cost of environmental harm, it uses taxes as penalties. Does this make the government the "owner" of public goods?

 

 

I think the major hurdle to achieving more fuel-independent economic productivity is that people are accustomed to certain lifestyles where they simply take for granted that food will be processed and brought to supermarkets, restaurants, and other distribution venues and that they are doing their part by working their office job to make the money to fund those means of food-distribution. In reality, it would use a lot less fuel if people would directly pick up their food from farms, and actually they should even live near and work on those farms as well to prevent the need for migrant agricultural labor and commuting. This is practically unimaginable for most people securely situated in elaborate modern divisions of labor, but it may be the only means possible as fuel grows increasingly scarce/expensive

 

I don't think it will ever be cheaper for direct-from farms shopping to become widespread. For one thing, people mostly live in crowded urban and suburban areas where farms don't fit. For individuals to travel to the food, rather than the other way around, makes no sense (and won't use fuel more efficiently). However, I wouldn't surprised if farmers markets become more common in urban areas.

 

 

My initial reaction to the point about fuel scarcity was "so what"? when/if fuel costs rise, the market will shift to cheaper solutions, and if that's local products, then so be it. Though, I could imagine a scenery where the switch is economically painful because our infrastructure is build around an oil economy. A gradual shift starting yesterday seems like it could ease this pain, even though it doesn't seem to be what markets are doing. The problem, of course, is predicting what the next dominant fuel source could be.

[lemur]

I don't think it will ever be cheaper for direct-from farms shopping to become widespread. For one thing, people mostly live in crowded urban and suburban areas where farms don't fit. For individuals to travel to the food, rather than the other way around, makes no sense (and won't use fuel more efficiently). However, I wouldn't surprised if farmers markets become more common in urban areas.

The problem with these crowded urban and suburban areas is that the crowding drives property prices higher, which makes them more popular and lucrative areas to live in where people can mostly afford rising food costs. But there's a catch, which is that property appreciation and the economic boom that goes with it tends to expand until the point of meltdown, at which point everyone is left scrambling to afford anything let alone everything. This is why it makes more sense to figure out what is sustainable and adapt to it BEFORE the point of meltdown, because as long as the bubble is growing it makes it seem like there's no end to prosperity in sight. This is because the larger economy continues to serve those with money until they've lost it. I would even say that capitalist economics pro-actively builds up dependencies among relatively prosperous people, which makes them that much more vulnerable to loss when it happens.

 

My initial reaction to the point about fuel scarcity was "so what"? when/if fuel costs rise, the market will shift to cheaper solutions, and if that's local products, then so be it. Though, I could imagine a scenery where the switch is economically painful because our infrastructure is build around an oil economy. A gradual shift starting yesterday seems like it could ease this pain, even though it doesn't seem to be what markets are doing. The problem, of course, is predicting what the next dominant fuel source could be.

Predicting subsequent fuel sources just drives investment, which sustains the bubble/meltdown economy. Yes, of course it is a good idea to seek new sources of energy but in the meantime, it is also sensible to reduce energy-dependency generally to the lowest level possible. That way, whether new abundant energy sources are found or not, more people are in a better position of living sustainably without them.

 

 

 

[SMF]

I agree with much of the several posts just above. I live in an area (Mendocino County, CA) where there is a lot of concern about keeping food local. There is even a movement to grow grains in the rows between wine grapes. Much of the local foods are more expensive while some are not, but one of the primary motivators is the fact that local agriculture, from smaller farms, produces food of much higher quality. This is because plants don’t have to be engineered for mechanical picking and for shipping. Those of us who garden and eat food ripe on the vine know about this.

 

One important factor to include when considering the costs of agriculture, beyond fuels for transportation, is the fact that much of corporate agriculture is also very dependent upon fertilizers and pesticides that are produced from natural gas and petroleum (respectively). SM

 

 

[lemur]

I agree with much of the several posts just above. I live in an area (Mendocino County, CA) where there is a lot of concern about keeping food local. There is even a movement to grow grains in the rows between wine grapes. Much of the local foods are more expensive while some are not, but one of the primary motivators is the fact that local agriculture, from smaller farms, produces food of much higher quality. This is because plants don't have to be engineered for mechanical picking and for shipping. Those of us who garden and eat food ripe on the vine know about this.

