Jan 10 2008

Does the funeral industry represent a market failure?

‘Green funerals’ feature biodegradable coffins – CNN.comMove over, I got a coffin on my back!

Our final micro unit examines situations in which resources are either under or over-allocated towards the production of certain products. Such a scenario is known as a “market failure” and in some case is represented by the existence of negative externalities, or spillover costs born by society, the environment, other species, or any third party that was not part of the market transaction.

All this is a fancy way to say that someone or something gets screwed thanks to someone else’s actions. In the case of negative externalities, such as air-pollution, second-hand smoke, loss of biodiversity that results from over-grazing or over-farming of sensitive lands, or even global warming, the full costs of production or consumption of particular goods are not being born solely by the producers and consumers of those goods.

The article above talks about the funeral industry, which for decades had had incalculable impacts on the natural environment thanks to humans’ irrational desire to be preserved for eternity with the help of countless chemicals, air-tight metal lined coffins, and heavy use of pesticides, herbicided, and all kinds of “icides” to make sure that our place of rest remains sterile and lifeless for perpetuity. All this “preservation” takes a huge toll on the environment, and as a result of America’s newfound sense of “greenness”, alternative forms of burial have emerged:

“It is composting at its best,” said Beal, owner of The Natural Burial Company, which will sell a variety of eco-friendly burial products when it opens in January, including the Ecopod, a kayak-shaped coffin made out of recycled newspapers.

Biodegradable coffins are part of a larger trend toward “natural” burials, which require no formaldehyde embalming, cement vaults, chemical lawn treatments or laminated caskets. Advocates say such burials are less damaging to the environment.

Here’s the irony that I can see from this situation. It appears that enviro-friendly Americans who want to save the earth by burying their loved ones the eco-way have to get their bio-degradable coffins from manufacturers as far away as the UK. Imagine the amount of fossil fuels that go towards getting something the size of a coffin from England to Oregon!

The majority of eco-friendly burial products come from overseas — including the Ecopod, which is made in the United Kingdom — although there are a few domestic makers. Options range from natural-fiber shrouds to fair-trade bamboo caskets lined with unbleached cotton. There are also more traditional-looking handcrafted coffins made of wood certified by the Forest Stewardship Council.

Probably won’t be long before dozens of American firms offer the perfect eco-friendly burial container for the “hippy in you” the next time you lose a loved one. After all, sounds like there are profits to be made!

Biodegradable containers cost from around $100 for a basic cardboard box up to more than $3,000 for a handcrafted, hand-painted model.

“It’s hard to tell if it’s a fad or if it’s here to stay,” said Bob Fells, of the International Cemetery, Cremation and Funeral Association. “We are certainly positioning ourselves that if this is what the community wants, we are ready to serve them.”

When I die, I want to start a new trend in eco-friendly burials. Why use any specialty container at all? I hope my loved ones will do what’s truly good for the environment, and head for the nearest Best Buy to dig out the perfect Maytag, Kenmore, or GE refrigerator box, line it with old issues of The Wall Street Journal, and lay me to rest in peace in a truly recycled container!

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About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

17 responses so far

17 Responses to “Does the funeral industry represent a market failure?”

  1. Cynthia Bealon 11 Jan 2008 at 12:40 pm


    Thanks for this perspective.

    I think that with respect to "natural burial" the funeral industry may indeed represent a "market failure", if only from the POV that it left a huge slice of "market" on the table for non-industry players from the natural products and conservation real-estate arenas to come pick up. As you say, the big-box greenies may swoop in eventually but 1) that will mean more cemeteries and funeral service providers go "green" even faster, 2) that will mean that the really good conservation cemeteries won't have to struggle because they'll obviously be the best and won't lack for customers if they're accessible, 3) and yes, there are "profits to be made" but no one can run a business on no profit, unless they've inherited a bundle, and then where did they get THAT from and how will they pay for and sustain good works?

