The Business Ethics Blog

This is getting a bit crazy, don’t you think?

From The Guardian: Food products should carry ‘water footprint’ information, says report

Food and drink products should carry a new label to give consumers more information about their “water footprint” – the hidden amount of water used in the manufacturing process – two health and food lobby groups will recommend this week.

More transparency is needed about the huge volumes of water used to produce food, which most consumers are unaware of, said the joint report by the Food Ethics Council (FEC) and the health and food group Sustain.

It is calling for the proposed new label to reflect good practice, by taking into account the extent to which some companies and manufacturers are already working to use water in ways that are fair and environmentally sustainable….

Now, to be clear, I think water is very important. Clean, fresh water is critical for all life on this planet, and its continuing availability is in question. I also think consumer choice is important. Consumers understanding the products available to them, and choosing on that basis, is in fact fundamental to market capitalism.

But I’m increasingly skeptical that labelling products (especially food products) with everything that anyone thinks matters is the route to consumer empowerment. (My views on labelling GM foods, for example, are here.)

The basic problem is that “the market” is complex, as are consumers’ interests and desires. It’s far from clear what the best way is for consumers’ various interests to be accommodated (thinking both in terms of good outcomes, as well as in terms of other important values such as autonomy). It might be worth sketching a rough typology of options.

Option 1) Label everything in as much detail as possible. I suspect this is a bad option. I don’t think consumers are empowered by overloading them with information, particularly where that information consists in metrics that are the subject of disagreement among experts. (I can see it now. An ernest consumer approaches a shelver at the local grocery store and says, “I found the low-carbon-footprint, organic, shade-grown, FairTrade coffee, but I was looking for the low-carbon-footprint, low-water-footprint, organic, shade-grown, FairTrade coffee. Can you tell me where that is?”) It’s also worth mentioning that such labelling is likely to be disproportionately burdensome for small, local producers. How many small farmers know how many litres of water it takes to produce a pound of beef or a bushel of apples?

Option 2) Let the market handle it — in particular, let the market (subject to suitable taxes & regulations) determine how much of various scarce resources is consumed. Part of the reason a resource like water gets overconsumed is that it is either free or underpriced. If water was suitably priced, then as water prices climbed, the price of water-intensive foods would climb, and people would buy less of them. You wouldn’t need a ‘water footprint’ label, then; everything the consumer needed to know would be shown on the price tag. Similarly, as the price of oil climbs (as many people think inevitable) the price of goods made from petroleum will climb, and we’ll inevitably buy less of them.

Option 3) Let government handle it. This could be done in a variety of non-mutually-exclusive ways. With regard to water, government could alter the price of water (see #2 above) by taxing it. Or the government could tax companies that make water-intensive foods. Or they could simply ban certain kinds of foods on the grounds that they’re, e.g., water-wasteful.

Option 4) Educate consumers. If people had a better understanding of which kinds of products generally have which kinds of background characteristics (e.g., which ones take the most water or petroleum or whatever else to produce) then you wouldn’t need as much labelling on the product itself.

Option 5) Use admittedly-imperfect aggregate scoring systems. This apparently is what Walmart is up to with its forthcoming sustainability index. Of course, aggregating along even what is supposedly a single dimension (like sustainability) is hard and bound to raise controversies; aggregating along more than one dimension is fool’s gold. (How do you rate a product that is high-sustainability, but scores low in terms of human rights? Trying to do so amounts to a version of the ‘triple bottom line’ fallacy.)

Of course, what we’re likely to end up with is a mish-mash of the above options. Governments will ban or tax the hell out of some disfavoured products. They’ll require labelling of some product characteristics they see as particularly useful to know about (for food: ingredients, basic nutritional info, etc.) Governments & activists will also do what they can to educate consumers. And a few single-issue labelling regimes will capture the hearts and minds of a handful of well-intentioned single-issue consumers. The big prize goes to whomever can figure out a compelling general argument for what combination of mechanisms fits what categories of consumer goods.