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Environmental Economics Research Paper No.3
Prepared by Deni Greene Consulting Services,
Australian Consumers Association and National Key Centre for Design, RMIT for the
Department of the Environment, Sport and Territories
© Commonwealth of Australia, 1996
ISBN 0 642 24869 9
Many different techniques are available for influencing consumption patterns so as to reduce environmental impact. They are applied at specific stages in the production and consumption chain and are therefore applicable to different types of activities or products and particular circumstances. These techniques, and the delivery mechanisms they employ, can be roughly categorised as:
The first four techniques are aimed at influencing behaviour. They are often coupled with development of environmentally preferable products or services or provision of infrastructure to allow environmentally desirable action.
To make changes in their patterns of consumption, people have to understand the types of actions they can take and the implications of those actions. As an example, a recent survey (Test Research, 1995) found that most people consider refrigerators to be low energy users, instead of the major energy consumer that they are. Without better understanding of the relative amounts of energy consumed by different household activities, there is unlikely to be emphasis placed on the energy performance of major energy users. Similarly, although the majority of Australians now separate their rubbish for recycling, they have little understanding of the importance of buying products made from recycled materials.
The environmental implications of everyday actions are also very poorly understood. Surveys show that most people confuse the greenhouse effect and ozone depletion, and few accept that energy use has anything to do with greenhouse emissions. Education can help to increase understanding of the areas of consumption that produce the most significant environmental impacts and of the implications of environmental damage. Better understanding may not be a pre-requisite for changing consumption patterns, but it should help people focus effort on important areas and provide some a motivation for change.
A life cycle assessment (or life cycle analysis) is used to identify the environmental effects of a product during all stages of the product's manufacture, transport, use and disposal. Effects on the environment are calculated for the mining or harvesting of the raw materials used in the product, transport to a materials processor, transformation of the raw materials into usable materials or components, transport of materials to the manufacturer, manufacture of the product, distribution and sale of the product, product use or operation, transport for final disposal, and disposal or recycling.
Life cycle assessments can assist manufacturers in identifying the sources of the major environmental impacts of their products, so that the products or the processes used in their production can be re-designed to reduce their environmental impact. Consumption patterns are altered because the consumer acquires a product that results in lessened impact on the environment.
Environmental or eco-labelling is designed to provide consumers with information about the environmental effects of a product. Formal eco-labelling schemes are in place in a number of countries, including New Zealand, Canada, Japan, and across Europe. Generally eco-labels are based on a determination of a product's impact at all stages of its life cycle. Some schemes include requirements for instructions on proper use. Although Australia does not have a full eco-labelling system in place, some existing labelling schemes provide environmental information. Examples of these are the energy labels used on appliances, the labelling of detergent phosphate content in New South Wales, and the statement of recycled content on packaging and products.
Eco-labels are intended to influence consumption patterns by providing information to consumers at the point of purchase. The expectation is that the labels will encourage at least some consumers to choose the products with least environmental impact.
Labelling produces an actual or perceived change in market forces, creating pressure on manufacturers to improve products or services. It also leads firms to enhance their image or market niche by making environmental improvements in products or services.
Companies compare their productivity or efficiency with others using indicators of performance. Commonly they compare the time taken to perform specific tasks or other measures of activity. The performance of a particular competitor or the best company in the field with respect to a specific activity is taken as a benchmark, that is, a goal to be striven for. In most cases, benchmarking is used as a way of helping a company catch up to industry leaders; it is rarely used as a mechanism for breaking new ground. Although benchmarking is usually applied to processes, not products, there is no reason why it could not be used to help a company improve the environmental performance of the products it manufactures or the service it provides.
Most people today lead busy lives and are disinclined to make the effort to change existing patterns of consumption unless something motivates them to do so. Much advertising is intended to provide reasons for people to choose a specific product or service. When the advertising is promoting an environmentally preferable option, it can help convince people that they should change to that option. Promotion campaigns have a similar purpose. The reasons used to convince people to change to environmentally preferable products or services can be based on the environmental benefits that will result or the increased amenity, cost-saving, status or other desired attribute.
The environment is, however, a very difficult area in which to change behaviour through campaigns, because it is may be hard to show a personal effect of actions. Small financial incentives, in themselves, may not be sufficient to convince people to change existing consumption patterns, but when coupled with promotional activities, they may act as a reminder or signal of the environmental reasons for change.
Promotional activities alone may not convince people to change their consumption patterns unless the message in the promotion is sufficiently compelling to motivate the change. Some of the types of inducements that may stimulate change are significant financial incentives, threats, standards or codes, and perceptions of increased amenity.
Changes in consumption patterns can be encouraged by providing a financial incentive for selecting an environmentally preferable action or product or by imposing penalties on actions considered environmentally undesirable. The assumption behind the use of economic instruments is that many people will be motivated by incentives or penalties to make the environmental choice. These instruments are only effective if people have the ability to choose between the alternative courses of action and if they regard the penalty or reward as sufficient inducement to take the environmental action.
People can be motivated to take an environmentally beneficial action by the fear that an undesirable consequence may result from their failure to act. In some cases, the fear may be associated with the environmental harm that may result, such as the exacerbation of the ozone hole from using CFCs. Other threats may take the form of fines or embarrassment.
Standards or codes, even when not mandatory, may act as a strong motivation for change because they are seen as indications of the acceptable way of doing things. By following a standard or code, people are inclined to believe that they are minimising risk.
