Energy Explained

Slime Ball Award for Green Tech News 003

To Reveal a Product’s True Cost An Environmental Tax?

Sometimes, simple acts such as going to the grocery store can turn into a moral dilemma. Is it better to choose the piece of organic fruit produced on the other side of the country or the non-organic version grown locally, 50 miles away? Are the benefits of chemical-free shampoo worth an extra 5 bucks a bottle? Will I really be able to enjoy a cheap chocolate bar knowing that the growers of the cocoa beans were likely not fairly compensated?

As much as I’d like to say that I always buy the product that is environmentally safe and sustainably produced, in reality, that’s not always the case. First, the sheer amount of information required to be able to distinguish between products is staggering. You need facts regarding environmental impact, transportation costs, and fair trade practices, to name just a few. And there are plenty of misinformation and greenwashing campaigns out there to steer you in the wrong direction.

Second, of course, there are times when the high cost of an ethically made product turns me off from buying it. Even consumers with the best of intentions have their breaking points.

The thing is, companies who go out of their way to implement sustainable practices endure a greater cost of production. Sure, they can sometimes capitalize on this by marketing to conscientious consumers who are willing to pay a bit more, but the fact remains that in today’s system, environmentally minded production is punished.

On the other hand, companies who move their factories (and jobs) to developing countries with lax environmental standards and cheap labor are able to make products at a fraction of the cost and undercut their competitors (while shipping materials and finished goods all around the world and adding to our greenhouse gas problems).

The way it’s set up, high environmental standards in one country drive companies to relocate in places where it’s permissible to pollute in order to compete in the marketplace. Chaco, the Colorado-based athletic sandal company, is a prime example of even a well-intentioned company being forced to follow suit to maintain competitive pricing on their products. In fact, 95% of all footwear in the world is produced in China, whose poor environmental regulation and sometimes dangerous environmental problems are well known.

With current talk about cap and trade emissions programs, this phenomenon may only get worse.

So how do we even the playing field and reward companies for good business practices?

When I think about this problem, I keep coming back to an idea I encountered in a casual conversation with a stranger while traveling. I can’t remember his face or his name, but his idea has stuck with me and festered in my mind for the better part of a year. His take was that putting the financial burden of environmental responsibility on the companies just doesn’t make sense for the reasons I’ve given above. In a global marketplace, it renders companies less competitive than those that operate free of environmental and labor regulations.

Wouldn’t it make more sense to put an “environmental impact” or “ecological footprint” tax on the product itself?

Ugh, a tax?

Initially, I didn’t warm to the idea either. But think about it: adding a tax proportionate to a product’s ecological and social footprint eliminates the cost advantage of irresponsible production. All those environmental costs that are currently not included in our economic system would be factored in and would increase the price of unsustainably made products.

This, in turn, would make moral dilemmas at the grocery store much easier. Is it more sustainable to buy distant, organic produce or local, non-organic produce? The tax-adjusted pricing should inform my decision. Can I afford the chemical-free shampoo? Yes, because the price of its chemical-laden competitors would be raised through the environmental impact tax and eliminate the cost advantage of choosing that product.

The money raised from the tax could fund its implementation and other sustainable programs such as public transportation (high speed rail, anyone?) and alternative energy. Perhaps it could even make a dent in our gaping budget deficit.

Won’t this cost me money?

You may be thinking, “Sure, that’s a good idea in concept, but that will raise my bills - grocery, clothes, everything.” Well, yes, that’s true. But maybe if we see the true cost of the products we casually consume, we can make a more informed decision about what is really necessary to our lives.

Additionally, programs such as this often have the greatest impact on the poor. But this could be compensated for by using some of the tax revenue for need-based assistance programs.

Regardless, running an economic system on the assumption of infinite resources is fundamentally flawed. Currently, environmental impacts such as air pollution, water pollution, and deforestation are not factored into the cost of a product: they are considered “externalities.”

These costs need to be included in the system in a way that does not punish those who engage in sustainable business practices. By taxing a product’s environmental impact, it levels the playing field for the consumer.

Disclaimer

Of course, I am not an economist or policy guru. I don’t know how to implement such a tax or if it would even be possible (though compared to creating a carbon trading market, perhaps it’s not that difficult). This is only the musing of a concerned, intelligent citizen trying to brainstorm ways to make our economic system fit within the bounds of our ecological constraints.

What do you think? Would such a tax have a beneficial effect on our production system? Join the conversation over at our website!

Jill Mueller is a conservation biologist, avid cyclist, and freelance writer. She has combined forces with a good friend and dietitian to start The Barefoot Badger, a blog promoting healthy, sustainable living. Check us out!

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