The Price We Don't Pay - Yet

Environmental sustainability is often discussed in terms of emissions, energy efficiency, or material reuse — all important elements, yet rarely do these conversations address the underlying question: What is the true cost of the things we make and consume? A product’s price tag rarely reflects its full environmental burden. Life Cycle Assessment (LCA), an analytical framework that evaluates the environmental impact of a product, project or process across its entire lifespan — from raw material extraction to end-of-life — helps to close this gap. But despite being around for decades, the broader idea of internalizing environmental costs into market pricing has remained slow to gain traction, and even today, it is inconsistently applied across sectors and regions.

Measuring the Unpriced: Why Most Environmental Costs Are Invisible?

One of the fundamental challenges in sustainability economics is that many environmental impacts — from water depletion and air pollution to biodiversity loss and toxic exposure — are externalities, meaning their costs are borne by society rather than reflected in product pricing. For example, while a plastic bottle might cost $1 at checkout, the full environmental cost — including petroleum extraction, manufacturing emissions, transportation, end-of-life waste management, and marine pollution risks — is substantially higher.

A 2010 study published by the UNEP Finance Initiative and the Principles for Responsible Investment (PRI) estimated that if companies were held financially accountable for environmental degradation, the world’s 3,000 largest corporations would lose over $2.15 trillion in profits annually, equivalent to 7% of their combined revenues. That figure includes unpriced impacts like climate change, water use, and air pollution. The report, titled “Universal Ownership: Why Environmental Externalities Matter to Institutional Investors”, underscored the material financial risks posed by environmental degradation and argued that investors, particularly large asset owners, should factor these costs into long-term portfolio decisions. Similarly, the True Cost of Food report (2021) by Rockefeller Foundation found that U.S. consumers spend $1.1 trillion on food annually — but the true cost to society, when including health impacts, GHG emissions, soil degradation, and water use, was nearly $3.2 trillion. Again, the external cost is borne by the society as a whole.

Why It Took So Long to Recognize the Value of Environmental Cost Accounting

Despite early recognition by economists like Arthur Pigou in the 1920s, environmental externalities remained largely ignored in pricing and investment decisions until the late 20th century. Several factors explain this delay. First, many impacts are diffuse, long-term, and hard to measure, making it difficult to assign clear financial values or trace them back to individual actors. Second, institutional resistance and fear of competitiveness losses — particularly in fossil fuel and manufacturing sectors — made governments reluctant to impose environmental taxes or enforce pricing schemes. Third, traditional economic models prioritized growth and efficiency over environmental limits, often treating natural resources as infinite or renewable without constraint. As a result, environmental degradation was seen as a side effect rather than a limiting factor, and policies rarely accounted for the ecological foundations of long-term economic stability.

Putting a price tag on greenhouse gas emission is an important milestone, but even in jurisdictions where carbon pricing mechanisms are in place, the systems tend to focus narrowly on greenhouse gas emissions and rarely account for other environmental dimensions. Impacts related to water use, land degradation, ecotoxicity, and biodiversity loss — all of which carry significant long-term consequences — are typically excluded from market pricing models. This narrow scope risks overlooking critical environmental trade-offs, such as the water stress caused by clean energy transitions (e.g., lithium extraction), or the biodiversity costs of land-use changes in biofuel production.

What Life Cycle Assessment (LCA) Brings to the Table

LCA enables a more comprehensive and data-rich approach to understanding environmental impact. Rather than focusing solely on carbon, LCA evaluates multiple impact categories in parallel. For example:

• Climate change: CO₂-equivalent emissions

• Water scarcity: Cubic meters adjusted by regional stress

• Human toxicity: DALYs or CTU

• Land occupation: Square meters over time

• Resource use: kg of fossil fuels, metals, or minerals.

The case of electric vehicle demonstrate perfectly why a life-cycle approach is important when we are considering the environmental impacts of EV when compared with conventional internal combustion engines.

