Combating External Costs of Overconsumption

Andrés Patino NRC

Lauren Thistle EnvirSci

Hannah McDonald NRC

Without giving it a second though, most people throw away items on a daily basis.  Americans in particular, have a lot of ‘stuff’: trinkets, last year’s clothes, that old iphone, broken CDs, used electronics, and many other unnecessary items. After a short amount of time, many of these items get thrown into the garbage, but where does it all go? Some end up in landfills. Many of these items also end up getting blown away into back yards, transported to other countries, and leak into water sources that eventually lead to the ocean. There is even trash debris floating around in the middle of the Pacific Ocean, estimated to be twice the size of Texas (“How Big Is the “Great Pacific Garbage Patch”?”, 2013)! These chunks of debris known as the “Great Pacific Garbage Patch” are a trash vortex that is a direct result of our consumption habits. The garbage ends up inside of birds, fish, and other wildlife that consume it, mistaking this ‘stuff’ for food.

This process could be seen as your ‘ecological footprint’, a concept that tracks consumption habits and how much of an impact we have on the Earth. What if I told you that your footprint is much larger than you think, and harms not only the Earth but people too? Imagine that the water from your faucet is undrinkable; your job is to burn and sniff different types of plastics and metals to recycle them, getting paid only cents each hour; and your air is so smoggy that you have to wear a mask to work. These are some of the hardships that affect people worldwide, as a direct result of our large consumption habits. How about that little trinket on your nightstand, or that bottle of lotion you got for the holidays? Have you ever wondered where these things are coming from or going to? And why did you only pay 5.99 for it? Does that price actually reflect the energy and resources used to extract those materials or getting it all the way to the aisle where it was purchased it from?

Consumer Culture

The problem with the previous scenario is that not all of the costs are being accounted for in the current system of consumption. All along the production process from extraction to consumption and finally to disposal, harmful effects of consumer culture are burdening us and the world around us. America has about 5% of the world’s population, but uses “one-third of the world’s paper, a quarter of the world’s oil, 23 percent of the coal, 27 percent of the aluminum, and 19 percent of the copper” (Scheer, 2012), which result in processes of extraction that have detrimental effects on the environment. This is the terrible reality we must face: we are using up most of the world’s resources from food, fuels, fiber, and minerals faster than ever and polluting the planet while doing it.

To make matters worse, there isn’t a system or concrete solution to help battle these consumption processes. Even recycling is inconsistent, not widespread, and isn’t necessarily efficient at repurposing materials. Instead, recycling can be viewed as a process called downcycling where plastics and other materials like aluminum are melted down. The materials decrease in quality and usability throughout this process (Braungart, 2002). Furthermore, the trash ending up in landfills produce a product called leachate. Leachate is a toxic water-based substance that accumulates in landfills by coming in contact with materials like food, plastics, and metals. Leachate leaks into groundwater and acts as a source of pollution, especially in older landfills. Incineration is also not a clean or sustainable method of managing our waste. Imagine all of your ‘stuff’ going up in flames; some incinerators are used as power plants and have filtering mechanisms, but are still known for emitting terrible pollutants into the atmosphere (Crowley et al. 2002). These are clear costs to the environment, to people who bear the consequences of polluted air and dirty water, and to economic systems that waste useful materials. These are costs that are not fixed into the price of our material items, also know known as externalities. As we start accounting for external costs and ways to combat them, we must also find ways to change the system in order to encourage people to consume less and consume better. However, before we start thinking of ways to change our consumption, we must first understand the systems in place.

