Knowing What Polluting Companies are Really Worth

There’s a hard problem in the cross-section of economics and environmental science: finding out the real worth of a company after damage to the environment is factored in.

For instance, a company that is dumping toxic waste into a river — yet still following the letter of the law — is causing damage to the health of the environment.

A better company could scrub its pollutants more thoroughly and thus do less damage, but its products might cost more.

How do we reveal the true cost of a product so that a customer can make a wise decision?

I offer three ways: 1) more accurate and different types of testing, 2) the knowledge that in this chaotic world some bad things end up being good in the end, and 3) nonprofits that rate good companies.

1) Local regions deciding to promote their area as more environmentally friendly could develop and use more accurate and different testing methods, so that the amount of pollutants and toxins released by different companies can be better compared.

For instance, more tests of different known carcinogens could show that certain companies are better for the environment.

While these extra data points won’t fix the problem of murky judgments between different toxins (such as one that causes a worse cancer than another), at least it helps.

2) Realizing this is a chaotic universe (fundamentally unpredictable) can help us understand that some bad things (such as wars) end up helping humanity in the end (such as an aversion to future wars).

This is quite a radical viewpoint, even though it’s right.

It’s impossible to know what the end results of an action will be: A butterfly flapping its wings in Brazil can cause a tornado in Texas years later.

In this chaotic way we can never know absolute good or evil.

This is not too comforting a belief when it’s your father that gets cancer and dies because of a horrible company.

But it does offer a bit of a perspective: we don’t know how things will turn out.

As a more concrete example, imagine that an area downstream of a polluting company has 25,000% higher incidences of rare cancers.

This is certainly sad. No one likes loss of life.

Yet a positive way to look at this dreadful situation is to understand that those people dying might spur greater and greater numbers of scientists and researchers to develop cures for these rare illnesses.

We don’t always have to focus on the dark cloud. The silver lining exists too.

3) A more practical solution to destructive companies is to support nonprofits that rate them on their environmental sustainability.

These nonprofits can decide how much worse certain damage is than others.

For instance, is fish death more or less important than human cancer? What about cancer versus birth defects?

The list goes on and on, and it’s easier for different nonprofits to make these complex judgments than for governments or individuals.

Then the nonprofits can put their seal-of-approval on the best companies and those companies can promote that their products are the greenest.

As people become more environmentally conscious, they will be willing to pay a little extra for a sustainable world.

These three strategies: developing more accurate and different types of testing so companies can be better compared, looking for good that can come from bad situations, and supporting nonprofit efforts that rate companies, can be helpful in developing a healthier world.

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