True Cost Economics is all about finding the hidden costs and benefits of things. True Cost Economists try to identify and calculate what are called "externalities" and give a clear idea about the full impacts that something might have on people, the planet, and the economy.
To give you an example, let's imagine us sitting is nice cozy pub sipping a pint of beer - specifically, let's imagine us sipping a mouth-watering Guinness. Now, while Guinness is made in Ireland, through the astounding abilities of the global economy, we can enjoy our Irish-made beer here on the west coast of British Columbia. Amazing and wonderful!
However, there is a dark side to this beer. On it's journey from Ireland to our table, our litte pint of beer has done some dastardly things. On it's trip by ship, train, and automobile, it has released some Greenhouse Gases (about 800g to be exact), Nitrogen Oxides (8 grams), Particulate Matter (soot - 1 gram), VOC's (nasty! - 2 grams), and some Sulfur Oxides (0.5 grams). All this pollution for one little beer!
As we all know, pollution ruins crops, makes cities nasty places to live, and is bad for our health. So all this pollution that our little beer made isn't just bad for the planet - it's also bad for the economy. One pint of Guinness causes about 40 cents worth of damage to the global economy.
True cost economics is not about digging up dirt on certain products - it's about providing information on the true impacts of economic activity - be they good or bad. An example of positive externality would be a beekeeper that keeps bees for their honey. A positive spin-off is the increased pollination of surrounding crops by the bees.
Check out the Local Food Directory to discover full costs associated with other foods. For a detailed explanation of how we calculate the externalities associated with the above Guinness and other foods Click Here
Some things that Full Cost Economics can do for you
- Explain the full impact of a product or economic activity.
- Tell you how much something should cost if all impacts where taken into account. (Hint: Gasoline would be more expensive - Honey would be less)
- Better assess alternatives when there are hidden costs and benefits involved.