The effectiveness of standards and codes on environmental performances will be strongly influenced by the stringency of the code, the commitment of company executives to implementation of the code, the training of staff to improve skills required for code implementation, as well as the time needed for the codes and standards to become widely accepted. The nature of the code or standard: mandatory, quasi-official, industry based, etc. will also influence the effect of codes on environmental performance.
Actual or perceived benefits in the form of increased comfort or convenience, luxury, or other desirable attribute may encourage people to change existing consumption patterns. Advertising and promotion campaigns frequently use the promise of increased amenity to encourage people to try a particular product or service.
As most people are law-abiding and unwilling to challenge authority, except perhaps on strongly held matters of principle, absolute requirements for specified types of behaviour are usually very effective. Prescriptive approaches to environmental protection are viewed with less favour than they were a decade ago, primarily because they tend to result in strict compliance, rather than innovative approaches which may achieve greater environmental protection at lower cost. Nevertheless, regulatory approaches are still used where the result of environmental damage is seen as compelling and/or where universal action is sought.
Some measures impose an obligation directly on consumers. An example of this is a prohibition on using a backyard incinerator. Obligations can also be placed on consumers by actions of manufacturers or service providers. A decision by a taxi company to run its fleet on LPG instead of petrol will influence the environmental impact of a taxi trip of an individual using that cab. A customer does not order a taxi based on its choice of fuel, and is usually unaware of that fuel choice. Thus, the fleet owner's action, which is voluntary, means that taxi customers are reducing the environmental impact of their ride, even without choosing to do so.
Rules covering the way land can be used or developed can be employed to change consumption patterns with respect to housing density, vegetation clearance, location near sensitive areas, and other environmental factors. Such regulations generally obligate a landowner to comply with the rules if they want to undertake development. Failure to comply can result in a denial of a necessary permit or a penalty.
Products are banned when they are considered too dangerous to be used. Regulatory authorities are, in these cases, unwilling to leave the choice about use to market forces. In some cases, the danger arises from the environmental effects associated with product use. These effects can be direct and visible, as with some agricultural chemicals which poison non-target species of animals. Other effects that have resulted in bans have been less apparent to the consumer, like depletion of the ozone layer.
Bans are effective because they remove a product from the market. In some cases, advance warnings of bans are provided so that use can be phased out, to minimise disruption or allow time for substitutes to be developed.
Product standards may be adopted by an industry, a standards setting body, or Government to control the environmental impact of a product. Standards may be voluntary or mandatory. Examples of standards affecting environmental impact are those which prescribe maximum energy or water use, limit contents of specific potentially harmful ingredients, or dictate the nature of packaging or labelling.
Adoption of codes and standards for buildings, appliances or other items ensures that all items covered by the requirements will meet at least minimum levels of performance. Insulation requirements for buildings and minimum performance standards for some appliances are intended to ensure that energy or water use will be reduced. If set at appropriate performance levels, they are effective because they eliminate the worst performers from the market. Other types of codes might specify or prohibit use of particular materials.
Regulations are used in a variety of other ways to change consumption patterns so as to reduce environmental impact. Some examples are prohibition of vegetation clearance, hunting and fishing limits and seasons, and controls on burning based on fire danger or air pollution levels. All these measures are intended to reduce environmental impact by controlling the consumption actions of individuals and groups.
Governments and some private buyers in Australia and overseas have already adopted policies that permit or require them to give preference to or to pay more for products that achieve environmental benefits. One of the most common policies is preferential purchase of recycled paper for laser printers and copiers. Another example is the United States Government policy of only purchasing computers that move to a low energy “sleep” mode when no action has been taken for a specified time.
Preferential procurement policies alter consumption patterns and they lower environmental impact because the products purchased are environmentally preferable. Procurement policies affect domestic consumers when products or services purchased by organisations are supplied for personal use. An example of this is the company car which is also used for personal travel.
Preferential procurement by government bodies or other very large purchasers can provide secure markets for preferred products, thus encouraging manufacturers to invest in the development and production of such items.
Selection of products or services to be given preference may require some form of life cycle assessment, because environmental procurement policies may need to be based on the overall environment impacts of the products.
Product design can have a significant effect on consumption patterns through its effect on durability, reparability, consumption of water, energy or other inputs during use, choice of materials, or ease of disassembly and recycling.
Consumption patterns are changed when people choose to meet a need by procuring a service instead of buying the product needed to carry out an activity themselves. An example is hiring someone to mow a lawn, instead of buying a lawnmower and doing it yourself. One lawnmower can provide lawn mowing service for many households. Other examples are libraries, providers of take away food, laundries and photocopy centres. Busy consumers are increasingly turning to acquisition of services for some of their needs. The effect of substituting services for products is lessened, of course, if people still purchase the product even though they use it infrequently. In such cases, reductions in environmental impact come only from efficiencies of scale.
Use of recycled materials in manufacture reduces the natural resources and energy required to produce the product. Recycling also lessens the amount of waste released into the environment, thereby decreasing the impacts associated with waste disposal. Recycling schemes provide mechanisms by which discarded materials from consumers can be collected in an efficient manner and reprocessed into new useful products.
Many types of actions which change consumption patterns are dependent on the existence of physical or organisational arrangements to facilitate their occurrence. As an example, use of public transport depends on the existence of public transport facilities and systems serving the area to be travelled. Similarly, for substantial amounts of plastics or paper recycling to occur, systems have to be in place for collecting discarded materials, sorting, and reprocessing the material.