Designed to Fail

Planned and perceived obsolescence are market strategies for designing products used by companies in order to make revenue and are the current foundation of the materials economy. This strategy is a major cause of the present materials economy because it encourages increased waste and continuous product development. Planned obsolescence is a strategy in which manufacturers design a product so that it has a short life cycle through tactics including death dating, limited repair, and gradually declining aesthetic use. As a response to perceived obsolescence, consumers feel obligated to buy newer versions of the same product, buy new products rather than repair them, and replace perfectly functioning appliances when they are aesthetically worn (Guiltinan, 2009, p. 20). Due to this strategy of designing goods to fail, Americans are buying and trashing goods unnecessarily to get the next new thing. Choi (2012) states “people are constantly being  ‘bombarded with messages encouraging materialism, self-centeredness, consumption’.” (p. 269). The combination of a marketing system that is designed for maximum waste and advertisements that encourage over consumption, are some of the key components behind our American materials economy.These are the central aspects we must work to change, if we hope to move forward to a more sustainable system of consumption.

Another contribution to the problem of a fast-paced materials economy is that there is a lack of responsibility associated with the manufacturing and disposal of products. Producers manufacture goods and consumers buy them; their ultimate destination is the trash. This is called an open-loop production system, one that does not assess the lifecycle of the product and pushes useful materials into the trash to become pollutants. The result is a system where materials move from extraction to production, distribution, consumption, and disposal with costs displaced on the interactants all along the way. Some examples of this include communities who are faced with stress, disease, public health problems, environmental degradation, and the burdens on future generations. People all over the world, including women of reproductive ages, are handling products that contain carcinogens and chemicals that mimic hormones (Leonard, 2010).  In some cases, whole cultures can become extinct because industries are not paying for the costs of their pollution to the surrounding communities (Leonard, 2010, p. 245).

The possibility of communities being completely ruined by these externalities, shows the importance of holding industries accountable for their impacts on the environment. There are environmental justice movements that are working towards anti-toxic campaigns and finding alternative solutions to the current disposal methods. These movements, which are mostly led by working-class and indigenous people,  are taking action to speak out against corporate polluters who place most of their hazardous waste and treatment facilities in poor and minority communities (Conrad, 2011, p. 30). There is an emerging concern for environmental justice as more people become aware of the inequity and the poor environmental conditions which often lead to health problems in low-income areas. As consumers, it is our responsibility to alleviate this injustice and reduce the burdens being placed on third parties.

Products are being shipped around the world and across the country, a process powered by fossil fuels. CO2 emissions are a main factor in global climate change, affecting the Earth, economy, and social systems. All of these negative impacts are not reflected on the price tag of stuff, which is why we propose a movement to internalize externalities. Leonard (2010) argues that “the failure to account for externalized costs encourages excessive consumption and unfairly leaves others to pay the full expenses of their operations” (p. 245). This shows that the free market and open loop production system are not keeping processes in balance. These social, economic, and environmental costs which are not accounted for in the present open loop production system, can be mitigated by encouraging producer and consumer responsibility while moving from a materials economy towards a closed loop production system.

The Social, Economic and Environmental Burdens of Consumerism   

It is clear that practices of over consumption are becoming the norm in the modern American system. For example, Conrad (2011) notes that “The Consumer Electronics Association estimates that U.S. Americans own approximately 25 electronic products per household” (p. 348). With these many products, it is inevitable that much of it is thrown away either in landfills or sent abroad. This causes environmental harm and when sent overseas shifts the health issues elsewhere, creating a social injustice. Conrad (2011) quantifies this social injustice because “it appears that at least 20 percent of all electronic waste is shipped abroad to be ‘recycled’ by makeshift recycling hubs in China, India, Ghana, and Nigeria“ (p. 348). Twenty percent makes up a huge amount of waste with which we are imposing and burdening other countries. Sending our electronic waste abroad is socially unjust because it puts the health burdens from toxic wastes of electronics to poorer communities who have limited sources of economic opportunity. Shipping our waste out of sight, out of mind is not the way to improve the problem.  In order to achieve equity, America must curb overconsumption by taking responsibility for our actions. In doing so, producers and consumers can be held accountable so that this system does not continue to harmfully affect less developed countries.