    I own the Natural Burial Company (the subject of the AP article on biodegradable coffins, and the focus of your comments) and I also have a book coming out called "Be a Tree, the Natural Burial Guide for Turning Yourself into a Forest" (online condensation at <a href="http://www.beatree.com.)” target=”_blank”>http://www.beatree.com.) I think I addressed your comments in both of those publications but thought I'd clarify them here since you've got this excellent blog forum that makes a response possible (thanks!).

    I'll just speak to your point about transport here, since you probably didn't read our website and explanation about transport (or paper coffins, etc.) but relied on the Associated Press story for your data (nice folks but not great for in-depth coverage when you're reading a 500-1000 word article.)

    As we imply on our sites, we import because we have to if we want to express a range of options broad enough to stimulate people to think differently and create enough momentum for change. We have big plans – we want to see big change in how we do death in this country – and big plans mean lots of change, all at once, in all sectors, across the board.

    Also, it's hard for anyone (entrenched industry, for example, that can't readily make room for the natural option) to object to natural burial on the grounds of "poor quality coffins" — something the UK funeral industry did initially but failed to prove over time due to their assertion's overall inaccuracy — when thousands of these exact same natural caskets have been buried successfully in England for over a decade. Without that successful track record in the UK, US change toward natural burial might be slowed considerably if questions could be raised about usability – but they can't. We're happy to say we have great products and they work – dirt is dirt, whether it's in the UK or the US, and coffins designed to go back to it do it the same no matter what country they're in (though for the quibblers, latitude and temperature and humidity do make a difference…)

    There are virtually ZERO woven caskets from Americans at this time – I have found none who are ready to enter the wholesale market. When I first started this company, I'd hoped to represent American artisans, but I quickly discovered there were none left – all artisans capable of making large quality work are fully employed as independent craftspeople and have no need to produce coffins for a wholesale market at wholesale prices that customers like yourself would agree to pay for.

    I have found only a handful of basket makers that are even capable of making a large squarework basket work any longer, and they're too busy to do anything else. We have outsourced all of our weaving to other countries, and we can no longer make quality woven goods for ourselves. We hope we'll stimulate demand, prove there's a market, and reinvigorate the woven fiber arts eventually – we feel we've made a good start, BTW.

    And if wood is cited as an alternative, sure – there are a lot of biodegradable options and we have most of them – but as you'll read in our online writings, solid wood caskets are the least eco-friendly, least biodegradable of the biodegradable grave goods and they also require the most work AND generally use heavy machinery in their construction, whereas woven caskets and Ecopods are made entirely by hand.

    Formaldehyde free plywood, woven fiber and paper are much more sustainable to both produce and put back into the earth.

    If you study the market, you know that it takes consumer demand to get the market to respond. Again, if you read my online book condensation of Be A Tree you'll see that consumer demand doesn't exist because Americans are not told natural burial is an option.

    They're not told natural burial is an option in part because the funeral industry has failed to create the option, and also because everyone's been so willing to bow down to "regulations," and accept the status quo, even when the practices (liner, embalming, even coffin itself) are obviously not needed for public health and safety.

    If the UK can do it for thousands of burials, where is the danger or the impossibility, and why have Americans (and others) blindly nodded our heads up and down and said – "Ok, I can't be buried naturally because it's illegal." Why do we do that? Why have we done that?

    Why don't we ask "why not?" and "why can't I?" and "what's so dangerous about it?" etc. Why is it so easy for people to blythely say "I want a Viking Funeral," and leave it at that? Why don't they take it seriously? I mean, they're going to die, and they haven't made any plans or taken care of it – in fact, almost all environmentalists I know have left it up to someone else to manage their body when they die OR have hired the Neptune Society (owned by BG Capital Group – http://www.bgcapitalgroup.com/management.asp)

    THAT, IMO, is the industry's success until now – it's hoodwinked us with a subject it has laden with taboo so that we won't inquire about it nor seek out our real desires.

    That's also the industry's market failure here – it masked our real desires so thoroughly that it couldn't even see them itself. It's one thing to blind us to our own desires by hypnotizing us to believe in theirs – the products and services that served their bottom line. They made their mistake when they thought we really had the desires they wanted us to have. THAT is the failure to anticipate a market because you're blinded by your own story of what's necessary.

