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Find an industry sector like automobile, electricity paper etc.. Then find a solution to a failing market has been found in terms of externality of a pollutant produced through production of a good – example; paper, in a particular country

Economics of Sustainability

Assessment One – Essay 2,500 Words

Find an industry sector like automobile, electricity paper etc.. Then find a solution to a failing market has been found in terms of externality of a pollutant produced through production of a good – example; paper, in a particular country – this could be a tax or regulation that has been put in place, to solve the problem of externality, which could be for example the release of S02 (Sulphur Dioxide), Ozone etc, into the atmosphere or Nitrates into rivers etc.

- Market failtures can be corrected through government intervention, such as new taxes, tariffs, subsides and trade restrictions.

- Externatlity of a pollutant – pollution as a negative externality; pollution is a negative externality, the social costs include the private costs of production incurred by the company and the external costs of pollution that are passed onto society.

- Light pollution is an example of an externality due to the consumption of street lighting has an effect on bystanders that is not compensated for by the consumers of the lighting.

- Textile as an externality; an externality is the positive or negative effect of a given activity caused on a third party that did not participate directly in such activity. Common negative externalities include air pollution on a community produced by a manufacturing company and noise from construction work that affects nearby residents. An example of poisitive externatlity is the nice smell that neighbours of a flower shop can enjoy.

-  Within the fashion industry, known negative externalities are water pollution with fabric dyes and massive water consumption in different steps of the process (including customers, at home). By choosing to buy more and more clothes, we are definitely affecting everyone else that needs water to survive.

- In Bangladesh the costs of garment factories pollution is high;

- The odor rises off the polluted canal – behind the schoolhouse- where nearby factories dump their wastewater. Most of the factories are garment operations, textile mills and dyeing plants in the supply chain that exports clothing to Europe and the United states,

Textile industries produce dyeing leftover of waste solutions and washing wastewater having high temperature, which presents an opportunity to apply MD by using the wastewater heat as input to hear the feed to solution.

- SIPH for textile industries;

- Off all the energy used withi the textile industry, 60%-65% is used in wet processing, including dyeing finishing, drying and curing.

- The energy for wet processing is used as hot water and steam.

- The textile industry in the United States uses approximately 500 billion L of water per day, and approximately 25% of this water is used at an average temperature of 60 degrees c.

- There are a number of examples of SIPH for textile dyeing.

- One of these is for a dyeing operation at the Riegel Textile Corporation plant in LaFrance, South Carolina.

Textile industry chosen – the textile industry is mainly concerned with design, production and distribution of yarn, cloth and clothing. The raw material of this could be natural or synthetic using products of the chemical industry.

Environmental impact of the textile industry – the textile industry includes environmental effects which are the discharge of large amounts of chemical loads which results from the high comsumption of water and harmful chemicals used within this sector which is associated with water pollution, 38-40 high energy consumption in production processes and related air emissions,

There has been huge amount of public awareness and growing perception of social cognizance regarding the environment and this has forced the textile industry to have to produce environmentally friendly products. Due to this, nowadays many companies and organisations focus primarily on the environmentally friendly way of production. In order to create a sustainable textile, the main change factors have been linked to eco-materials so less and harmless waste, reusing/recycling, lesser usage of energy, water and chemicals and ethical issues in production processes.

Taking a stand against fast fashion –

US has fallen deep into the thralls of an obsession with fast fashion. Our descent into piles of T-shirts and jeans is a microcosm of the growing acceptance and even celebration of mass overconsumption in this country. It is a trend that can and must be stopped if we are to commit to a sustainable existence on this planet.

Today, the textile industry moves wherever costs are lowest and keeps shoppers coming back to stores, and online shopping platforms, by pumping out a barrage of new trends and an ever more intense cycle of fashion seasons.

As consumers we are inundated by an onslaught of messaging and advertisements peddling the fabricated idea that we must ‘keep up’.

The clothing industry today is a globalized system riddled with negative externatlities and characterised by a lack of transparency. Natonal susbsidies ihave made the U.S the worlds leading exporter of pesticide-laden cotton. Meanwhile, the manufaxturing side of the garment industry has moved overseas, where labor is cheap and envrionemtal regulation of often non-existent. Petroleum is pumped in for the production of syntethic fibres like nylon and olyster. Disenfranchised factory workers mix the toxic dyes and sew hems in dimly lit factory rooms.