Extraction Burdens

The lack of account for externalities is also a problem facing extraction processes for resources. In many sites of extraction, there are laking regulations requiring that the land be recovered afterwards. This is a problem because the companies extracting resources are getting them at a cheaper cost then they should be since they are not held accountable for their negative impacts to the land. For example, the Ajkai Timfoldgyar aluminum-processing plant in Hungary collapsed in 2010, causing the release of 184 million gallons of highly alkaline red mud to nearby towns and the large Danube River, causing eight deaths (Than, 2010). In this situation, there were not only huge environmental costs from the spill, but human life was lost. Another example of the environmental costs caused by companies but not accounted for is a situation in Kivalina, Alaska. The village of Kivalina sued 24 companies that extracted fossil fuels on their land for destroying their home. They claimed that the companies caused climate change which eroded the thick sea ice that previously buffered them from storms, and that the island would be underwater by 2025 (Minoff, 2015). In this case, these villagers are going to be forced to relocate and watch their old homes submerge underwater due to the actions of fossil fuel companies who are not held accountable for the damage they are causing to the environment. These examples display the problem with the present production system. Starting with extraction, these external costs are not accounted for by those causing them, but end up being a burden on communities such as Kivalina.

Economic Downfalls

We can define economy as the wealth and resources of a country or region, specifically in terms of the production and consumption of goods and services, or careful management of available resources. Consumption is defined as the use of a resource. Our consumptive habits are dependant on globalized resource use. When these resources are depleted or polluted, it creates an economic problem. Materials are coming from all over the world and being disposed of improperly. Energy and useful materials are displaced into landfills, incinerators, or simply in the ocean or one’s backyard.  As mentioned above, black markets emerge around the recycling of electronic waste because there is not an efficient system to help repurpose these useful materials (Watson, 2013). This is not a product of a healthy economic system.

This open loop economy has long term implications. BBC released an article containing the Global Resources Stock Check. Antimony is used in drugs and batteries, and only has an estimated 8-year supply on the planet (“Global resources stock check”, 2012). Profit margins shrink for any given commodity as its respective resource stock is depleted. Environmentally speaking, it is obvious that it is harmful to extract and dispose of the Earth’s available antimony reserves. Where do we draw the line of extracting our last bits of antimony even if the cost exceeds the profit of selling it, and making the whole system economically unsustainable? One may argue that humans have already crossed that line. There are trace amounts of cryolite, for example, a mineral used in processing aluminum, but in 1980 the reserves were “too small to justify the expense of a mining operation at current prices” (Palmer, 2010). A report from the US Academy of Sciences also showed that as elements such as  platinum, copper, and zinc are being rapidly depleted, they are more likely to increase in price. (Cooper, 2010, p.19).

The high demand for products therefore increases the number and degree of externalized costs along the product’s lifecycle.  In the long run,  producing an item that lasts longer and contains replacement parts will cost less and generate less waste (Cooper, 2010). At this rate of production and disposal, resources on which we are dependent will be scarce and expensive where even the most economically advantaged producers will be facing the consequences of the rapid resource depletion and consumers will be paying for it. There needs to be a system in place that will help displace these foreseen tragedies and make sure that resources are used wisely and sustainably.

Extended Impacts

Overconsumption and our modern economy marked by consumerism have many negative social impacts. People in America on average work more hours in a typical day than residents of other countries, contributing to increased buying and trashing of products (Leonard, 2010, p. 246). If Americans were to work less, they would earn less money that would reduce the over consumption of goods and waste of materials that is leading to negative environmental impacts. Not only would it improve the environment, but it would also lead to increased happiness because it would give people more time to spend with their families and communities. Leonard (2010) notes that working less would make people happier because studies show people who spend more time with family and friends are shown to be happier than those who receive a marginal pay increase to use for buying more items (pp. 246-247). This study supports that there is a disconnect between social beliefs and habits surrounding consumption, and that our want to have all these things isn’t necessarily benefitting us.

A Sustainable System is Possible

A proposal for combatting externalities is through Extended Producer Responsibility, a system of recycling in which companies that create the products or packaging are also given the responsibility of tracking the waste. This EPR notion is becoming a rule in Europe and expanding all over the world, but is facing resistance in the United States due to powerful lobbies of corporations who are in opposition (Motavalli, 2011, p. 24). An example of EPR in effect in the U.S. is the bottle bill, which is a deposit system for bottles and was run by collection centers maintained by producers. Maine is a state excelling in EPR by initiating producer stewardship for electronics and batteries, saving the state up to $3 million annually (Motavalli, 2011, p. 24). Maine’s implementation of extended producer responsibility is an example of the economic benefits that can result from a movement towards a closed loop system.