But what do you do about the fact that paying local people to work in local agriculture requires pricing that supports a high level of eco-unfriendliness in the broader economy? It might be more ecofriendly to ship cheap produce from somewhere that people don't drive, consume a lot, or buy property at prices that support people who do. This leads to the more general question of whether recession in wealthy economies is itself eco-friendly because it constrains the culture of resource-waste by inducing budgeting.

 

One important factor to include when considering the costs of agriculture, beyond fuels for transportation, is the fact that much of corporate agriculture is also very dependent upon fertilizers and pesticides that are produced from natural gas and petroleum (respectively). SM

I've been thinking about this issue lately, and specifically how to recycle human waste into fertilizer that can be used on food. This should probably have its own thread, actually. What I came up with is perhaps you could use human waste to fertilize some intermediate crop that's not directly ingested, like flowers, and then compost the flowers into fertilizer.

 

 

[SMF]

Lemur. Please expand your first point a little more because I don't understand this. In my area, which is admittedly pretty rural, most small farms are family run or are cooperatives. There are some larger ones that are by subscription where you can pay a monthly or yearly fee and get just about all the produce you can eat of whatever is in season. This movement is often called slow food, in contrast to McDonalds, where uniformity and calorie content is replaced with emphasis on minimal processing, freshness, and only eat what is in season. There is also an ethic of not expecting every fruit or vegetable to be waxed and perfect. I have heard some discussion regarding how this can be scaled up to supply large population centers, but this would probably require some big compromises and some good science.

 

The second point is very interesting, but one big problem is that human waste has a lot of potential problems. Having human waste in contact with human food production is a vector for disease and requires the extra expense in order to sterilize it. Also, we all take a lot of drugs that are present in the sewage and there are a lot of other troublesome products that go down the sewers. One interesting answer to this is a proposal to use human waste in an expanded treatment pond arrangement to grow plants for making fuels. For alcohol, for example, apparently cattails are perfect. Yes cattails. They apparently have a very large, and efficiently produced, starch content in the roots, stems, and the top that could be fermented, and the remaining cellulose and potential methane production at a sewage plant could be used for distillation. This, obviously, would not be a major replacement for fossil fuels, but it is much more efficient than the dumb corn ethanol idea, and we need a mix of different strategies to become independent of fossil fuels. Fossil carbon is such a precious resource as a raw product that it should be preserved for future generations instead of just burning it up as fast as possible. SM.

Edited March 14, 2011 by SMF

[lemur]

Lemur. Please expand your first point a little more because I don't understand this. In my area, which is admittedly pretty rural, most small farms are family run or are cooperatives. There are some larger ones that are by subscription where you can pay a monthly or yearly fee and get just about all the produce you can eat of whatever is in season. This movement is often called slow food, in contrast to McDonalds, where uniformity and calorie content is replaced with emphasis on minimal processing, freshness, and only eat what is in season. There is also an ethic of not expecting every fruit or vegetable to be waxed and perfect. I have heard some discussion regarding how this can be scaled up to supply large population centers, but this would probably require some big compromises and some good science.

We're talking about two completely different issues. I think your "slow food" sounds great. My point was that prices in the developed world reflect an economic ecology that supports the most eco-unfriendly lifestyles of the globe. So when you're buying cheap food grown by peasants who lack cars and other means to consume eco-unfriendly products, you are supporting more eco-friendly labor than when you pay local farmers for "slow food" who are going to buy a house from developers who are very eco-unfriendly in the way they spend the money they get. Basically what I'm trying to suggest is that maybe the best way to support eco-friendliness is to pay as little as possible for any commodity because doing so reduces the revenue and income levels of the people who have the most eco-unfriendly lifestyles. Then, as these people adjust to lower budgets, they will live more like the rural peasants that do the farm labor to produce low-priced "slow food."

 

They apparently have a very large, and efficiently produced, starch content in the roots, stems, and the top that could be fermented, and the remaining cellulose and potential methane production at a sewage plant could be used for distillation. This, obviously, would not be a major replacement for fossil fuels, but it is much more efficient than the dumb corn ethanol idea, and we need a mix of different strategies to become independent of fossil fuels. Fossil carbon is such a precious resource as a raw product that it should be preserved for future generations instead of just burning it up as fast as possible. SM.

