Can a Freed Market Save Our Ecosystem?
What if consumers paid the cost of eco-ploitation up-front, at point of purchase, instead of delayed, when seeking medical attention or paying taxes? This 2010 article is based on concepts developed in detail in Chapter III of Achieving Eco-nomic Security On Spaceship Earth.
by Jim BellThe ecology of our planet is the foundation of everything we do, including what we do under the heading of economy.
When we damage our planet’s life-support system through inappropriate economic activities, we undercut the potential for economic activities in the future. For example, most of the food humans consume is grown in ways that deplete, poison, or otherwise contaminate air, water, and land alike. Organic agriculture causes much less life-support and human health damage than non-organic agriculture, but it’s still not completely sustainable.
Today, almost everything humans do causes life-support system harm.
More precisely, it’s not so much about what we are doing, but about HOW we are doing it. The ways we support ourselves now depends on using up ever more non-renewable resources and using renewable resources in ways that make them difficult to renew. The result of this is over flowing landfills and evermore destruction of virgin land for raw materials to replace those buried in landfills.
"True-cost-pricing" is a free-market strategy aimed at integrating the principles of life-support sustainability with economically sound business practices. The basic idea is to include all the costs -- cradle to cradle -- of all products offered for sale in the common retail marketplace to pay for any damage those offerings cause from the procurement of raw materials, their refinement, product manufacture, product use, and their disposal.
Currently, the public, through taxes, health costs, property damage, etc. pays the health, environmental, and social costs associated with health and ecologically damaging products. By paying these costs, the public is caught in the ironic position of actually subsidizing the very products and processes that are harming them and their life-support system. Even worse, these subsidies retard the development of technologies that are more health and ecologically benign by artificially lowering the retail cost of ecological, health and socially damaging products, technologies, etc.
With true-cost-pricing, these costs, would be included in the market price of all market offerings. In other words, the health and life-support-costs of product offerings would be determined by an independent body (perhaps Consumer Report Magazine would be interested in this job) and these costs would be included in the retail price of every product being offered for sale. Of course, the products and services that are benign to health and life-support would have no extra cost added.
Including these costs up-front would cause the consumer price of health and life-support damaging products and services to rise. But even here, we would save money over what we pay now. Why? Because “an ounce of prevention is worth a pound of cure.” It’s less expensive to avoid creating health and environmental problems than it is to cure sick people and heal damage to our common environment.
As technologies become more ecologically sophisticated there is no reason for commonly used products to be any more expensive to purchase than they are now. In fact, in spite of the subsidies supporting products damaging to health and life-support, the market price of some “green” products is already lower than the harmful products they replace. And they work better too!
But even if green products and technologies end up costing more at the point of purchase, under true-cost-pricing they would still be more cost effective to society. It's still less expensive to prevent ecological and social problems, than to fix them after they have been created.
An additional true-cost-pricing benefit would be the elimination of solid waste disposal. With true-cost-pricing everything sold in the marketplace would be designed to be reused, recycled, or composted. When all costs are included, this is the most cost effective thing to do.
Some say that “free enterprise” is the antithesis of a healthy environment. But they mean “free” in the sense of “license”, not of “liberty”. With true-cost-pricing, however, a true free market can be a powerful tool toward creating a secure life-support sustaining future.
The rest of the book is available free at www.jimbell.com; click on “Jim’s First Book” (on the left side of your screen).
JJS: Another way to figure out true cost is to put the limited liability that corporations enjoy in its proper place, so that businesses must become responsible for the results of their decisions that impose pollutants on others. Without the shelter of limited liability, dirty and risky businesses would have to pay more for insurance. Then insurance companies would figure out how much to charge, and those companies would raise their prices to cover their higher, “internalized” costs.
What government could do, instead of sheltering polluters, would be to (1) collect Ecology Security Deposits, (2) require Restoration Insurance, (3) auction off Emission Permits, and (4) mulct Fines against Gross Violators of standards.
A fifth and most fundamental government task would be to recover the rental values of sites, resources, and ecosystems. Having to pay such “Land Dues”, land users would take less and use that wisely, leaving less waste behind. And if at the same time government did not tax labor and capital, then the work of recycling would be tax-free and cheaper and the investment in “apt-tech” would be tax-free and more remunerative.
Finally, returning to subsidies, quit using public money to tilt the playing field in favor of “grey ways”. And you would not even have to favor “green ways”. But using the recovered natural rents to pay citizens a dividend would make both green goods and leisure more affordable, enabling consumers to choose the sustainable path more easily.
The word for all this shifting of taxes and subsidies is geonomics -- a way to get any market economy to work right for people and planet.
Jeffery J. Smith runs the Forum on Geonomics.
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