Not only does the use of extended producer responsibility have economic benefits, but it also has environmental benefits. The Product Policy Institute helps to take back end-of-life TV’s and electronics while putting the responsibility for recycling them on producers. These policies help to handle lead-acid batteries, mercury-containing automobile switches, and thermometers that prevent hazardous products from getting into the environment (Motavallo, 2011, p. 24).

Green Taxes

Green taxes are another example of a market-based approach for internalizing externalities. Though one may argue that this could increase initial production costs for companies and we conclude that this is necessary. Depending on the product life-cycle, the externalities along the way should dictate how much more the producer and consumer will pay. This will incentivise companies to produce better quality goods using better methods and materials, creating competition in the market and stimulating economic growth. A study conducted by Bowerman and Markowtiz (2012) shows that in Oregon, there is a general trend where residents and policy makers are agreeing that Americans should consume less. The problem is that consumption is a habit and products are designed to break. Incentivising companies to redirect their energy into more durable and intentional products while imposing taxes on irresponsible behavior will help move the trend towards a sustainable closed loop system of production.

A cap-and-trade program is an example of this. They reduce greenhouse gas emissions from factories by setting limits on emissions and providing tradable allowances that are surrendered at the end of a compliance period. In a cap-and trade program, any additional emissions not covered by the given allowances are paid by the producers, or alternatively purchased from companies who are more efficient and may have extra allowances (“California Cap and Trade,” 2014).This is a great example of how to control pollution from factories and encourage a close-loop system to reduce waste. Changing this system will not hurt the economy but will create new jobs that focus on more sustainable practices like extracting materials from our used items in a safe and healthy manner. “Successful cap and trade programs reward innovation, efficiency, and early action and provide strict environmental accountability without inhibiting economic growth” (“Cap and Trade,”2012). The revenue created by these efficient practices could be used in many ways including further research of sustainable practices that would reduce a company’s ecological footprint.

This is not the most efficient plan as a lot of waste is being produced and many environmental problems aren’t being taken into account in the overall cost of production. Reducing the production cost would result in a decrease amount of waste. Although it may seem counterproductive for a company, it is also in their best interest to do so. As production decreases, the amount of waste being sent to landfills or incinerated will also decrease. Companies could reduce their disposal costs by recycling more materials. Incentives will arise where companies can grow along a product’s life-cycle. These middle companies can sell recycled materials and create room for localized business to bloom that can in turn benefit the local economy. This reduction of landfill space can be used for other development that can provide revenue for the companies to make up for the decrease in production.

Some companies already picked up on this opportunity around a waste heavy system by capturing resources where they would be otherwise lost in the open loop system. Terracycle is a company built on this niche by reusing, recycling and upcycling trash. In 2013, the company was shown to have $15 million in annual revenue by creating a thousand unique products generated from 1 million pounds of garbage every month (Widjaya, 2013). Terracycle’s success shows the incentive behind innovation by making use of easily discarded materials. Terracycle is in effect closing the loop of consumption.

Cradle-to-cradle Design

A proposal for moving towards a closed loop production system would be through cradle-to-cradle design techniques. Cradle-to-cradle design is a system in which materials circulate so that production is safe and waste free. To assess the product, one can look at its recyclability and ability to decompose, its toxicity for human and ecological systems and potential for disassembly for remanufacturing (McDonough et. al 2003). McDonough et. al even go as far to say that this principle can be applied to the production site, connecting employees to their surroundings with clean air and habitat, restoring native species. This mode of production provides economic benefits too. Green roofs can cost-effectively filter water, using $35 million less than conventional water treatment systems (p. 440).

