The Most Pressing Question: How To Price Food, Energy, and Health?

I was recently invited to throw my hat in for participation in the conference on “Ecosystem Services” hosted by the National Academies Keck Futures Initiative. It is a “think tank” style event at which people from all disciplines, sectors, and backgrounds come together to address weighty topics. One question on the application was, “Which one question or topic related to ‘Ecosystem Services’ is most pressing and most deserving to be addressed by [conference attendees]?” Following is my response, which was required to be fewer than 250 words. What do YOU think?

How to price food, energy, and health

Capitalism is an extremely efficient system for organizing resources to produce a desired outcome. However, as with all systems, garbage in results in garbage out. Subsidies, protectionist economic policies, and the externalization of costs result in prices for food, energy, and health that do not reflect reality and that are completely misaligned with desired outcomes.

For example, fast “food” is an incredibly cheap source of calories in the US but its costs do not reflect market reality. Its ingredients have low costs due to agriculture subsidies. The economies of scale used by the industry require massive infrastructure and energy use. The cost of infrastructure is externalized as overhead. The cost of energy is undervalued because the energy industry receives high tax breaks and externalizes the costs of environmental damage and health risks. Overconsumption of fast food drives up nation-wide health costs to cope with rising diabetes and obesity. The health costs themselves are inflated under the burden of overhead for an incredibly complex multi-payer system and prices are based on services rendered rather than on outcomes achieved.

This brief, US-focused example illustrates not only what dire situations food, energy, and health are in but also how complex and interrelated they all are. These issues must be addressed at the system level and the primary parameter for the capitalist system is pricing. Addressing pricing will require an interdisciplinary and inter-professional approach, which is why the NAKFI conference is a perfect venue for its discussion.

Published by Bryan Guido Hassin

These are the musings of a global cleantech entrepreneur. This blog began as a way to document my experience during the IMD MBA in Switzerland and now is the place where I publish eclectic thoughts on business, politics, fitness, entertainment, travel, wine, sports, and . . . whatever else is top of mind.

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