True price
True price, in the context of Life Cycle Assessment (LCA) and sustainability, refers to the comprehensive cost of a product or service when both its direct and indirect impacts on the environment, society, and economy are accounted for. This concept extends beyond the conventional market price to include externalities, which are the costs or benefits that affect a party who did not choose to incur that cost or benefit. The true price aims to reflect the real cost to society and the environment, thereby encouraging more sustainable consumption and production patterns.
Examples of True Price in Sustainability
Carbon Footprint: Carbon emissions contribute to climate change, imposing significant costs on the environment and societies worldwide. For instance, the true price of a product that generates high levels of CO2 during its production, use, and disposal would include the costs associated with these emissions. These costs could cover the impacts on public health, environmental degradation, and economic effects due to climate change. An example is the “environmental cost indicators” used in the Netherlands, where a standard price per LCA indicator for Carbon Footprint is applied (e.g. €0.05 for every kgCO2eq emission). This approach internalizes the environmental costs of CO2 emissions, making products that cause higher emissions more expensive and thus less attractive to consumers and producers focused on sustainability.
Material Use (Waste): The true price of products also considers the environmental and social impacts of material use and waste. For example, the lifecycle cost of plastic, as highlighted by the World Wildlife Fund (WWF), significantly varies between low-income and high-income countries. This discrepancy reveals the inequities in the plastics value chain, where the environmental, social, and economic burdens of plastic waste disproportionately affect poorer nations. The true price of plastic products would incorporate these broader costs, including waste management, environmental pollution, and its cascading effects on communities and ecosystems.
Importance of True Price
Incorporating true price into decision-making processes helps highlight the hidden costs of environmental degradation and social inequities. It encourages businesses and consumers to opt for products and services that are truly sustainable, not just in terms of immediate financial costs but also in their long-term impact on the planet and society. By doing so, the true price concept supports the transition towards a more sustainable and equitable global economy.
The movement towards recognizing and integrating the true price of goods and services is gaining momentum, with initiatives like environmental cost indicators for LCA indicators in the Netherlands serving as pioneering examples. These efforts underline the crucial role of comprehensive environmental and social cost accounting in achieving sustainable development goals.