Example: Electric Vehicles vs. Internal Combustion Engines:

• Battery production: 2 – 6 tons of CO₂ (Argonne GREET model, 2023)

• Lifecycle emissions savings: 50–70% (ICCT, 2021)

• Raw materials: 8 kg lithium, 35 kg nickel, 14 kg cobalt (Nature 2021)

• Water usage for lithium: 400,000–2,000,000 liters per ton (IER 2020)

Long-Term Implications: What Happens When We Don’t Account for Environmental Costs

The omission of these broader ecological costs results in systematically incomplete signals to both markets and policymakers. Products and practices that deplete natural capital or degrade ecosystems often remain economically viable under current pricing models — not because they are sustainable, but because the full costs are externalized. As a result, investment and consumption decisions continue to be made on the basis of partial information, misaligning short-term profitability with long-term environmental and societal resilience. This leads to overproduction of harmful goods, underinvestment in sustainable alternatives, and inflated perceptions of profitability. For example, CDP reports show global companies face over $300 billion in potential water-related business risks, yet invest less than $20 billion annually to mitigate them. Infrastructure that ignores climate risk, such as floodplain development, may appear viable short-term but generate high long-term liabilities.

A Personal Perspective: Rethinking Value in a High-Tech World

As consumers, we often face a difficult trade-off between price, performance, and sustainability — and nowhere is this tension more evident than in the products we rely on daily: smartphones, laptops, and increasingly, electric vehicles. These items promise efficiency, innovation, and sometimes even “green” credentials. But how often do we stop to ask what it really costs to make them — beyond the price tag?

Lately, I have been shopping for a new mobile phone. Like many, I was drawn to the latest model with faster chips, better cameras, and smart energy features. But what caught my attention was a study highlighting that over 70% of a smartphone’s total carbon footprint is generated during manufacturing, not during use. Rare earth metals like tantalum and neodymium, used in small amounts for screen components and vibration motors, are often mined under environmentally damaging conditions. And most phones are replaced every 2–3 years — long before their hardware truly fails.

The same complexity applies to electric vehicles (EVs). They’re often marketed as zero-emissions alternatives, which is largely true during the use phase. But when you look at the full life cycle, especially battery production, the environmental footprint becomes more nuanced. A typical EV battery contains over 60 kg of processed minerals, including lithium, cobalt, and nickel — materials with high extraction and processing impacts, often in water-stressed or ecologically sensitive regions. Without LCA-based insights, it’s easy to overlook these upstream effects when choosing a “green” alternative.

These examples taught me that sustainability isn’t just about switching from one product to another — it’s about rethinking the value system behind our choices. To put it into perspectives, now when I shop, I consider three questions:

1. Is it durable and repairable? I try to extend product life through repairs or software updates rather than replacing things prematurely.

2. Is the environmental impact justified by the use? For instance, if I only need basic functions, I don’t need the most resource-intensive device on the market.

3. What happens at the end of life? Can it be recycled, refurbished, or responsibly disposed of?

This doesn’t mean we have to forgo innovation or convenience. It means we need to match functionality with footprint, and choose wisely — not just based on sticker price or sustainability labels, but on informed understanding of environmental costs. LCA gives us a framework for that understanding, helping us balance utility and responsibility in an increasingly complex world.

My iPhone XR since 2019 - a faithful phone + camera + music & video player + scheduler + Notebook + entertainer

Conclusion: Rethinking Impact Beyond the Price Tag

In our pursuit of progress, we’ve grown accustomed to measuring value by price — how cheap, how fast, how scalable. But in doing so, we’ve often overlooked the broader consequences: the energy embedded in production, the water withdrawn for extraction, the ecosystems altered to make way for growth. Environmental impacts are rarely visible at checkout, yet they shape the health of our communities, the resilience of our economies, and the stability of the natural systems we rely on.

As this post has explored, many of these impacts are still unpriced and unmeasured. When they are accounted for, it’s often through narrow lenses that prioritize carbon above all else — important, but insufficient. Environmental harm is multi-dimensional, with trade-offs across water, land, health, and biodiversity. Failing to reflect these realities in our analysis — whether as policymakers, businesses, or consumers — means that we are often solving one problem while creating another.

There’s no single formula for capturing the full cost of environmental degradation. But perhaps that’s not the point. The point is to pause and examine the full picture, to ask deeper questions about what lies behind the products we use, the systems we build, and the efficiencies we chase. That process doesn’t need to result in perfection — but it can lead to better decisions, rooted in awareness of long-term consequences, not just short-term gains.

If we want to create a future that is not only technologically advanced, but also environmentally viable, we must stop treating impacts as afterthoughts.

Because ultimately, what we don’t factor in — we still end up paying for, just not always in ways we can easily see.

[First published on Substack "Ginci Insights" on May 14, 2025: https://gincinno.substack.com/p/the-price-we-dont-pay-yet?r=2cxt8s]