Once failing you show how the market was failing before the solution was put into place, using evidence of real figures – ‘from pollution to solution’ – breaking down waste in the fashion/textile industry.

- Fashion is a $1.2 trillion global industry, with more than $250 billion spent annually on fashion in the US alone

- Led by retail giants, governments and the public, global programmes are currently in motion to clean ip the environment which is all powered by technology.

- By reducing the fashion industries waste, retail giants may someday be able to clean up the environment, conquer the root cause of pollution and play a major role in redeeming our contaminated planet.

Getting down and dirty;

- Textile processing creates many aspects of waste which includes liquid, gas and solid wastes.

- The number one casualty is water, with an estimated 20% of industrial water pollution derived directly from the textile industry.

- While vivacious colors and prints do make attractive garments, many are produced using toxic chemicals.

- Processes such as slashing/sizing, scouring, bleaching, heat setting and printing, pollute many of the clean water sources where large textile mills operate.

- With the rise of public and government awareness, the fight to clean up thr environment, the apparel industry is deploying new technologies that provide alternatives to harmful solvents, such as short-chain fluorinated polymers used to repel stains and water.

- One example is Levi’s development of its own process to ensure the ingredients used in new products are screened for harsh chemicals and solvents.

- Environmentally conscious, they are now using elaborate processes that exclude water in the stone-wash process and combines multiple finishing washing steps.

- The retail giant estimates this new technology reduces water use by up to 96% for some styles and plans to expand the process to cover 80% of its manufacturing by 2020.

Levi’s has their own website called ‘Levi strauss and co’ which is dedicated to use and reuse, clothing that is built to last, with style that endures. The company have stated that consumer use and disposal accounts for 23% of the total water used, and up to 40% of the climate impact during the life cycle of a pair of jeans. Disposal is also a major issues; across the industry, over half of all garments made annually are burned or buried within one year. They have stated that has to change. That this why theyve made it a priority to educate consumers on how they can extend the life span of their clothing – like washing jeans less often or by getting them repaired and reinforced – and how and where they can donate and recycle anything they’re no longer going to wear. The giant company firstly created product tag, care tag for ‘our planet’, which offers tips on ow to best preserve your clothing. They also offer Levi’s Authorized Vintage, the most authentic, everlasting vintage pre-owned or restored ites on the market. Additionally, they work with Blue Jeans Go Green in the U.S and Canada, and other organisations in different countries to collect used clothing. And they are increasingly designing products that are suitable for true circularity – with 100% recyclable materials – from the outset.

- From Levi’s introducing this sustainable method, they have improved across a number of areas; 4.2 billion litres of water saved since introducing Water <Less in 2011. 9.6 billion litres of water reused and recycled. 75% of their cotton now comes from more sustainable sources. 65% of their products are currently made in factories that run their worker well-being programs.

- The company have stated they still have work to do and are working towards industry-leading targets including; 100% sustainly sourced cotton by 2025. 100% renewable energy in owned and operated facilities by 2025. 40% reduction in greenhouse gas emissions in their supply chain. 50% reduction of water use in manufacturing in water-stressed areas by 2030. 80% of products made in Worker well-being facilities by 2020.

H and m conscious have also moved away from its fast fashion roots with the conscious collection, made of materials like organic cotton and recycled polyester. By using eco friendly fabrics and more susitanable production methods, the company hopes to reduce ts environmental footproint. Customers can also recycle unwanted garments at H and M stores and get a discount for a future purchase. As a whole H and M has a goal to use only sustainably sourced materials by 2030.

