The price of our most cherished vices tends to hide the enormous environmental costs that are caused by their production. Would we be so keen to buy them if their hidden costs were included?
Have you ever noticed that chocolate bars are usually conveniently located at the cash registers – whether you shop at a large commercial supermarket or your local organic grocery store? Do you get tempted to buy a chocolate bar or snack while you wait in the queue?
Or do you prefer a coffee fix? Maybe you order a takeaway coffee and collect it on your way to work or after you’ve completed your grocery shopping or a workout at the gym.
Our modern lifestyles are built around luring us into feeding our desires and senses. We’ve all been a party to this way of life!
But have you ever wondered what is the real cost of the $1 chocolate bar or the $3 cup of coffee?
Let’s take a look at product pricing and our market dynamics to understand why our economic system and structures as well as the way we think and live our lives is failing to fix climate change and our global health issues.
The real cost of goods and services is hidden
Our market system is premised on the economic concept of consumer sovereignty. In theory, consumers hold the power to choose what products they want and thereby determine what goods and services are produced. Producers compete against each other to supply consumers with these desired goods, and those producers who satisfy consumers’ tastes and preferences are the ones who survive in this competitive market.
In practice, the relationship between consumer and producer is not exclusively one-way; producers and retailers can also influence and stimulate supply, and in doing so, they are incentivised to encourage consumers to spend more and consume more.
Our market system externalises costs
The key flaw of this model is the market doesn’t tend to price items in a way that counts the true social and environmental costs of particular goods and services. What may be considered the ‘right price’ for consumers may be the ‘wrong price’ for our environment.
The market often ‘externalises’ certain costs of products – that is, it doesn’t count those costs as part of the price of those products, and essentially shifts these costs to other players or elements of the social and economic system.
An example: clothes manufacturing and pricing
For example, let’s imagine that producing a particular kind of clothes involves the by-product of a certain kind of waste chemical. If the producer of those clothes can dump that waste chemical in a nearby river, then dealing with the ‘cost’ of that pollution becomes someone else’s problem. The cost will not be ‘internalised’ – it will not be counted – into the price of the clothes, but it still needs to be dealt with by someone, at some point.
And this is the problem. Without specific regulation or action, our markets tend to systematically externalise the environmental and social impacts – such as pollution in a river, or the fairness of wages, or the treatment of workers – that are involved in making products.
The power of consumer choice
Companies are not required to disclose the environmental impact of their products. Although environmentally conscious companies can include positive environmental messages on product labels, the presence of these messages may not significantly alter a consumer’s perception of product quality and value or influence a consumer’s purchase intention.
Harvard University reports that in a recent survey, 65 percent of consumers said they want to buy purpose-driven brands that advocate sustainability, yet only about 26 percent of them actually do so.
Consumer choice prevails, and sustainable businesses find themselves operating in the same market structure as other businesses and end up behaving in a similar way to their competitors – that is, pricing to encourage consumption. While it is the case that green businesses are driving sustainable consumption, nevertheless, the market still tilts them towards encouraging consumption.
Buyers need to be cognisant of social and environmental costs
As a result of not pricing commodities and manufactured goods accurately, companies hide the environmental and social costs of goods and most consumers are unaware of the real costs. For example, when you buy a $3 cup of coffee, the price hides the whole chain of activity that put that cup into your hand – the hours of backbreaking labour of the villagers who harvested the coffee beans, the damage to the local ecosystem and its plants and animals, soil erosion, and the pollution to the local water supply.
As an alternative, some businesses sell organic or ‘Fair Trade-certified’ coffee because they believe it may be more ethical or better for the environment. But does the price of these slightly more expensive coffees factor in all the environmental costs of growing, harvesting, producing, and transporting the coffee beans?
EnvironMentalists hold the power to change a flawed system
We, as EnvironMentalists, need to become more mindful of all the costs involved in the products we consume. Every time we consider buying a $3 coffee, a $2 packet of potato chips, or a $1 chocolate bar, we need to be cognizant of the environmental and social costs that are not incorporated into the price.
We need to start questioning every consumer choice that we make and assess its impact on our global environment – this is true consumer sovereignty. How much does a $1 chocolate bar or a $2 packet of chips really cost our planet? Is it a fair price to pay for the deforestation that occurred in order to produce the cocoa or the palm oil? Does the low price accurately reflect the cost of destroying the home of an endangered species?
To solve climate change we all need to reshape the way we think
If we change our way of thinking, then it will become the norm that when we see a cheap chocolate bar for sale or crave a cup of coffee, our first thought will be of the orangutan or the elephant that lost its home due to the production of the ingredients, rather than merely appeasing our taste buds and offering temporary happiness.
To make a significant impact on the state of our environment, we need to take personal responsibility and action. This means looking at the way we think, the way our thoughts work, the way our minds function, and how all of this shapes and informs our behaviour.
With this new level of awareness, we can then reshape our thoughts and mind – which not only reshapes our behaviour but also allows us to address the growing and pervasive sense of anxiety, including climate anxiety, that has come to mark our social and individual lives. We then become meaningful actors in the improvement of our relationship with the environment and place our future firmly in the palms of our hands.
This article is an excerpt from our new book The EnvironMental Fix.
Copyright © James Golding and Leisa Golding 2020