The environment: Pricing the “priceless”

Lolonomics - Abusin' Externalities
Image by spatulated via Flickr

As I wrote about in an earlier blog entry, one of the ironies of living in a market based economy is that “if you truly believe something is priceless, you need to be prepared to put a price on it.” You can rail against the injustice and preach the unfairness of it all, but the big wheels of the economy just keep grinding away and blissfully ignoring you. The hard-wired logic of the capitalist machine dictates that no price at all means it is a free good, and so treats it as a value-less input/output. Unfortunately, this is quite the opposite of what we think we mean by stating something is “priceless”.

And so I present a modest proposal for “pricing the priceless…” which is intended to provide specific pricing signals to businesses. This in turn leverages the profit incentive to drive their businesses in a direction that is beneficial to society’s desires (cleaner air, cleaner water, better health, etc.). I’ve pulled this proposal together over the past few months and packaged it up as “Pricelist 2.0 Framework”. You can access it here — Pricelist 2 Framework 9-Apr-2011

Essentially it is a proposal for a global pricing framework for pricing agreed externalities by setting global pricing and also allowing for regional (local) discount structures. This is a model which I have adapted from how global corporations manage global price lists, but I believe it is a “new” idea when applied to externality pricing. The example I use in the document is CO2 pricing, as we have been debating the merits and pitfalls of that for the past couple of decades and so it is reasonably well understood at this point. However, I believe the framework presented can be utilized for ANY externality (whether environmental or social) where there is a critical mass of support for minimizing the externality at the global level. So the framework is equally valid for CO2 and Water as it is for Obesity and Type 2 Diabetes. The big “gotcha” is that there needs to be some level of agreement around the externality being traceable to a specific input/output in our economy.

At this point I have this document out for selected review/feedback from various research and advocacy groups; as readers of my various “musings” I would like to get your feedback. All comments and thoughts are much appreciated, and if you want to get involved with me on this or have suggestions on people/groups I should contact to help get some traction with this project, all the better…!!

Thanks all.

3 thoughts on “The environment: Pricing the “priceless”

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