In recent times, there is a global shift towards environmental-friendliness. Such is the trend of businesses and other organizations such as political parties. This movement probably gave rise to the idea of sustainability.
But the question is, at what cost?
Certainly, the move towards such a theoretical idea would almost-definitely mean that some alternative is foregone, and I would say that the opportunity cost of being sustainable is being inefficient.
I shall take Vancouver as a simple example.
In downtown Vancouver, certain roads and lanes are closed for cyclists to use them – an implementation by the local government towards environmental-friendliness. Now that roads are closed for the sake of cyclists, motorists are inconvenienced because of traffic congestion as a result of road and lane closures. The arrival of the winter season complicates matters more. Cyclists are less-likely to ride during this time of the year for various reasons such as cold & safety. They now take motor transport to travel to downtown instead; which increases the flow of traffic moving into downtown Vancouver (and lanes are still closed for cyclists). Traveling time for both motorists and “cyclists” is now increased.
The model of downtown Vancouver traffic illustrates my argument that the opportunity cost of sustainability is inefficiency.
Applying this model to the typical business firm who intends to jump into the bandwagon of sustainability, the firm now incurs a higher cost (including opportunity cost). Just pause for a moment and think about this: even energy-saving light bulbs that the firm purchases would already cost more than regular light bulbs. What about sourcing raw materials from environmental-friendly sources? Surely the firm would incur additional costs as well.
Now, the firm must produce more goods to increase its revenue in order to cover the increased cost. Isn’t this inefficient?
This links me to the lesson on business ethics. Only individuals can have responsibilities. Not companies. (Milton Friedman). It should not be an organization’s responsibility to go green because it does the firm no good.
Are the organizations’ intentions (to go green) sincere? Or are they simply jumping onto a gimmick bandwagon as an opportunity to exploit and conspire to raise prices (Adam Smith)?
