At the World Resources Forum (WRF) in Beijing, all environmental experts agree on the fact that today we need to take actions to tackle the problem of resources scarcity. Problematic, however, is to pinpoint who should lead the change.
Prof. Munashinghe, the 2007 Nobel Peace Prize winner, gives a very pragmatic answer: “ Market share is the key element to understand where governmental policy should focus.” If the market has oligopolistic characteristics, policy actions should focus on the supply side. In an oligopsonic market, the opposite policy maker should take actions on the demand side to make the consumer aware about possible solutions path for the environmental issue. This solution is very important because it give a simple tool for policy maker to focus their strategy on the right market actors and therefore gain in efficiency.
Relying only on government policy is not enough to raise awareness however. The market requires information to make decisions that employ a sustainable perspective. Labelling is a key tool that can simply provide this information to decision maker. The end consumer can use this information during the purchasing process, a force whose fury is often overlooked. But Prof. Yuichi Moriguchi, Director of the Centre for Material Cycles and Waste Management Research, reminds us of the power that labelling can also have on intermediate actors of the supply chain.
Intermediates are looking to differentiate themselves and sustainable labels can be used in that way too. Prof. Moriguchi and Prof. Munasinghe both believe in a future where successful businesses would manage to overcome competition because of sustainable characteristics. Only the one who may have succeeded integrating sustainable vision in its business model may survive to competitive market. Of course, the labelling process has to be the result of expert work on specific measures and calculations. Labelling may rely on experts’ ability to analyse and compare critically data in an efficient way. It could be an issue but many examples of PhD research here at the World Resources Forum have demonstrated that it is today already feasible. Having a standardised labelling process will also help lessen confusion, both on the supply and demand side, as to what constitutes a “good” product.
Sharing his view about the consumer side, Prof. Moriguchi was also very pragmatic, advising international experts to focus on price effect. Environmental damage should be internalized in the price of goods and services. The end consumer is not going to look at too much information. He concentrates on price and quality of products, and much less on its origin and its way of production. Unfortunately, too few discussions here in Beijing were related to solutions to internalize environmental effects. Taxing environmental damage can have big impact. Indeed, price increase would make the environmental factor visible to consumer. However, the efficiency of such instrument should be questioned because data collecting could make that tax inefficient. We don’t want the market to be too much affected by the situation where the tax collection could not counterbalance the negative impact of the tax levying. We need the collected amount to be big enough to compensate at least partially the negative effect of price increase or profit reduction for the economy, thought reinvestment for example in the infrastructures or education of the working classes.
In conclusion, two distinct tools should be developed to launch a sustainable change. Labelling and environmental tax may give a clear message about the environmental impact and therefore, be the first actions to undertake by market actor, on the supply side or demand side. To undertake measures on the right side, a policy maker should simply focus on the powerful actor of the market according to Munshinghe’s proposal. The World Resources Forum has showed us again that simple solutions may lead to sustainable change. But now, we must step up to the challenge and actually do them.