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Product Ownership and Climate Change

There is almost unanimous consensus among scientists that climate change is continuing to exacerbate each year and is now a serious existential threat to humans. The weather extremes we have witnessed in the last few years alone speaks to this fact. It is important to understand that our modern lifestyle and resource consumption is at the root of climate change. As capitalism took hold in the world, beginning with the cotton trade in the 17th century, our world was put on a collision course with catastrophic climate change. We are now beginning to feel the impact of this impending collision. If 2020/21 is any indication of this, we are in for a rough ride.

Climate Change and the Ownership of Consumable Assets

If one were to sort all the consumable assets into two broad categories, we would end up with (1) assets that we use on a regular basis like automobiles, computers, and electronics, and (2) assets that we collect because of its perceived long term or timeless value like land, gold, diamonds, or paintings. Most people spend a substantial part of their lifetime yearning for and striving to buy the first type of asset. Unfortunately, this is where capitalism and our desire to buy and own these consumable assets has made climate change worse and somewhat difficult to tackle in a timely manner.

Capitalism is based on a free market principle of supply and demand, with the price of a product being a function of demand and the consumer’s willingness to pay for the product. Over time, consumers decide on what and when to buy, based on price and affordability, so the pressure to lower price on goods is always in the background. This leads the manufacturers of consumable products to relentlessly work towards lowering the price of the product. Unfortunately, this kind of thinking has forced manufacturers to design and make products with inferior materials, with the expectation of the consumer buying the product frequently. This has led to a ‘use and throw’ culture which is at the root of climate change. I am sure we all can think of so many products that seem like they are designed to break right after the warranty periods.

One way to encourage manufacturers to make durable products, and consumers to demand better quality products, is to move away from product ownership and allow for a usage-based fee model. Interestingly, auto makers sensed this opportunity many years ago and started offering a leasing model for their products, which now makes up most of their new sales transaction. Since the product is technically owned by the manufacturer until the lease ends, it is assumed they have all the reasons to make a longer lasting and better-quality product. Another advantage of this model is that it encourages manufacturers to focus more on end-of-life recycling to reduce initial cost of materials. This does not have to take away ownership option for those who prefer that route, but like the auto industry has demonstrated, this should create a virtuous cycle of better and longer lasting products with a reduced carbon footprint of every product.

We must make lots of small, and sometimes big, changes to tackle climate change in the coming years, but one essential change we all can make is to buy better quality products and encourage end of life recycling or reuse of products. This should help reduce the overall carbon footprint of our lifestyles over time.