The current price of plastics does not incorporate the negative impacts resulting from their production, consumption, and disposal. In this blog post, we discuss the true cost of plastics and present economic instruments to enable conscious corporate decision-making.
Allocating a price to plastic pollution is easier said than done. Understanding the market value is one thing. But what about the true cost of plastics’ negative impacts?
In many countries, recycling is not a viable, cost-effective solution. As a result, hundreds of cities in the U.S. have suspended their recycling programs. Oftentimes, plastics are shipped abroad, landfilled, or incinerated at the end of their lifecycle.
A recent study by the WWF and Dalberg reported that the market price of plastics should be 10x higher due to the damage it imposes on our society, environment, and economy. It is clear, the incentives are wrong.
This blog post summarizes how business leaders can quantify the true cost of plastics and presents economic instruments to enable conscious corporate decision-making.
Drivers of the True Cost of Plastics
1. Environmental Impact
Plastic pollution has a considerable impact on biodiversity and wildlife. Due to ingestion and entanglement, plastics are causing extensive harm to birds, fish, mammals, and turtles, to name a few. Coincidently, the effects of toxin leakage from plastics and its additives are still widely unknown, but they are finding their way onto dinner tables worldwide.
Additionally, plastics are the perfect habitat for algae and bacteria to colonize, increasing their range and abundance.
Furthermore, the presence of plastics has the potential to alter the ecology of marine systems dramatically. A changing environment and shifts in biodiversity can have potentially far-reaching and unpredictable secondary societal consequences, not the least of which is compromising the resilience and recovery potential of ecosystems in an era of global change.
2. Social Impact
The production and end of life treatment of plastics have hazardous consequences to communities across the world. For example, inundated by petrochemical plants, St. Gabriel, Louisiana, is commonly known as “Cancer Alley” due to the overwhelming number of community members suffering miscarriages and dying of cancer.
Moreover, marine ecosystem services contribute extensively to the well-being of coastal communities. Plastic pollution is threatening their well-being and way of life. Specifically, the marine plastic epidemic is damaging the abundance of fisheries, aquaculture, and raw materials for agriculture, cultural heritage, and recreational experiences.
The lifecycle of plastics poses a massive threat to the well-being of human health and is predominantly borne by low-income communities. Thus, the plastic epidemic has become as much of a human health crisis as a human rights issue.
3. Economic Impact
Coastal economies are profoundly feeling the effect of plastic pollution. Marine litter affects vital industries such as fisheries, aquaculture, tourism, commercial shipping, and local coastal governments. The economic costs associated with marine debris can be direct (i.e., cleanup activities and potential loss in economic value) or indirect (i.e., impact on biodiversity and ecosystems).
Coastal tourism is a staple for many coastal communities, specifically Small Island Developing Nations. However, as plastics inundate beaches and threaten biodiversity, local cleanups can only do so much to assuage the issue; upstream plastic action is an immediate necessity.
What Can Business Leaders Do?
Plastic pollution is a complex problem. Global collaboration is the first step to accelerate meaningful positive change. Unfortunately, governments have been slow to action policy, and consumers are subject to cognitive dissonance.
Consequently, business leaders have an essential role to play. By establishing systems to pivot the incentive structure, corporate action can become the driving force to turn the tide on plastics.
Pricing Plastic Pollution
A practical first step is to institute an internal price on plastic pollution. This price can then factor into investment decisions and business operations.
Setting an internal price on plastic pollution can incentivize companies to shift investments to circular, low-carbon alternatives. This shift can help businesses create resilient supply chains, gain a competitive edge, and showcase thought leadership.
An internal price on plastic pollution can take different forms:
- Internal Plastic Pollution Fee: Assign a monetary value on each ton of mismanaged plastic waste. The fee is taken out of the relevant profit center accounts and repurposed to fund corporate initiatives that combat plastic pollution.
- Shadow Price: Establish a theoretical price on mismanaged plastic waste. The price can help support long-term business planning and incentivizes investments in circular initiatives. We recommend using a shadow price higher than current government levels (where EPR schemes exist) to prepare for more stringent regulation in the future.
- Implicit Price: This is based on how much a company spends on taking action against plastic pollution and/or the cost of complying with government regulations. For example, it can be the amount a company spends on recycled material purchases or compliance with recyclability standards. For some companies, an implicit price can set a benchmark before formally launching an internal price on plastic pollution.
Forming a Holistic Plastic Action Strategy
By setting the right incentives, decision-makers will have the resources they need to enact conscious decisions. However, putting a price tag on plastic pollution is most meaningful if embedded in a company’s business and sustainability strategy. Combined with a holistic circular economy strategy, an internal price on plastic pollution can kickstart urgently needed environmental action.
Don't Let Perfect Be the Enemy of Good
Current research assigns the cost of plastic pollution at ($3,300–$33,000 per tonne of marine plastics per year). Yet, the caveats are clear: the current research landscape still has to evolve to enable a precise valuation of the negative impacts of plastic pollution.
Unfortunately, we do not have the time to wait as the negative impacts of plastic pollution are expected to exacerbate. So, instead, let’s create accountability and transparency today and refine our methodologies and models over time.
Ampliphi is here to support you along the way. Our plastic footprint management platform helps you measure your plastic footprint and set an internal price on plastic pollution. This initial baseline assessment will help design your planetary action strategy without breaking the bank.