Today’s lesson –

Recognise the link between economic activity and the environment using the models; circular flow model and materials balance model

Circular flow model –

- Shows the real and monetary flows of economic acitivity through the output and factor markets

- Forms the basis of modelling the relationship between economic activity and the environment

- But does not explicity show the linkage between economic activity and the environment

Materials balance model –

- Places the circular flow within a larger schematic to show links between economic activity and the natural environment via two sets of flows

Flow of the resources from the environment to the economy – the focus of natural resource economics

- Flow of the residuals from the economy to the environment – the focus of environmental economics

Residuals are pollution remaining in the environment after some process has occurred – residuals can be delayed, but not prevented, through recovery, recycling and reuse



- Research a particular market failure and solution in a country

- Market failure in the textile industry and find a solution that helped come back from this failure

- Show how it was failing before the solution was put into place

Within the fashion industry, specifically, when it comes to fast fashon, errors are almost inevitable. The speed at which garments are created has drastically increased in order to meet high demands and unfortunately, quality control often takes a back seat during the production.

Below will demonstrate two apparel brands that failed and how they turned around their damaged reputations to revive their apparel quality management systems.


- H and M is often referred to as pioneer of fast fashion. This company is one of the world’s largest and fastest growing retailers and is highly popular amongst consumers for their ability to create affordable and up to trend products at fast speed.

- The idea of the company is that they produce designer knock off’s, worn only while on trend and then replaced by the next seasons trend pieces. Unfortunately, this cycle of production has destructive effects on the environment due to its large water and resources requirements.

- In 2011, H and M along with other brands were criticised by Greenpeace in their report titled ‘Dirty Laundry’. In addition to this, h and m have been found to make use of Youngor Textile Group’s factories for manufacturing which is known for releasing hazardous chemicals, mainly PFC’s, Alkylphenols, and hormone disruptors into waterways by the Pearl and Yangtze deltas.

H and M; the Fix –

- The company denied using wet processing at Youngor’s factories and in attempt to preserve their brand’s reputation, they embarked on a series of sustainable ‘Look Good, Do Good, Feel Good’ marketing campaigns which have been prominent in their marketing strategy to this day.

-         H and M continues to tackle sustainability issues such as ethical working conditions, environmental conservation, and animal testing in order to provide sustainable fashion.


Zara had a quality mishap in 2011, when the brand failed three quality control tests on teir garments, making them the only brand to have failed three successive quality tests.

An incident took place in 2012 where Zara, along with 20 other popular fashion brands, were accused by Greenpeace of selling clothing contaminated with hazardous hormone disrupting, cancer causing chemicals which are harmful to customers and the environment.

These harmful chemicals contribute to toxic water pollution. Greenpeace launched their Detox campaign which saw thousands of Zara’s fans leaving commdnts on their Facebook page urging the compay to Detox, expressing their desire for ‘fashion without pollution’.

More than 300,000 fans signed up for the ‘Detox Zara’ petition or emailed and tweedted Zara directly, demanding the change to be made.


Zara felt immense pressure from Greenpeace and the public to make a change and after Greenpeace campaigners began a conversation with Zara about eliminating the release of harmful chemicals during the production of their clothes, the brand decided to do something out problem.

In November 2012, Zara committed to eliminate all discharge of harmful chemicals from its supply chain by 2020. Zara also vowed that by 2013, 100 of its suppliers will make information about the release of hazardous chemicals available to the public and the media.

Successfully encouraging Zara to make the change was a huge breakthrough for Greenpeace as Zara being one of the world’s largest fast fashion brands, has the ability to set an example for other fashion brands all over the world.

What is Greenpeace?

The Greenpeace Envrionmental Trust supports a range of projects in the UK and around the world. Their focus is on scientific research, investigations and education, all of which address the urgent environmental problems we face.

As part of the wider Greenpeace movement , our work is dedicated by tackling the climate emergency and defending their world’s world’s rich biodiversity.

They do this by –

- Funding innovative scientifdic rsearch on the impact of human acitivities on the planet

- Supporting pioneering investigations, gathering evidence to shine a light on environmental destruction

- Backing educational programmes which promote better understanding of environmental issues and solutions.

Greenpeace contribute to many significant projects around the world in a number of ciritical areas.

Their legal status –

There are two greenpece organsiations in the UK wbhich are both part of the same global movement. The greenpeace environmental trust is a registered charity (no. 284934) which expands public understanding of the environment, commissions scientific research an helps deliver environmental projects around the world.

