TRUE COST PRICING

While the environmental, social and health costs of the current economic model mount, economists carry on with business as usual. But we have the means of measuring the true price of the products we consume.

Cost of aviation
Aviation gives rise to a number of adverse environmental impacts. These include aircraft noise, contributions to local air quality problems and climate change, and other negative effects on townscape, landscape, biodiversity, heritage and water. The British government commissioned a study to quantify these costs, with the following results:

Estimated Environmental Costs of Air Transport per Flight:

B 737-400 £245
A 320 £285
MD82 £350
B 757 £412
A 310 £395
A 340 £3,613
B 747-400 £5,140
B 767-300 £2,499
B 777 £3,804

Source: Department for Transport report “Valuing the external costs of aviation,” 2000


Air pollution generated by food transport
A 2001 Iowa State University study showed that through the conventional food delivery system, the average piece of produce in that state travels 1,494 miles to get to the consumer. Compared to Iowa-based regional and local systems, the conventional system used far more fuel, and released five to 17 times more carbon dioxide into the atmosphere.

Source: “Food Fuel and Freeways”

Cost of industrial farming in Great Britain
A 1999 report from Essex University calculated that British taxpayers spend up to £2.3 billion every year repairing the damage that industrial farming does to the environment and human health. The report’s authors compiled figures from a variety of sources. In 1996, water companies spent £214 million removing pesticides, nitrates and farm pathogens from drinking water. The bill for food poisoning includes an allowance for the victims' lost wages as well as the cost of their hospital treatment. The government agency English Nature calculated that restoring endangered species and wildlife habitats damaged by agriculture costs £25 million annually. The bill of £1.1 billion for air pollution and greenhouse emissions includes, for example, the cost of flood protection as a result of rising sea levels.

Source: New Scientist “Crops without profit,” December 18, 1999


Cost of obesity in the US
According to a 2002 US Surgeon-General report, 61 per cent of Americans are significantly overweight. This obesity generates $117 billion in annual medical bills and triggers 300,000 premature deaths each year.

Source: The Independent “Fast Food Nation: An Appetite for Litigation” June 4, 2002


Cost of agricultural pollution in the water supply
In 2000, seven people died in the town of Walkerton, Canada, when farmland runoff polluted the town’s water-supply with E. coli. The subsequent crisis cost at least $64.5 million CAD overall and individual households had to spend about $4,000 CAD on average.

Source: Canadian Broadcasting Corporation (CBC) “Inside Walkerton: A Water Tragedy,” May 2002


Cost of mad cow disease
Disruptions to the beef industry caused by mad cow scares:

Canada - $3.3 billion CAD
Source: CBC “US tentatively links mad cow to Canada”, December 27, 2003

United States - $6 billion
Source: Spokesman Review, “Mad cow to cost firms almost $6 billion,” February 25, 2004

Europe - €92 billion
Source: European Association for Animal Production report entitled “After BSE,” 2003


Cost of global warming
Private insurers hit hard by global warming costs prepared a report in 2001 demonstrating that more frequent tropical cyclones, loss of land as a result of rising sea levels, and damage to fishing stocks, agriculture and water supplies amounted to a yearly bill of $304.2 billion.

Source: United Nations Environmental Programme, financial services initiative report, February 2001


Cost of air pollution
According to Science magazine, exposure to air pollution affects “death rates, hospitalizations and medical visits, complications of asthma and bronchitis, days of work lost, restricted-activity days, and a variety of measures of lung damage.” A World Health Organization study of France, Switzerland and Austria found that their health costs due to traffic pollution amounted to approximately 1.7 percent of GDP, dramatically more than the cost of treating injuries from traffic accidents.

Source: CNN.com “Traffic pollution 'kills thousands every year' “ September 1, 2000

In Canada, the province of Ontario estimates that air pollution costs its 12 million residents at least $1 billion annually in hospital admissions, emergency room visits and worker absenteeism.

Source: Ontario Medical Association, “The Illness Costs of Air Pollution Ontario” June 2000

And the World Bank reports that in China – home to some of the most polluted air in the world – the deaths and illnesses of urban residents due to air pollution cost an estimated 5 percent of GDP.

Source: World Bank “Urbanization and Urban Air Pollution” in Beyond Economic Growth, 2000

Cost of driving
What would it cost to drive if the price tag of gas and cars included air pollution, road construction and maintenance; property taxes lost from land cleared for freeways; free parking paid for by taxes; noise and vibration damage to structures; protection of petroleum supply lines; sprawl and loss of transportation options; auto accidents; and congestion? A number of researchers have tried to answer this question, and John Holtzclaw of the Sierra Club profiled eight studies that, when averaged, estimated the true price of gas at $6.05 a gallon.

Source: John Holtzclaw “America's Autos On Welfare” Sierra Club

As for vehicles, transportation analyst Todd Litman has calculated that the external costs of driving would add $42,363 to the sticker price of a shiny new car, based on a 12.5 year lifespan.

Source: Todd Litman, “Transportation Costs & Benefits,” June 2004

Here's a comprehensive yet highly readable discussion of driving externalities produced by Redefining Progress:

Source: Beyond Gas Taxes: Linking Driving Fees to Externalities by Mark M. Glickman, March 2001

 

Cost of noise
Don’t think noise has a cost? Check the price of real estate close to a major airport. Another example: the 1.3 million jet skis in the United States impose approximately $900 million of noise costs on US beachgoers each year.

Source: Charles Komanoff and Howard Shaw, “Drowning in Noise -- Noise Costs of Jet Skis in America,” April 2000

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