True Cost: What If?

By Kalle Lasn

What is the real cost of shipping a container load of toys from Hong Kong to Los Angeles? Or a case of apples grown in New Zealand to markets in North America? And what is the true cost of that fridge humming in your kitchen, that car purring on the road or that steak sizzling on the grill? Practically every one of the products we buy in the global marketplace is undervalued because the environmental costs haven’t been taken into account. As a result, every one of the billions of purchases we make every day pushes the world a little deeper into the cosmic red.

But what if we were to implement this simple idea: true cost?

We calculate the hidden costs associated with products – what the economists nonchalantly refer to as “externalities” – and incorporate them. We force the price of every product in the global marketplace to tell the ecological truth.

We start with the little things: plastic bags, coffee cups, paper napkins. Economists calculate these eco costs – say it’s five cents per plastic bag, ten cents per cup and one cent per napkin – then we just tack that on. We’re already doing that with the various eco-fees and eco-taxes included in the price of tires, cans of paint and other products. But now we abandon the concept of ancillary fees and taxes and implement straight true-cost pricing.

Then, over a ten-year period, we phase in true-cost eating. We raise the price of avocados from Mexico and shrimp from China to reflect the true cost of transporting them long distances. And we estimate and add on all the hidden costs of our industrial farming and food processing systems. That burger at McDonald’s will cost you more, so will most meats, produce and processed foods. You can eat whatever you want, but you’ll have to pay the true cost. Inevitably, your palate will submit to your wallet. Processed, mega-farmed and imported foods become more expensive as the cost of organic and locally produced food goes down. Bit by bit, purchase by purchase, the global food system heaves toward sustainability.

Then we phase in the true cost of driving. We add on the environmental cost of the carbon our cars emit, the cost of building and maintaining roads, the medical costs of accidents, the noise and the aesthetic degradation caused by urban sprawl and maybe even the military cost of protecting those crucial oil fields and oil tanker supply lines. Your private automobile will cost you around $100,000 and a tank of gas $250. You’re still free to drive all you want, but instead of passing the costs on to future generations, you pay upfront. This would force us to reinvent the way we get around. Demand for monorails, bullet trains, subways and streetcars would surge. We would demand more bike lanes and pedestrian paths and car-free urban centers. And gradually a paradigm shift in urban planning would transform urban life.

True-cost pricing is fraught with daunting, seemingly insurmountable problems. For conventional economists, it’s a frightening concept that would slow growth, reduce the flow of world trade and curb consumption. It would force us to rethink just about every economic axiom we’ve taken for granted since the dawn of the industrial age. It could turn out to be one of the most traumatic economic/social/cultural projects that humanity has ever undertaken. And yet … and yet … the idea of a global marketplace in which the price of every product tells the ecological truth has a simple, almost magical ring to it. It makes sense, it feels right, and it’s totally nonpolitical. It’s the one big idea that – if we are able to agree on it, implement it and muster the collective self-discipline to sustain it – could pull us out of the ecological tailspin we’re in and nudge this failing experiment of ours on Planet Earth back onto the rails.

This article originally appeared in Adbusters #85.

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24 Responses to True Cost: What If?

  1. I am very interested to learn more about this, it is shameful to be so ignorant. My first question is: Who is right now paying the hidden costs?

    • Syama Gopala das

      What do you think about us, nature, the environment? Why do you think there is such a price difference between normal meat and organic meat (weird example from a vegetarian to another vegetarian but okay)? It’s because the cost of organic comes closer to the true cost.

      • Yes, I see. But the article for example mentions long transport distances, who pays them?

        It also says “the cost of organic and locally produced food goes down”, how so?

        • Its a complex process. As the article indicates, and as Syama Gopal suggests, ultimately we all pay the actual cost of “cheap” living. We pay with no less than our precious human lives. Human life is meant for God realization. However we spend our lives locked in a global system which is exclusively materialistic. In this way our time is wasted. Our time in this form of life is extreme valuable – its the greatest assest there is. But what each of us are exchanging for this asset is irrelevant for self-realization. Introspeciton and then distribution of that introspection is the real commerce we should be engaging in. Whatever comforts generated by a system of introspection should be regulated by related measurements.

