True Cost Accounting
June 18, 2018
Anne Schwartz is a long-time CSANR Advisory Committee member, former Tilth Producers of Washington president, proprietor of Blue Heron Farm, and lifelong advocate for sustainable agriculture. Anne is a guest blogger, challenging College of Agricultural, Human, and Natural Resources Sciences faculty, and CSANR faculty in particular, to focus on and address the challenges of True Cost Accounting.
True Cost Accounting is the study in economics that addresses all of the upstream and downstream costs and benefits associated with a set of management decisions and ensuing practices, and their long-term impacts on natural resources and communities. Other terms used to indicate a similar approach include: Full Cost Accounting (FCA), Life Cycle Analysis (LCA), Triple Bottom Line (TBL), Natural Capital Accounting (NCA), and Cradle to Cradle (C2C).
The intent of this letter and accompanying publications and links is to provide a wide-ranging list of resources that will encourage and facilitate the incorporation of True Cost Accounting (TCA) into WSU research and teaching programs. It aims to reach multiple audiences; university/college administrators, department chairs, faculty and students as well as outside stakeholders including businesses.
Three of the five WSU Grand Challenges (developed in 2016 to help guide University focus and development) would be directly benefited and enhanced by the incorporation of TCA principals into the research and teaching programs at WSU: GC1 – Sustaining Health: The Uncompromising Pursuit of Healthier People and Communities; GC2 – Sustainable Resources for Society: Food, Energy, and Water; and GC3 – Advancing an Educated, Informed, and Equitable Society.
For too long, industrial progress has proceeded with little concern for, or recognition of, the full costs its technologies and management decisions impose on humans and the environment, labeling these costs as “externalities”. Cost Benefit Accounting (CBA) -based economic principles have left these externalities unmeasured and therefore unmanaged. Being economically invisible, they have been unaccounted for in public and private decision-making. Thus, our market systems have largely failed to develop mechanisms to prevent, repair or mitigate those costs, which are then shifted to the environment (by way of degradation) and to society and individuals (by way of negative health impacts, increased taxes and costs of doing business).
The perverse incentives (with their negative, unintended consequences) intrinsic to market-driven CBA have resulted in a failure to adequately provide for sustainable resource use, create incentives for healthful diets and food systems, and ensure regional food security. In the face of global disruptions from climate change, now more than ever we need a new approach to guide research and technology development and implementation. Including True Cost Accounting in our considerations will lead to better policy and resource use decisions and investments for Washington State, both in the public and private sectors.
I challenge administrators, faculty, non-profits, and members of the private sector to dig into the resources below as examples of the headway being made by others. Use this as your jumping off point; your inspiration.