That's interesting about the cat tails, but I wouldn't be so concerned with creating bio-fuel as I would be with creating producer-consumer networks that can function in the absence of ANY fuel, since ANY fuel that is developed will be scarcer than fossil-oil and thus will continue to grow more expensive and thus get consumed by the super-rich. Keeping the masses fed is going to require numerous sustainable communities that are capable of sustaining their own agricultural feedback loops without fueled transport. An example might be like people I talked with who live in Ghana who walk each morning to their farm-plot to weed and tend it before going on to the rest of their daily activities.

 

 

[Mr Skeptic]

I think his point is that if the price of a good fully reflected the ecological costs, people would probably be smarter consumer because things would cost more.

 

I actually think this is an issue of property rights, which I will illustrate with an example.

 

Let say I'm in the wooden furniture business and my neighbor has a really nice spruce forest that would make great deck chairs. I can sneak into his property and steal the wood, though he would probably catch me so that would be dumb. If I buy the lumber from him, I'll have to raise my prices in order to maintain my profit margin, because the trees are not free from my property like I usually have.

 

In the real case, my neighbor's property is the stuff we take from the environment but don't pay for outright.

 

The complication is, we could have carbon taxes and pollution taxes, but how do you price those things in a way that accurately reflects the cost? Carbon trading tries to do this, but I don't think it's been terribly effective (in part because western-style economics and governance is largely built around private property law - so do we treat government as the owner of public property? I have philosophical issues with this.)

 

Yes, ecoli has a pretty good grasp of what I'm trying to figure.

 

OK, let's try to see what happens in the real world. As such we probably have to deal with fuzzy definitions, because I don't really know how to define these things properly. This could be considered the same as asking several slightly different questions depending on the definition.

1. Does the price of a product (compared to similar products) correlate fairly well with its resource and environmental costs?

Such a correlation won't be perfect because of externalities. For example, because it will always be cheaper to pollute than not pollute if there is no one charging for the right to pollute, polluting would result in lower costs. However, we do regulate pollution which would help minimize that effect. In some cases, labor costs will make up a large percentage of the cost of a product. However, if you consider the wages of people with different standards of living, I think it would be fair to suggest that lower labor costs correlate to lower use of resources and damage to the environment by the people providing the labor, which can be treated as a component of the product. Then there is the issue of resource depletion. Most resources (not on private land) are owned by the government, which grants license to use those resources to companies. The government is "owned" by the people, but do they have responsibility to the future citizens, to our children and grandchildren? Unless the answer is "yes", our government could and probably will set us on a course for a tragedy of the commons, albeit in slow motion so that "in the long term we're all dead" applies.

 

As to the part that SMF mentioned about supply and demand, so long as reaction time of the market is short enough the price of the product will shift to meet it's normal production price, or alternately would represent a shift in the valuation of the resources used to produce it. It will be necessary for the market to function that price goes up when demand exceeds supply, so that the market adjusts to increase production.

 

2. Could changes be made to government policy such that the price of a product much more closely correlates with its resource and environmental costs?

I think the answer to this is yes. I think ensuring externalities are paid for would be important so that the price of a product more closely matches its cost.

 

3. Would (2) be a good idea?

I think so. If the price of a product doesn't match its cost, we might end up purchasing very costly things at a rate much higher than we would otherwise. The free market can't give an ideal solution under such conditions, and I really don't like regulation because it would be rigid and probably an inefficient solution.

[lemur]

2. Could changes be made to government policy such that the price of a product much more closely correlates with its resource and environmental costs?

I think the answer to this is yes. I think ensuring externalities are paid for would be important so that the price of a product more closely matches its cost.

People would see it as a tax and resist it. The only way to do what you're saying is to sue for damages directly. The other method would be to charge impact fees but this is more difficult since businesses seek out areas whose governments are favorable to their business practices, so you would have a hard time lobbying such governments to raise impact fees to those businesses.

 

It would be more effective to replace those businesses' products with more eco-friendly ones and promote those with lucid informational campaigns that don't don't come across as manipulative advertising. I think you'd be surprised, though, that when you tell people that an alternative produce is eco-friendlier and they really get why/how and it's not too much more expensive, they choose it over the less eco-friendly alternative. I always buy cage-free eggs, for example, even though they cost more than caged abused-chicken eggs.

Edited March 14, 2011 by lemur