Full Cost Pricing: A Key of Sustainability

Full Cost Pricing: A Key of Sustainability

Alison Zigler

As our population on Earth continues to grow, so does our demand for resources. However, these resources that humans continue to consume, such as oil, food and gas, all have severe effects on our environment. The search for solutions and trade-offs to our environmental problems has led to proposed social science principles of sustainability. One of these principles is full-cost pricing, which is a practice that includes the harmful environmental and health costs of producing and using goods in the market price. Many economists believe that our failure to include these harmful costs in the market price of goods and services is one of the major causes of environmental problems (Living in the Environment). Therefore, full-cost pricing should be instituted in the United States, the biggest consumer country, to give American consumers better information about their lifestyle choices. Will it be hard? Yes. But, it just might be a key to protecting our environment and paring down our ecological footprint.

Today, the market price that we pay for a product or service usually does not include the external cost, or the harmful, environmental, or social effect of producing and using an economic good. This results in many hidden costs. For example, the video, “The Hidden Costs of Hamburgers”, describes how the internal cost, or the direct cost paid by the producer and the buyer, does not account for the full price of producing a hamburger. The video explains that an item as simple as a hamburger has many hidden costs, such as land, food and water for raising the cows, the methane emissions, the pollution from transporting the beef and other necessities, and the greenhouse gases caused by raising beef. The infographic to the right shows how much resources are required to make just one hamburger. However, Americans eat three times more meat than other people across the globe without even realizing the full price of their food. If they did and cut out just one burger per week, it could would remove as much greenhouse pollution as taking their car off the road for 350 miles. In addition to the environmental impact, people may not also realize the external costs of medical bills. Studies show that eating too much red meat can lead to heart disease, high blood pressure and diabetes (The Hidden Cost of Hamburgers). If the full-cost price of hamburgers was included in the market price, people would be able to make more informed choices about what they are consuming. This also is true for many other consumer goods such as cars and electricity.

Full-cost pricing would reduce resource waste, pollution and environmental degradation. So why aren’t we using it? Well, first of all it’s very hard to estimate the total cost of products and if we could, market prices would increase, creating a lot of backlash and opposition from the public. In addition, many companies that provide these environmentally harmful products, such as the Koch brothers, can use their political and financial power to obtain government subsidies that help them avoid including the full cost of their products (Living in the Environment).

Despite the challenges and uproar that full-cost pricing would create, it needs to be established in the United States to reduce our environmental impact and inform consumers. Without it, we will remain trapped in detrimental hidden costs without even realizing it.

Works Cited

Miller, G. Tyler, and Scott Spoolman. Living in the Environment. Boston, MA, Cengage Learning, 2018.

Prevention, Rodale Inc., 2017, www.prevention.com/inspired-bites/2012/06/27/eat-meat-an-insightful-infographic/. Accessed 16 Sept. 2017.

theifilestv. YouTube, YouTube, 1 Aug. 2012, www.youtube.com/watch?v=ut3URdEzlKQ. Accessed 16 Sept. 2017