Can Price be A Strategic Lever for Inducing Sustainability? - India Renewable Energy Consulting – Solar, Biomass, Wind, Cleantech
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Net Zero by Narsi is a series of brief posts by Narasimhan Santhanam (Narsi), on decarbonization and climate solutions.
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I have been in Delhi last couple of days, and today I had to travel the length and breadth of Delhi for three meetings – from near the airport to Noida, to Oberoi hotel (Lodhi Road) and from there to Gurgaon, and back to the airport; and all within 7 hours. So was it any surprise that I could not find any time to eat along the way?

Going hungry was frustrating, sure. But what made the hunger more frustrating was not the non-availability of food along the way, but non-availability of healthy food – say, fruits, nuts, simple food like roti etc. For instance, I travelled almost 10 kilometers from Noida all the way to Oberoi and I could not locate a single fruit vendor on the road.

I was terribly hungry and finally I decided I had no choice but to go the junk food way. I asked the driver to stop at a petrol station where there was a shop selling all sorts of junk nuggets – samosas, chips, the usual suspects. Unwillingly, I bought them.

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Needless to say, I was not at all pleased with Delhi right at that moment.

Clutching these junkets in hand, I asked the shopkeeper for a bag. He said he had only a plastic bag. Not exactly what I wanted, so I asked him for a paper bag. Not only did the shop not have a paper bag, but the shopkeeper said he could supply only plastic bags, and here comes the wallop – at a cost of 10 bucks. I said, “What! 10 rupees for a silly plastic bag? No way!” Awkwardly clutching the food stuff in the absence of a plastic bag, I somehow made my way to the car.

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It took me a few moments, but then it hit me – I had actually refused a plastic bag despite the fact that I kind of needed it. And the only reason? It cost a lot! Wow, I told myself, is there a lesson out here? Is one way of getting rid of plastics (as well as many other unsustainable things that are really not indispensable) to simply price them high enough? I know it is probably overly simplistic to argue that price alone can take care of our getting rid of unsustainable habits, but I am sure you will agree there is at least a glimpse of a solution here.

Some of you might yawn and point out that this is the classical price-demand curve that economists have been talking about for ages – you increase the price and the demand for a particular product goes down. The extent to which a demand of a product decreases with increase in price is called price elasticity of demand.

(source: Wikipedia)

It is not difficult to decipher the above chart – as the price p increases, the quantity demanded q decreases.

So, all right, I did not discover anything that the economist blokes did not already know, and that’s putting it lightly. However, one point to be noted about the above curve is that it is not the same for all classes of goods. For essential goods (say, water), the curve might be much less steep, and for completely non-essential goods, the curve could be even steeper…

The question I have is, is plastic an essential good or a non-essential good? My trivial experiment appears to show that it is a non-essential good (under at least some circumstances). What else could explain my shrugging away from buying it even when the cost of it was not very high (given the fact that I had already blown over Rs 100 on all the junk food I had bought). That would be good news, the news that plastic is a non-essential good in many contexts, as this will mean that increasing its price could lead to drastically decreased demand and use.

Thank you, Delhi, I am actually quite pleased with you.

An update to this: A week earlier, I had wanted to buy a new pair of leather shoes (OK synthetic leather, as I have decided to become vegan), as my shoes have worn out. Myself and a colleague checked out shops and I found the lowest price I could get decent shoes were about Rs. 2000, too high for a penny-pincher like me. So I decided to try out what my dad suggested: try repairing and remaking my old shoes. I was not sure at first, but today I have got my old shoes repaired and they look fairly good for another couple of years. All at a cost of Rs 100, and the money going to a poor cobbler near our house instead of to the house of Metro’s and Batas and others. Sustainable for my pocket, and enhancing local sustainability. Once again, upon reflection I realized that I was spurred to take a more “sustainable” route owing to the high cost of shoes. Had I been able to get decent shoes at Rs 1000, I think I would have bought them. Two instances, in less than three days, and I am getting curiouser and curiouser on how much of a lever price indeed could be to enhance sustainability.

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About Narasimhan Santhanam (Narsi)

Narsi, a Director at EAI, Co-founded one of India's first climate tech consulting firm in 2008.

Since then, he has assisted over 250 Indian and International firms, across many climate tech domain Solar, Bio-energy, Green hydrogen, E-Mobility, Green Chemicals.

Narsi works closely with senior and top management corporates and helps then devise strategy and go-to-market plans to benefit from the fast growing Indian Climate tech market.


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