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== Externality Minimisation == | == Externality Minimisation == | ||
Quantifying externalities is very difficult as many externalities are quantitative. For instance strip mining a coal field would ruin a beautiful view of nature which would last for as long as humans are alive, so would this not be priceless? A better thought experiment is the humble cup of coffee. | Quantifying externalities is very difficult as many externalities are quantitative. For instance strip mining a coal field would ruin a beautiful view of nature which would last for as long as humans are alive, so would this not be priceless? A better thought experiment is the humble cup of coffee. | ||
=== The Cup of Coffee === | |||
The humble cup of coffee is a brilliant example as to the issues in business associated with externality minimisation. First we should set the scene and ask: ''What would be the most ethical (including environmentally friendly') way to serve someone coffee in a cafe?'' | |||
To answer this question you would first need to define what the maximum, ''most ethical'' would be. To do this you would need to break down what the business does. | |||
==== Cup ==== | |||
Styrofoam (worst 0 points) ---> plastic (better 1 point)-----> Cardboard (best 2 points) ----> where does the cardboard come from? | |||
==== Lid ==== | |||
Plastic (worst 0 points) ----> Paper (better 1 point) ----> Compostable (best 2 points) ---> does it actually get composted? | |||
==== Coffee ==== | |||
Slave labour sourced (worst 0 points) ----> Organic (better 1 point) -----> Fair trade (best 2 points) ---> are these standard properly regulated? | |||
Labour | |||
Logistics | |||
A company which is most ethical would want to have the highest addition of points. However, there is often a direct correlation as to the higher amount of points the more costly the solution, i.e. organic will always cost more the non-organic just on the principle that it is more niche. | |||
Any business before inception should figure out its entire externality and profits should be primarily routed to externality minimisation before anything else. | |||