Natural Resources, what are they?
Natural Resources are resources that exist without any actions of humankind.
They are voiceless, which makes them prime candidates for exploitation, especially when bought up as private property. It’s only with special protections and regulation that we can keep these gems intact for future generations and not sold off for short term profits.
Here are a few of the common unintended consequences (externalities) of resource exploitation:
• Air Pollution
• Climate Change
• Light Pollution
• Oil Depletion
• Oil Dependency
• Habitat Destruction
• Urban Heat Sprawl
• Coral Reef Degradation
• Loss of Biodiversity
• Ocean Warming
• Water Pollution
Fast Food and Natural Resources
I’ll Be Around
Fast Food is like The Spinners song “I’ll Be Around”
“Whenever you call me, I’ll be there (hello DoorDash). Whenever you want me, I’ll be there (hello midnight bucket of fries). Whenever you need me, I’ll be there (24/7/365). I’ll be around “
And that’s just the problem. They’re always around, but as soon as they’ve slung that burger n’ fry combo, “Next”.
Nestled between the cost of shipping, packaging, and serving your burger and it’s externalities are the root issues behind consumption, External Costs. These are costs avoided by a producer or consumer and instead externalized onto someone — or thing — else.
It looks like this: Internal Costs + External Costs = True Social Cost
• Internal Costs would be things like the cups, wrappers, bags, shipping, and utilities.
•External Costs would be things like C02 sequestration, the cost of moving your family off the coast due to rising sea levels, and a new water filter due to your cities polluted water.
Imagine it costs a restaurant $1,000 to install a water collection and purification filter for their property. If they charged $1 extra, they would have the system paid off in 1,000 orders.
External Cost -> Externality
When these costs are externalized, we see the resulting externality. That looks like this:
Internal Costs = Price at Register
↳ Externalized Cost → Externality
This $1 cost could have paid for clean water. It could have saved the town from having to buy bottled water or water filters. It could have saved the wildlife downstream from polluted runoff.
Instead, the sediment heavy water made its way to the treatment plant and increased the costs, resulting in higher taxes. Some of it made it’s way into waterways, lakes, and reservoirs harming the fish and forcing a local fisherman to drive to the neighboring city.
Your order may have looked $1 cheaper on the menu as these costs were initially footed by our Natural Resources (seen as externalities), but eventually society pays the bill in things like rising taxes (from polluted water) and clean water alternatives (from increased pollution and sedimentation in our streams and rivers).
*This is where the “Don’t tread on me” philosophy breaks down. Nearly everything we buy has an unpaid external cost that “treads on” someone — or thing — else.
Here are some common External Costs avoided in our agricultural system and their resulting Externalities
• Healthcare Bills
• Relocation Away From Coast (climate migration)
• Work Days Lost (sickness)
• CO2 Sequestration R&D
• Environmental Revitalization
• Flood Controls
CORAL REEF DEGRADATION
• Flooding Costs
• Tourism Revenue
• Erosion and Climate Migration
If you’d like to learn more about Externalities and External Costs, check out the following linkTHE THEORY OF EXTERNALITIES
Going Green is the way of the future. According to a study by Neilson, 75% of millennials stated they would “definitely or probably change their habits to reduce their impact”.
But it requires a keen eye to differentiate between a company embodying “green” and a company running misleading marketing campaigns like “this area rugs contain 50% more recycled content”, when the increase of recycled fibers went from 2-3%.
Technically these claims are true. But what do we do when there is an obvious ulterior motive?
Tying It Together
So how can someone with little money or political influence make an impact on a system run by the almighty dollar?
Let’s tie it all together.
From “sustainably sourced” to “100% clean energy”, it’s difficult to tell which labels are legit and which are marketing fluff.
What is for certain is that the massive growth and use of these terms means that our conscious consumption and “voting with our dollar” works.
Here are a few legit labels to look for.
• Energy Star
• Forest Stewardship Council
When it’s impossible to tell the difference between legit and fluff, you’d expect the government to help out.
Here are some of the organizations holding our government accountable.
• Environmental Defense Fund
• The Nature Conservancy
It’s in a corporation’s best interest to avoid all the external costs they can. More money for them and more “affordable” products for us. But as we’ve just learned, these costs don’t just disappear.
It’s also in their interest to use labels that sell product, whether that’s for the benefit of society or their bottom line.
That’s where it’s our government’s job to step in. With proper regulation, they can force producers to pay for their external costs and use proper labels.
Here are a few ways our government does that.
• Pigouvian Tax
• The National Environmental Policy Act (NEPA)
• The Clean Water Act
• The Clean Air Act
Imagine a world in which you send your spare change from your Green-e certified renewable utility bill to Earthjustice.
Earthjustice uses your spare change to advocate in government for a higher % of renewable energy in our power mix.
The government then passes a bill requiring at least 60% of our energy be from renewable sources.
Now, you know that even if your neighbor can’t afford to pay extra for renewables, they’re supplied a good amount with their normal plan. You’re helping include external costs in your power bill and mitigate the externality of pollution.