Timber has a price, as do coal and oil. Fish in the supermarket do too, but does a living fish have a price? To include monetary environmental values in considerations associated with the production of goods and services is still a bit ahead of time, but already today businesses and government agencies are following the topic with interest.
– The cost of environmental damage and the extraction of natural resources is not very well regulated in legislation. It seldom costs consumers or producers anything to take from nature, but depletion of nature always has a price, even if someone else has to pay, says Maria Lindblad, environmental economist at IVL Swedish Environmental Research Institute.
She has just completed a project which has updated a method for so called environmental pricing. A price list of costs associated with environmental damages would make it meaningful to close the cycles and create incentives for technology development. Virtually all natural resources, from clean water and rare metals, to farmland and predators, are priced in the method, all valued in euros.
– In order to include socioeconomic values in the innovation process, and get paid for them, these values need to be translated into economic terms. The aim of the project has been to clarify the economic value of good environmental performance, says Chalmers Professor Bengt Steen, who developed the EPS Method - Environmental Priority Strategies - in the 1990s.
But can you really put price tags on fish, birds and everything in between? Isn’t the environment too valuable for that? That's a sensitive question. In any case, the environment should not be free, and now it is time to start paying for withdrawals from our common natural capital, Bengt Steen says.
– The issue is becoming more and more important. We also see an increasing acceptance for costs like these. What matter most for companies are long-term rules and regulations. Environmental pricing is not even as controversial as it sounds. We already have an acceptance for similar environmental costs, such as the carbon dioxide tax and the EU-ETS emissions trading system.
The major challenge lies in harmonizing the pricing between countries in order to avoid a distorted market. Therefore the project has initiated an ISO standard, ISO 14008, which functions as a framework and a common language.
The EPS method is available now as a beta version on IVL's website and will eventually be commercialized. IMP - Integration of environment and economics in product development provides innovation opportunities, has been carried out through the Swedish Life Cycle Center and is financed by Vinnova. Four case studies have been conducted by the companies that participated in the project: AB Volvo, Akzo Nobel and SCA.