Ecological cost

The ecological cost quantifies the loss, degradation or depletion of the natural resources of a locality, country or region.

Ecological cost

The ecological cost generally occurs during the production process, accidents, involuntary human error, negligence, among others. And it can be expressed in a monetary value.

Society and ecosystems are the most affected by a negative environmental impact. To know the magnitude of the damage, the ecological cost is used.

Green cost record

In order to prevent, reduce or repair the loss of natural resources, it is necessary to measure it. It can be carried out through balances that show the situation and the expenses that must be incurred in order to restore natural resources; this with certain limitations since there are resources that are lost and it is not possible to restore, such as the extension of species.

It is possible to keep a record of the ecological cost of the affected environment, for example:

  • Atmospheric pollution.
  • Soil degradation.
  • Hydrocarbon depletion.
  • Groundwater depletion.
  • Water contamination.
  • Forest resource depletion.

It is also possible to measure the degree of depletion and environmental degradation by different sectors of economic activity.

Ecological replacement cost

It is a method by which the total cost of replacing the damage is estimated, approaching the value of the environmental good.

For example, the value in hectares of forest necessary to absorb the CO2 caused by a person’s energy consumption in a year.

Environmental protection costs

Some cases in which, derived from human activity, costs are incurred for the protection of the environment are:

  • Waste management.
  • Air protection.
  • Waste water management.
  • Soil protection and restoration.
  • Protection of groundwater.
  • Investigation and development.
  • Protection of biodiversity.

The ecological costs must fall on who causes it or who generates the negative impact. However, this is not always the case in practice, since sometimes the cause is unknown and in the end it is society that bears the costs.

Business and the green cost

Since the ecological cost is related to the production process and the life cycle of the product; that is to say, its useful life; then it becomes a waste, which will have to occupy a place. It is therefore important that both companies and consumers take into account the assessment of product life cycles. Companies can plan that their products have more uses at the end of their main function and consumers make an informed purchase focused on responsible consumption.

In this sense, if the products whose degradation process is short, have a lower impact from the ecological point of view, because they will not occupy space and will not affect with their presence and with their slow deterioration other environments other than where they were produced or consumed. .

Companies have the responsibility of complying with environmental regulations, established by control institutions. Otherwise they will face costs of restoration of environmental damage, fines, penalties or even closure for not following good practices in this matter.

That is why they must assume costs such as prevention, costs for internal failures and / or environmental correction. This can lead to reprocessing, costs for the waste they produce, proper waste treatment, and costs for downtime.

Importance of knowing the ecological cost

It is essential that the ecological cost is known to be able to make decisions such as planning, budgeting and managing natural resources.

However, assuming the cost implies that it has an effect on the economic process because in the face of an increase in production costs, it will necessarily have an increase in the final price of the products, if they are inelastic then the expected effect will be that the quantity demanded of those goods. In the event that these goods enjoy a subsidy for their purchase, then the ecological cost will continue to be transferred to the future and threatening the sustainability of ecosystems, production and consumption will therefore be inefficient.

This is why, for many experts, it is necessary to internationalize the ecological cost in such a way that part of the price of a product is allocated to environmental restoration and another to the investigation of alternative sources of energy. This is what some economists call "strong sustainability."