Why Is the Sustainable Option Always More Expensive?

Uma Satapathy
May 28
3 min read

Oftentimes when at the store, you notice that the products labelled as organic or fair trade cost much more than the regular ones. Why is that?

Sapling rising from glass cup of pennies

One of the primary reasons that environmentally-friendly goods are more costly is their inclusion of negative externalities into the total price. A negative externality is an unintended consequence of an economic activity on the environment that proves to be bad. For example, if a farm makes good money on their produce, but they use chemicals that leech into the soil and cause damage to the surrounding environment, then the net benefit is negative. The cost of the destruction of habitat ultimately outweighs the profit from the produce, ultimately rendering the overall benefit below zero. When sustainable brands internalize these sort of costs to account for production of their goods, the price starts to hike up.

Moreover, costs are influenced by economies of scale. Larger conventional corporations are able to produce units by the millions, causing the cost per unit to lower drastically. Sustainable corporations are often newer and smaller, meaning that they are not able to produce their goods at such a large scale. So, each item that is produced ultimately ends up more costly for the corporation. Raw materials and labor costs also factor into the total price of a good. Materials that are USDA Organic, Fair Trade, or FSC Certified wood cost more because getting these certifications adds to the price. Additionally, such materials are of higher quality, are more difficult to extract, or are more labor-intensive to produce. Sustainable goods also include the costs required to allow workers to earn livable wages, effectively contributing to their expensive price tag.

Furthermore, companies implement a "green premium" when marketing eco-friendly goods to target conscious consumers. Since they know those interested in sustainable practices are more willing to pay a higher price, costs are artificially inflated to maximize profit. According to Deloitte, 52% of consumers are yet to create a more sustainable lifestyle due to the high cost of eco-friendly alternatives. So, though it is that many are willing, it is that far more are unable to pay the price for a conscious lifestyle.

Consumer data on the price of sustainable goods. (2022, June 17). Deloitte. https://www.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker/sustainable-products-and-practices-for-green-living.html — *Consumer data on the price of sustainable goods*. (2022, June 17). Deloitte. https://www.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker/sustainable-products-and-practices-for-green-living.html

So how much higher are the costs for sustainable alternatives really? It depends on the item, as different goods may have different certifications, harder to harvest materials, and higher labor costs. Though, on average, these alternatives cost 75-85% more than the regular option.

So, what should you do? Is it always just better to suffer the high cost to benefit the environment? Not always, as you can avoid such prices and still be eco-friendly. If you already have a feasible item, you do not have to buy the sustainable version of that item. Similarly, if you can find a second-hand item that suits your needs, go for it. Don't bear the high costs if you cannot afford them, and only do so if possible for you. Follow along with Bayou Barrels for more insightful tips!

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