As consumers, do we pay a true price for the products we buy? This issue is central to this report. ‘True Pricing’ is the concept that all the social and environmental costs of a product are included in its price, such as the damage caused by emissions during the production process. In many cases these costs are not included, resulting in a ‘true price gap’. If we did pay real prices, we would approach a situation in which the ‘polluter pays’. The end user is then held responsible for impacts caused by the production and consumption of the product.
There is currently almost no true pricing on consumer items. In this report, we analyse various types of products and conclude that in most cases there is still a very large true price gap. Although products such as meat, dairy, furniture, clothing and electronic devices involve many external costs, there are virtually no instruments that allow consumers to pay a price for the impact of these costs (such as taxes). Moreover, in most cases consumers are not informed about the external costs of a product.
How can we achieve a system of true pricing? In the report, we also analyse the possible impact of instruments to reduce the true price gap and to better inform consumers. For example, by internalising external costs through environmental taxes and/or informing consumers of the true price of the product they are buying. Based on our analysis, we recommend ways for the government to contribute to the transition to a system of true pricing.
The report was submitted to the House of Representatives by Sophie Hermans, the Minister of Climate Policy and Green Growth (Klimaat en Groene Groei), on 21 February 2025 (Only available in Dutch).