        • Yes, I see. But the article for example mentions long transport distances, who pays them?

          I think no one fully pays a monetary price for them (in the short term), and that is the problem. Long transport distances means burning a lot of oil, which means rise in pollution. The costs to the environment, for i.e., is not accounted for in the price we normally see in the supermarket. Economists usually call this an “externality”. In the long-term, everyone pays the price (even those who didn’t partake in the production and/or consumption) in the form of bad air quality, water pollution, global warming, etc.

          It also says “the cost of organic and locally produced food goes down”, how so?

          I think:

          As the true cost is accounted for, prices will skyrocket. Demand falls for food grown 3000 miles away and demand for locally produced foods will increase. More and more producers will start producing locally to satisfy the rising demand. Competition amongst producers will lower organic, locally grown food price.

        • Good points and well said! They both seem very accurate.

        • Thanks for your answer. Yes, that’s reasonable. I’m just very ignorant. But I’m really trying now to come closer to mother earth in my diet. No more processed stuff.

        • I wonder how rising demand for bananas would cause people to grow them locally in Norway without using oil for the green houses 😉
          We live in quite complicated world… I find the idea of paying true cost quite utopian and even selfish- only the rich people can pay the real cost. Others would have to eat what is available locally- that means vegetarians would starve in some places and not only them…
          Growing all food locally maybe posible in USA that has so much agricultural areas, but Europe for instance is quite urbanized- there is not much space available for more agriculture and not many people really wanting to do be farmers. And also culture is different- in many places rising demand causes just rising of the prices and farmers rather will not sell then sell food cheaper. I mean solidarity is often higher than competition.

          And what about the people who produce the cheap food? Cheap bananas and oranges ect in the 1st world mostly come from the poorest countries. Are the rich ready to accept in their country thousands of people who lost the only source of maintenance because bananas became expensive?
          Food demand causes wars and therefore it is quite wise to keep the prices low

        • Those are valid points and to be honest I didn’t really think about them much. After doing some research, I came across a site (see “URL” above), which addresses most of the points against local food. I found them to be pretty convincing.

          For example, with regards to growing food in unsuitable climate, eating seasonably is suggested. We can substitute bananas for other fruits that grow locally. Of course, if you’re somewhere in Alaska and are a vegetarian I think it’s best to move.

          With regards to the unavailability of necessary foods, subsidies can be diverted from current, inefficient practices of subsidizing corporate farming that tend to depress world food prices (and make poor people poorer). These practices, as far as I know, are prevalent in Europe and USA. Instead, subsidizing research in green technology aiding local food growing can be helpful.

          Subsidizing organic growers will allow for lower prices for consumers and higher income for farmers. Essentially, government pays part of the higher price faced by consumers. In EU and USA the amount of these subsidies may mean a huge potential for growth in organic farming.

          Domestic subsidization can carry over to other nations as well. Government can subsidize imports so that people abroad earn a decent amount of income. Unemployment may even fall in poor nations.

          Diverting inefficient subsidies may help out, but I am sure there will be other variables that, like you said, will complicate the issue.

          Food security can cause wars, especially if a nation depends on another for food. Thus, it is possible that growing local may actually deter wars owing to less dependency on another nation. Likelihood of wars from self-sufficient nations may be less.

          All in all, these issues seem to call for a change in lifestyle, as hard as it may be. Personally, I theoretically know that these problems will be solved naturally as a byproduct of engaging in theistic practices (i.e. Gaudiya Vaisnavism) as they seem to have economic efficiency (and all other types of efficiency) ingrained within.

          Thanks for your points because they were practical and helped me learn, too.

        • Syama Gopala das

          But research has also shown that sometimes food that is produced miles away is better for the environment than that produced close by.

