Green Party Platform:
True Cost Pricing
True Cost Pricing (TCP) is an accounting and pricing system that relates to the Green values of ecological wisdom, sustainability, future focus, and social justice.
Under our current accounting and pricing system, many commonly used products carry hidden environmental and social costs such as air and water pollution, deforestation, and toxic waste. These costs are created during the production, use, or disposal of the products. While revenue and profits from these products are internalized by the producer, the costs are externalized to society and the natural environment. This externalizing of costs may make the consumer price low, but we all pay for it eventually through taxes, adverse health effects, and reduced quality of life. In this way, externalized costs equate to a subsidy. Artificially low prices on subsidized products encourage their overconsumption and, therefore, the underconsumption of environmentally sound products.
The inclusion of all costs into the price of a product would make ecologically sound products cheaper to the consumer in terms of market price, and demand for these products would increase. For example, solar electricity has a higher per-unit cost than electricity from coal or oil. But, if all the costs were considered-- oil spills, air quality regulation, health care, massive subsidies to the oil, gas, coal and nuclear industries-- solar power would clearly be the cheaper alternative. Under TCP, market forces would foster new, ecologically sound products and industries by making them cost effective and price competitive. Also, various cultural/traditional industries that have been marginalized by unrestrained technology could flourish.
Many of the government's current policies have the effect of subsidizing environmentally damaging practices, and the laws that do exist to prevent this are not always enforced. An example is the grazing land and water subsidies to the cattle industry, which are known to be severely detrimental to the environment. We not only directly subsidize the industry, we pay for the environmental aftereffects. The concept of true costing, as a part of cost/benefit analyses, should be a basis for decisions on government projects, including Environmental Impact Statements and Reports.
The Green Party calls for the implementation of true cost pricing:
- Implement product labeling to inform consumers of the total cost of the product's ingredients and manufacturing process.
- Provide education to explain that TCP incorporates the true life-cycle cost of a product and, therefore, is not a tax--it is a method of internalizing appropriate costs that will result in a net decrease in consumer prices. As TCP is implemented and less damaging practices are adopted, taxation for environmental clean-up and the other externalized costs will be dramatically reduced.
- Establish an information clearinghouse, consultant's network, and other communication channels to facilitate the exchange of information. Many ecologically benign techniques already exist on a small scale or in limited locations. Sharing this expertise is crucial.
- Integrate the concept of TCP into domestic industrial policies and regulations, and likewise, promote it in international trade agreements.
- Recognize that some items exist for which TCP and/or the market may not be appropriate. These include but are not limited to health care, education and National Parks. TCP is one option available to address the failure of the market to include the economic, social and environmental costs and benefits created by the production, use and disposal of goods and services.
- Recognize that TCP may have short term impact on people of lesser financial means. We must explore and implement measures to mitigate these effects.