Wasteful consumer goods stress the planet

Wasteful consumer goods stress the planet

FMCG SUPPLIER NEWS

IOL Business/ Pierre Heistein - Dec 1st 2011, 09:04

Words by Pierre Heistein, the convener of the UCT applied economics for smart decision-making course

The main focus of the UN climate conference currently being held in Durban will be on how the world economy can go about reducing its levels of greenhouse gas emissions.

 

As emissions are a direct result of industrial production, the topic of fighting climate change cannot be discussed without addressing the impacts this will have on an economy’s production levels.

There are three ways in which emissions can be reduced. First, industry can continue to produce exactly what it has been, but develop new methods in which it can do so with less greenhouse gas pollution. Second, industry can shift its production to meet existing demands and needs of consumers, but with a different set of products that are less emission intensive.

And lastly, consumers or governments can drive a behavioural change such that consumer needs are met, but with lower total production and therefore lower emissions. It is the last of these that I would like to focus on.

There are a number of examples where this is possible and one of the most talked about is bottled water. Bottled water is extremely damaging to the environment through its use of oil in plastic production and transport, its strain on water resources, and the burden the bottles place on landfill sites. It has been reported that it takes 600 times more carbon dioxide to produce a litre of bottled water than a litre of tap water. While it may have its place in roadside shops where you can pick up a bottle while on the move, there is no reason beyond image and marketing why bottled water should be used in conferences, business meetings or social events. Toss some mint, a few slices of orange and maybe some strawberries into a jug of filtered tap water and your guests or clients are likely to be just as happy, if not more so.

The economic question in this regard, however, is what happens to the wealth creation processes within the industry? The demand for bottled water supports industrial growth, creates employment in its production, transport and marketing, as well as at financial services companies that support such a business.

Would a restriction on bottled water production (through bans, taxes or consumer sentiment) cause a contraction in the local economy? Not at all.

Were this harmful industry to diminish in size the resources allocated to it, such as labour, capital, land and entrepreneurial ability, would be freed up to be channelled into other areas of the economy. From a consumer’s point of view, the money now not spent on bottled water will be spent on other products, hopefully ones that place less of a burden on the environment.

The job of a government as the writer of the laws, and consumers as the source of demand, is to close off the incentives that encourage production of products that are both harmful to the environment and add little extra value to society. As these industries fade, others will grow that are more in line with the demands of sustainability that the economy now requires.

Bottled water is just one of these examples. Others include the use of non-recyclable packaging; marketing through flyers and hand-outs where the same need could be met through other mediums; disposable cutlery and crockery; restaurants handing out a package of sauces instead of customers selecting only what they will use; or products designed for frequent replacement rather than extended use.