The Glass Half-Full

Taking an optimistic perspective, it is worth noting that there is a growing level of awareness, particularly among younger generations, regarding the inadequacy of the dominant economic model that has led us to the current “state of affairs”. People recognise the need for action and are increasingly conscious of this fact. The pervasive flow of information and widespread media coverage have played a vital role in spreading this awareness through various channels. It is evident that there is a collective understanding that proactive measures are necessary to address the situation. Similarly, digitalization has made information retrieval and delivery cost much lower, and therefore has also made it much more difficult for rogue actors (think of the classic case of a company polluting a river or dumping waste in the sea) to act unnoticed.

 

The Glass Half-Empty

However, once awareness is established, the crucial subsequent phase is to translate such awareness into action. And this is where we are failing: from an ecological perspective, the overall state of our planet is significantly worse today than it was several decades ago. This decline can be observed across multiple dimensions, including specific areas such as air pollution and massive loss of biodiversity. It is imperative to address these issues and take concrete steps towards restoring the health of our planet.

While concerted efforts have effectively addressed certain aspects, the overall assessment reveals a disheartening state when measuring various climate-related factors. Extreme climate events, greenhouse gas emissions, pollution, waste, and deforestation present a dismal picture. This alarming reality should serve as a catalyst for heightened urgency in tackling these issues.

There is a risk that this realisation can also induce a sense of helplessness and inaction among certain individuals. Some may believe that solving such an immense problem is impossible due to the multitude of conflicting interests involved. The sheer complexity of our world and its vast population make proper coordination for concerted action seem daunting.

This perspective leads us to the more pessimistic side of the story, acknowledging the gravity of our current situation. However, instead of succumbing to despair, it should serve as a strong impetus to adopt a more assertive and motivated approach. The urgency of our predicament should stimulate us to take proactive steps and actively contribute to sustainability initiatives.

By enhancing communication and making awareness readily accessible to the general public, we can emphasise the pressing need for action and convey that we have not yet reached our desired goals.

 

The solution

As humans, our evolutionary background has shaped our perception within a context of scarcity. Consequently, it becomes challenging for us to acknowledge a crucial fact, which marks the initial step. This fact is the awareness that the prevailing economic and consumption models are propelling us towards catastrophe, far sooner than most people realise. The unpredictable nature of the ecological balance introduces discontinuity effects, making it difficult to predict the speed at which extreme events and the collapse of essential ecological services may occur, triggering cascading chain reactions.

To drive change effectively, it is crucial to recognise that the initial step lies in altering certain habits. Humans possess a remarkable ability to respond to incentives. Therefore, a key approach to instigating habit change, which encompasses shifts in consumption patterns and prioritising sustainable choices across various aspects of life, such as clothing, food, and travel, is to promote transparency and appropriately price externalities. By understanding and quantifying the hidden costs associated with economic activities, we can encourage individuals to make more informed decisions and actively prioritise sustainability.

In economic terminology, externalities refer to the negative impacts that affect the overall environment or commonly shared resources. Examples of such externalities include water pollution or greenhouse gas emissions. These externalities have enabled us to flourish and consume extensively at remarkably low costs: like a rogue company “cooking the books” and hiding their debts, our economic model’s successes have been overstated by hiding the cost lines related to loss of natural capital, pollution, and extreme weather phenomena, whose liabilities have fallen (and will continue to fall, in greater amounts) on everyone’s shoulders.

Integrating the environmental impact of our consumption into the pricing of goods can significantly alter current consumption patterns. By accurately reflecting the true cost of environmental consequences in the prices of the goods we consume, we would witness a transformative shift. It would unveil a differentiated pricing structure for various products, serving as a powerful incentive for change.

Several commodities (in particular dairy, meat production and crop production in tropical areas) have been under increasing pressure in recent years due to their high environmental footprint, either because of CO2 emissions directly generated by the animals, or because of the externalities generated through land use change and deforestation, particularly illegal deforestation. While the industry is investing in technology to reduce its impact and emissions across the value chain, the best way to drive change would be to accurately directly incorporate the cost of these externalities into the price of such commodities, with much faster effects on consumption: the increased pricing would reflect the true environmental impact, making these products more expensive with respect to alternatives from different regions or applying innovative technologies to reduce externalities, establishing a positive feedback-loop rewarding the most efficient and ecologically-minded producers.

It’s the same logic followed - for example - in energy markets, where carbon cap-and-trade schemes have gradually reduced the appeal of investing in plants using the most polluting types of fuel. The challenge, for agriculture, lies in the fragmentation of production and the inherent difficulties in tracing the origin of product for globally traded commodities, and in properly accounting for their environmental impact due to the difficulty in collecting reliable data in a scalable and cost-efficient way.

 

The bottom line:

Fundamentally, fostering heightened transparency regarding the repercussions of our consumption choices bears substantial promise as a viable sustainability solution. It possesses the potential to act as a pivotal driving force for expediting change, harnessing pricing as a potent beacon that kindles a perception of scarcity. This methodology's historical efficacy is underscored by successful instances such as carbon credits or carbon pricing initiatives, which wield economic incentives to facilitate transformative shifts.

However, it is crucial to acknowledge that for this approach to be successful, it requires concerted action and equitable application across all countries and supply chains. Without such collective efforts, it may lead to competition distortions and create an unfair advantage for those not subject to such regulations. Therefore, fairness and equitable considerations should be at the forefront when implementing these measures.

Overall, the picture tells us that the glass is both half full and half empty. There has been a lot of good work done in terms of sustainability. However there is still a long way to go to help preserve our future. Whether through finding ways to calculate the externalities in products, to implementing technology to help drive sustainable practices, we need a concerted action to ensure that we consistently meet our sustainability targets.

 

 

 

 

 

 

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