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Expressing Environmental Values Through Markets

Markets don’t only distribute resources; they also allow consumers to express environmental values

  • Jonathan Wood
  • Most people appreciate that markets are effective at distributing resources. But they also help to generate information and let people express their values.

    Even so, these benefits of markets are often given short shrift. For instance, so-called “commercial speech”—any speech concerning market transactions—receives far less protection from courts than many other types of speech, even though commercial speech often expresses people’s values as much or more. Just look at the brouhaha over Nike’s decision to advertise its products by promoting a controversial former football player.

    This is as true for environmental issues as for any other. Recently, several organizations and companies sued Missouri over a controversial new law that bans plant-based “meat” products from using the term “meat” in advertisements. Ostensibly enacted to protect consumers who would be confused by the phrase “plant-based meat,” the law is widely viewed as a response by traditional meat producers to the growing demand for these products among consumers concerned about animal cruelty and environmental impacts, as suggested by the New York Times.

    Although products like veggie burgers and sausages have been sold for years, the debate over how they can be described has become particularly contentious as plant-based products have grown more popular. This has created a challenge for the traditional meat industry, prompting debates about whether something without eggs can be called mayo and whether almonds lactate.

    This shows two things: consumers’ decisions often reflecting underlying moral, environmental, or other values; and businesses respond to this incentive by catering to those values. The increased quality and variety of veggie products as demand has grown is one example of many.

    Another prominent example is the Forest Stewardship Council. Concerned about deforestation, this nonprofit, formed by forest owners, timber companies, environmental groups, and others, established a voluntary program that certifies whether timber harvesting is consistent with the organization’s standards. Lacking the coercive power of government, the organization turned to the market. Its power comes from consumers’ willingness to insist on or pay more for products that meet the group’s environmental standards.

    Similarly, popular concern about the environmental impacts of climate change is already beginning to generate a market response. Many companies have announced ambitious goals to voluntarily change their products or processes to reduce emissions. Part of this may be motivated by reduced costs; emissions are a waste, after all. But the extent to which these companies publicly promote their decisions suggests that consumer perception and demand is also playing a role.

    What all of these examples have in common is that markets are enabling producers and consumers to communicate with each other about values. This commercial speech, far from being the sterile form of speech often assumed, is a rich process of generating new information about people’s values and incentivizing producers to satisfy them—all without anyone having to coerce anyone else.

    Replicating this process for many other environmental challenges, like conflicting demands to public lands or scarce resources, is the best way to maximize social welfare and empower individual consumers to use their pocket books to push for a better world.

    Written By
    • Jonathan Wood
      • Vice President of Law & Policy

      Jonathan Wood is vice president of law and policy at PERC, leading PERC’s Conservation Law and Policy Center.

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