          For instance, Dutch tomatoes grown in greenhouses and exported to England are more harmful to the environment than those transported from Africa.

          Shall we stop eating tomatoes altogether then?

        • But research has also shown that sometimes food that is produced miles away is better for the environment than that produced close by.

          For instance, Dutch tomatoes grown in greenhouses and exported to England are more harmful to the environment than those transported from Africa.

          Shall we stop eating tomatoes altogether then?

          Definitely not, and I guess I was wrong in calling for immediate substitution due to unavailability as this can lead to trade in food to be stopped.

          Can it then be said that cutting emissions arising from food related international trade when local growing is possible may be a better solution? It seems that local food theory rests on the assumption that emissions resulting from food traveling miles to get to consumer from producer(“food miles”) is not good for the environment and transport is mainly the cause. But this study done in New Zealand supports your view, in that growing the same food in UK than importing it from New Zealand emits more emissions because total energy input and emissions is considered:

          So if trade in food that causes reducible emissions is lowered, then the scale of pollution will also be reduced. International trade in food can continue at a scale that allows nature to recover from the air, water, and land pollutions emitted.

          Also, this recent article from BBC seems to show the need for imports of final products rather than importing inputs in the production process (like importing water and growing food as opposed to just importing the food from where the water already exists).

  2. More than the ecological problem, it would solve our human problem (not that the two are not connected). But forced to live with less stuff, humans would naturally evolve spiritually.

    • Audrya-lila dasa

      That’s a nice idea but it doesn’t seem to play out practically. There are so many people with so little who are not deveoping spiritually. I know a lot of homeless people here in Ventura and having little to nothing has not led to any tangible spiritual development in them from my perspective at least.

  3. Hmmm, these homeless people, they should read Thoreau. And then Bhagavad-gita.

  4. Brajasundari, ironically its the poor who remain poor as a result of distribution of food around the world. It goes something like this: banana farmers in Nicaragua grow bananas for distributors such as Dole or Chiquita. The price these growers receive is determined by those two corporations, never by the growers themselves. That price is kept just at the level where it allows growers to stay in businesses, but not any higher that the growers can withhold the product and demand higher returns and so expand their own economic (and consequent political) power. The distributors are able to determine the price due to the monopoly (yes, thats where the game’s name was originated) they have on the market. But if these banana growers diversified and sold their various goods locally, they would have control of said localized economy. Would that be selfish of them? Possibilly if their economic model meant that Norweagians would have to go without bananas. But then again even if Norweagians would want to not be selfish themselves and so sell their apples to Nicaraguans, these poor fellows, by Norweagians’ standards, wouldn’t be able to afford those apples at all.

    • Well, every villager in Nicaragua has his own banana tree therefore the only local market would the town people and this is not much.
      So the bad thing here is monopoly not export itself. Export is not a new thing. It is as old as humanity is.

  5. “The cost of a thing is the amount of life which is required to be exchanged for it.”
    – Henry David Thoreau –

    • Thanks for posting this–very enlightening indeed. I may be wrong, and I hope I am, but my sense is that consumerism is so ingrained now that many people could watch this video and just not care, or find some inane way to criticize it (some did–look at the comments). Or perhaps care for, say, about five minutes only to forget all about it on the way to Wal Mart to buy more stuff.

      • One note: it appears that the quote used in the video by Victor Lebow does not actually represent the truth. The quote is taken out of its original context to make it look like he was the architect of consumerism, when he was actually only describing and perhaps even wryly critiquing it.

        • Yes there is a dispute as to whether Lebow was prescribing consumerist behavior or exposing it. Personally I doubt he did as this film claims. Evil acts are never directly recommended, but rather disguised as benefic ones. The reverse might apply to good, sensible recommendations. Some thing similar was said of Machiavelli; that in his masterpiece, The Prince, he recommended such wicked sequence of of evil acts and behavior to state rulers that it was clear he was actually speaking of behavior which was already being practiced for ages. Cunning is surely not the monopoly of the Devil.

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