A double challenge and double sided solution.
Our existing linear, economy has evolved over thousands of years in phases first from hunter gatherers to farming communities, then bartering and trading and early forms of currency; shells, grain then silver and gold, then coins and promissory notes and today, fiat currency and digital currency. With each development we have moved further from our connection and 'coupling' with nature.
We have progressively decoupled the price of things from human and natural constraints. Today the social value and cost to nature are not reflected in the price. The common transaction of our modern economy disconnects the production and supply side from demand and consumption side, meaning the consumer has little or not visibility of the prior implications of the choices they make. These implications are externalised from the transaction with the resulting ‘un-costed’ emissions, waste and inequality.
Our current economy has two major problems:
The externalities of every transaction between buyer and seller create a significant amount of waste that remains largely unaddressed. This waste represents a huge opportunity for growth, as it can be converted into wealth. The linear economy systemically relies on waste. Material waste after first use is at 90%, energy at 60% and food at 40%. By addressing this waste, we have the potential to achieve material resource abundance, social well-being, and to restore a balance between humanity and nature. We define waste as lost or latent value.
Consumers are unaware of the social and environmental impact of their purchasing decisions or the value that is lost as a result. Oscar Wilde said, "The cynic knows the price of everything and the value of nothing," while Warren Buffet stated, "Price is what you pay. Value is what you get. Price and value are two sides of the same coin." However this relationship between price and value assumes ignorance of cost. In order to understand the potential value or true price of something, we must be informed of the cost. Cost refers to the resources (such as time, energy, materials, information, and labor) required to produce, manufacture, or acquire a product or service. Price is the amount of money asked or charged by a seller or provider. Value is the worth or importance placed on something by consumers and is subjective, based on individual needs, preferences, and circumstances. Value is the benefit, utility, and well-being derived from a product or service. Neither price nor value can be independent of cost.
To make informed choices, consumers require a transparent understanding of the relationship between price, cost, and value. This calls for systems that treat both sides of transactions coherently, equitably and transparently.
In a linear economy, energy, material, and information have a beginning and an end. Ultimately the linear economy is a system that depends on the source, use, consumption, and waste of these inputs, it is a terminal one where the energy, material, and information are unrecoverable and lost. This is not compatible within a resource constrained environment; our planet Earth!
In a circular economy, we are all both consumers and producers; we are custodians or stewards in a regenerative and perpetuating material and energy cycle. Regardless of our role within the energy and material cycle, we are the recipients of the material inputs, we utilise them and they are passed on to the next
The concept of the "invisible hand," which refers to the self-regulating nature of free markets guided by selfish interests, has no place in a regenerative economy. Today our economy must be regenerative by design, for biodiversity, resilience and the well-being of our species.
Waste is lost and latent value that represents a +90% growth opportunity that will restore a balance between humanity and nature.
That is the design and purpose of the CostCarbon initiative.