Buy in to the 'Green Star'!

Buy in to the 'Green Star'!

Ganga Prasad G. Rao
http://myprofile.cos.com/gangar


What does it take to turn the world green - I mean, without poisoning our air, water, and land with toxic residues that perpetuate across time, accumulate in the food chain, reduce sperm count and infiltrate in to mother's milk and foetuses? Food, vegetables, fruit, even opaquely-packaged drinks with preservatives/pesticides and colours that negate any nutritive value they might contain (despite the detailed risk-analysis prepared by the consultant who was compensated with a free 'day-old, returned' Mercedes by the industry!). Toilet cleaners that, going by the composition, smell and color, are likely to turn the Pacific Ocean barren of life. Or, cadmium-doped, brightly colored plastic bags that poison the land they litter (and turn it eligible to receive EPA's Superfund monies! Phew!).

To answer the question, not much. A strong political will, a few economists who will not sell themselves to the devil, and political strength where it matters most – on the floor of the legislatures and at regulatory bodies. I am no expert on the matter, but I do know conventional hazardous consumer products rule the lion's share in the market on account of their scale-derived competitive advantage over competing environmentally-friendly products. In a market where consumers are more conscious of their purses than the impact of their decisions on their children's health, and on the environment we are leaving for them, a few pennies, cents, and paises make the difference between environmental sustainability and a doomed planet. True, there already are environmentally-friendly consumer products. They are costlier – some because they were designed environmentally friendly, others because the constituents are naturally rare and must be specifically grown to manufacture the product. The bottom line? We have a situation where the toxic, but cheaper products attract a huge demand and not because they do not compensate the environment for the damages imposed. Economists call this an externality – wherein one agent, here the producer, undertakes socially sub-optimal private decisions because it is in his interest to minimize cost and thus maximize market share by not taking cognizance of the damages imposed on environment (and public health).

Conceptually at least, a solution is easily designed. Any policy wonk worth his salt would recommend a pigouvian tax equal to the marginal damage imposed by the consumption of the incremental unit as the appropriate incentive to induce manufacturers to internalize environmental damages resulting from the consumption of their products. A tax increases the price paid by the consumer, the margin of the producer and induces both a reduction in consumption and production of the environmentally damaging product. The environmentally damaging product turns relatively costlier to produce and to consume relative to the environmentally-friendly product, thus achieving the objective of the tax.

So, where's the catch? As always, the devil is always in the details. How do we determine which product is bio-degradable and to what extent? Who measures the marginal damage to public health and environment from the various toxic products in our daily life, and how? Let's not pretend. The task is physically unpractical and economically infeasible. Does that mean we don't tax the 'dirty' products? No; where there is will, there is a way. There already is a 'green square' on vegetarian food items on the shelves. Why not a 'Green Star' stamp on bio-degradable consumer products (excluding/including the packaging)? The Government could license the 'Green Star' emblem for bio-degradable consumer products after due certification for which it receives a modest fee. The 'Green Star' stamp would inform consumers, who don't have the time, or the glasses, to read the fine print, as to the bio-degradability of their product. (For those of you who are finicky, the Green star could be further labelled A1, A2 A3....D1, D2, D3 to signify products with different biodegradable contents and 'bio-degradability half-lives', A1 being the most and early bio-degradable product, and D3 being the least and last).

Labeling completed, what we need next is a substitute that mimics a calibrated tax. If environmental damages are assumed proportional to product mass, a weight-based tax could be a reasonable basis for levying the tax. Calibration comes next. Do we tax 'non-biodegradable' products on a linear basis? on a slab basis? Or, on some 'volume/mass-discount/premium' basis? The answer lies in the damage function of product packaging and product constituents – another unknown piece of information. Let's settle for a weight-based tax, say, 2 paise per gram, or twenty rupees a kilo. Such weight-based tax is more onerous on low-priced products than it is on the higher value products – not a bad idea in a market dominated by low-priced, environmentally-inferior consumer products. This turns the environmentally-friendly product relatively attractive to consumers, and increases its market share relative to the environmentally-damaging product. True, the tax is arbitrary, but it is a start nonetheless. Over time, this 'tax-cum-labelling' policy brings about a real shift in consumer taste and shopping patterns, in turn inducing producers to switch to bio-degradable products. A reduction consumption of non-bio-degradable products translates to lesser damage to public health and the environment. Ain't that what we seek?

I emailed this suggestion to the government many, many months ago, if not in this detail. A witness tells me an 'almost-new' Mercedes blew away the paper as the printer spit it out. Lemme know if the Mercedes happens to drive in to your town!!!

ps: And the Green Square shined in the reflected glory of the Green Star (or was it the other way around? Let's find out, shall we?)