Cradle to cradle design can work in favor for businesses as well. Braungart et al. (2013) describes these benefits through the use of recycled materials. Inputs are cheaper and production costs decrease because of cleaner liquid waste discharge, also a positive impact for the environment (p. 3). This design technique can be extremely beneficial in preventing waste from entering the environment. In open-loop systems, 90 percent of the material extracted ends up as waste. However, using a cradle-to-cradle design in a closed-loop would generate no waste because every material is used as an input for new production (Braungart et al, 2013, p.3). If goods are manufactured to disassemble or be effectively recycled, production costs will eventually decrease especially as resources dwindle and are harder to extract.

Producer Responsibility

In order to combat the damaging materials economy, it is necessary that the externalities along the open-loop system are taken into consideration. Accounting for them should be the ethical responsibility of businesses because external costs are a product of business practices and strategies that encourage over consumption. These companies don’t necessarily pay for those costs and instead, other systems get damaged such as community and environmental welfare (Guiltinan, 2009, p. 20). It is also questionable whether or not consumers have proper places to dispose of their products. There are many ways that the production system is already transforming to a more sustainable process, especially as designers are becoming more innovative and environmentally aware. Sustainable and ethical design practices such as replaceable subsystems in products, design for the environment, life-cycle assessment, and environmental effect analysis are emerging to help in sustainable design for producers to implement (Guiltinan, 2009, p. 24). These more sustainable designs are also becoming more demanded by consumers as more environmental awareness increases to showcase the negative impacts of excess waste. These pro-environment designs are also being given higher priority for firms because they are becoming more cost-effective to adopt.

Just because a process is more efficient or environmentally friendly however, doesn’t indicate it’s soundness as healthy or sustainable. There is actually a lot of misinformation concerning the health, safety and responsibility associated with products (The sins of greenwashing home and family edition, 2010). Companies are using words such as ‘natural’ and ‘green’, claiming responsibility without proving it, or just displacing the harm when in reality, a ‘fuel efficient SUV’ is not really a solution to the problem because resource consumption and pollution are still prevalent in their existence. These materials may be less bad than conventional products, but most of them are still designed to be a part of the system that encourages open-loop production and externalized costs (Braungart & McDonough 2002). Designing products that are biodegradable, built to last, and empower communities upon their production are some of the best ways to stimulate innovation and move true green products to the front of the supply chain. Incentivising companies to do so with taxes or filling in the holes of the open loop system can work in conjunction with consumers’ rising demand for green products while strengthening communities around innovation and product longevity.

In order to achieve a better social system where people could work less and avoid that from negatively impacting their careers, a movement towards mandatory vacation time, career advancement with part-time work, and job-sharing program policies should be utilised. If working less was a gradual change, then the labor market would slowly decrease as consumer demands dwindle and would not disrupt the economy. People would be inclined to keep maintenance of their things, creating jobs for people who have the skills to do so while encouraging future generations.. This movement of valuing time over possessions would be beneficial to the environment, social systems, and economy by increasing happiness levels and reducing consumption to result in more sustainable lifestyles.


Implementing new economic systems to move towards more sustainable methods of consumption is necessary for the well being of the planet and its inhabitants.“To create more sustainable societies and economies, we will need to change much more than … the prices we attach to things. It [will]  require… a change to our ‘software’: our values, perceptions, habits and the  way  that  we  think” (Cooper, 2010, p. 244). Even with the given challenges, there are a plethora of opportunities in incentivising closed-loop production systems. Americans need to consume less. With an increase in quality of material goods and a healthy life cycle analysis, we can move towards a sustainable, regenerative future. It is hard for people to their change attitudes towards consumption given its habitual nature, but Americans are increasing awareness around their consumptive behaviors. There is no simple solution and actions will need to be taken on multiple levels from individual choice to government intervention to implement thorough change. This will be a slow process, but change is necessary. Companies are producing ‘greener’ products, but it is important to acknowledge that this is still within a system of ‘being less bad’. Our motive is to be good to the planet and by reframing the environmental, social and economic implications of consumption, we can move towards a prosperous and healthy future for all.


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