Costs aware of but not Priced for

11 Oct

One of the main problems with our current economical system is that we fail to internalize externalities. What this means is – the price of a beefsteak goes beyond the stated price of a beefsteak. The production of beef comes at a higher price. But the price is ignored because a ranch owner does not have to account for the dirty manure water that seeps into the groundwater under the cow’s feet, the methane gases (farts) they emit that have a global warming potential from 25 to 72 times that of carbon dioxide (depending on how you calculate it), the ecological costs of the grazing land that could have otherwise housed a vast, dense forest that could have functioned as a carbon-sink and home to at least dozens of different species, the health costs to the humans who digest this meat raised to be fatty, stocked full of hormones and antibiotics.

Then spokesperson for the beef industry, actor James Garner, underwent a quadruple by-pass surgery in 1988.

The question here is, how is it possible to change the way the system functions?  How is it possible for us to internalize the external costs? There are currently two ways that are being utilized by some countries, on some products, that may be of use in expanding:

1. Taxing: Just like the cigarette tax, this tax is meant to raise the price of products to account for the external costs of the production, as well as serve as a deterrent to consumption of high external costs products v.s. low external cost products. However, most of the market by itself is unlikely to take this drastic step without strong, controversial legislation backed by very strong consumer support. So we can look at the other alternative:

2. Listing the costs: Just as in some places fast foods are required to list their caloric content, and CO2 listing is now accepted, the efficacy of listing costs gives consumers the choice (and the guilt) to take a vote on what sort of food they want available on the market. What would you say if your next shrimp was labeled like this?


26 pounds of other sea animals were killed and tossed back for every 1 pound of this shrimp.


One Response to “Costs aware of but not Priced for”

  1. Sarita October 11, 2011 at 3:57 pm #

    would make me think twice about buying it 😛
    but then again, i can only picture environmentally – aware consumers to care about this.
    most consumers today are still driven by the price of the product – so i’d go with the taxing system so long as it is explained to the consumers why this is being done.

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