The greenpeace Ltd (company number 1636817) is the one most people know about which runs campaigns and exposes environmental injustices. Because pf restrictions on what political campaigning charities can do, it is a limited company.

Partnerships – they work with a number of trusts and foundations based within the UK to deliver transformational projects to help make the world a more green and peaceful place. Past and present funders include The Ashden Trust, Esmee Fairbairn Foundation and The Waterloo Foundation.


Goal was set for h and m to cease the use of dangerous chemicals in its supply chain contributing to the pollution of waters near their factories in China and Indonesia.

Like many anti-corporate campaigns, thw actions for this campaign were greatly dispersed. Although H and M was charged with polluting waters in Indonesia and China, actions against the retailer were all over the world and online. Local store actions were known to be taken in Sweden, Germany, China and nine other countries not specifically named in press materials.

On 12th July 2011, Greenpeace released a reprt titled ‘Dirty Laundry’ naming h and m as the largest clothing manufacturer amongst a number of international brands linked to textile manufacturing facilities in Indonesia and China discharging hazardous checmicals local water systems. The facilities discharge waters had dangerous levels of caustic and hazardous substances present including endocrine disruptor nonylphenol and solvent tribuyl phosphate.

After greenpeace mobilized online signatures on their ‘detox fasgion manifestio’ they quickly won textile policy changes from major retailers Nike, Adidas, and Puma. H and M refused to respond to initial grenpeace communications and sharing of petition signatures. On 13th September 2011 greenpeace escalated their tactics with H AND M.


Lesson 27/04/2021

Environmental pollution; a market failure

- Market failure is the result of an inefficient market condition

- Environmental problems are modelled as market failures using either the theory of public goods or the theory of externalities

- If the market is defined as ‘environmental quality’, then the source of the market failure is that the environmental quality is a public good

-  If the market is defned as the good whose production or consumption generates environmental damage, then the market failure is due to an externality

Environmental quality; a public good

- A public good is a commodity that is nonrival in consumption and yields nonexcludable benefits

- Nonrivalness – the characteristic of indivisible benefits of consumption such that one person’s consumption doesn’t preclude that of another

- Nonexcludability – the characteristic that makes it impossible to prevent others from sharing in the benefit of consumption

-  The relevant market definition is the public good – environment quality, which possesses these characteristics

A public goods for market for environmental quality –

- Public goods generate a market failure because the nonrivalness and nonexcludability characteristics prevent market incentives from achieving efficiency

- Achieving allocative efficiency in a public goods market depends on the existence of well defined supply and demand functions

- But the public goods definition disallows the conventional derivation of market demand

Market demand for a public good –

In theory, market D for a public good is found by vertically summing individual demands

- Vertical sum because we must ask consumers ‘what price would you be willing to pay for each quantitiy of the public good?’

- But consumers are unwilling to reveal their WTP because they can share in consuming the public good even when purchased by someone else

- Due to the nonrival and nonexcludability characteristics

- This problem is called nonrevelation of preferences, which arises due to free-ridership

Market demand for a public good –

- Result is that market demand is undefined

- In addition, lack of awareness of environmental problems (i.e, imperfect information) exacerbates the problem

- Consequently, allocative efficiency cannot be achieved without third party intervention

Solution to public goods dilemma; Government intervention

- Government might respond through direct provisio of public goods

- Government might use political procedures and voting rules to identifying societys preferences about public goods

Externality approach;

Environmental problems; a negative externality

- An externality is a spillover effect associated with production or consumption that extends to a third party outside the market

- Negative externality – an external effect that generates costs to a third party

- Positive externality – an external effect that generates benefits to a third party

Environmental problems; a negative externality

- Environmental economists are interested in externaltiies that damage the atmosphere, water supply, natural resources and overall quality of life

- To model these environmental externalities, the relevant market must be defined as the good whose production or consumption generates environmental damage outside the market transaction

Relationship between public goods and externalities

- Although public goods and externalities are not the same concept, they are closely related

- If the externality affects a broad segment of society and if its effects are nonrival and nonexcludable, the externality is itself a public good

-  If the externality affects a narrower group of individuals or firms, those effects are more properly modelled as an externality


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