    Now, as 30+% of Americans wake up to their desire for a more natural end, they're going to want something different really fast. The funeral industry is NOT prepared to respond quickly and this will open the funeral field for hundreds of new entrepreneurs. I repeat, 2.5 million people a year die in the US alone and I'm guessing at least 30% (probably a lot more) want natural urns, caskets, burial plots, shrouds, funerals, etc.

    The emerging publicity about natural burial will now change that. Demand will grow. The market will respond. My company and our colleagues will do our best to stay at the forefront of that market with environmentally friendly options that increasingly embody the values I describe in my book.

    But we also won't lose sight of the most important thing – we must change the systems we set out to adjust on the largest scales in this oligopolistic over-regulated industry, because it's only when change takes place on the larger scales, impulsed by public will and with the backing of public institutions (like city-owned cemeteries, for example) that the smaller businesses who are outside the oligopoly can come into easy alignment with the new trends.

    Yes, it's ironic that I'm forced to source items from abroad. But it's also interesting to explore the WHY – that even environmentalists with 50 years of activism under their belts – environmentalists who started the "Leave No Trace" movement, for example – have failed to notice that they're going to die, and have failed to research even the basics of natural burial, notice the lack of natural burial grounds, or to address the downsides to cremation. How could environmentalists (and I count myself among them until my epiphany in 2004) fail to notice we were going to die?

    Now, that's irony…

    Finally – with respect to "greenwashing" I've heard it said that if a company is in the top 5-15% of its "class" and is greener than the other 80-95% of its competitors, charges of greenwashing should be suspended because they're meaningless. Doing something 20% better when you're competitors are doing it ZERO better is punishing the very people who are making the change you want to see in the world. Don't punish the folks who are changing because they don't do it fast enough. Buy from the best if you can afford it, but please don't ridicule the people who aren't as "good" as you want them to be.

    Reward them for the change by supporting them, not castigating them for their failure to attain perfection before everyone else – you'll put them out of business making them souce those handmade office pencils while their competition is out scooping up their supply chain.

    Support the folks who are changing in the right direction, the ones in transition who are taking more risk, so that their competitors will be forced to step up to the same plate and spend the same amount of profits on greening THEIR businesses (instead of covertly funding trolls who talk about greenwashing, and don't think it isn't done…)

    BTW – Although it may feel new because you thought of it on your own (and congratulations – we'd be much better off if more people were that creative), you won't be starting a new trend with the recycled cardboard box because that's the home-funeral movement's item of choice and it was one of the first type of coffins I ever sold (although the EveryBody Coffin is a pretty close second…)

    You'll also see that on our website we advocate cardboard but it's so cheap we don't even market them! However, the one we DO have and sell in our galleries is produced from a lot of recycled content, and assembled two blocks from the mill it's made in by a non-profit US company that consists largely of blind persons, so we're certainly aware of how to buy according to the triple bottom line…)

    So, I DO commend you for the Maytag box re-use you mention but in our case, you'd obviously be depriving deserving people of good work and you may have to do a lot of dumpster diving to round up an adequate box AND your friends will have to duct tape it together AND — WARNING! — it will be floppy because your rigor mortis only lasts 24 hours, so unless you've made pre-arrangements with a couple of friends handy with a shovel and stout of heart(except for they're probably not allowed to dig for insurance reasons unless you're at one of the truly hip burial grounds), and yet even with rigor mortis you'll probably need a box-bottom stiffener but dang, now you're back into the consumption cycle again — sure, go get an old door; that will work but by this time whoever's burying you may notice you're not around to complain – at least, you're probably not saying much.

    And I don't mean to be disrespectful here but as you can see, there's a bit to think about — more than just a toss-off, if you really take it seriously — and if you haven't done this for yourself then someone else will have to do it for you and, all greenness aside, where's the personal responsibility in THAT?

    Anyhow, I've enjoyed posting a comment her and it's given me even more thoughts for my own writing. Thanks for thinking! If more people did, this would be a helluva place!



    Cynthia Beal

    Natural Burial Company

    Be a Tree

    PS – If you're in China, this should continue to be an interesting topic. I'll try and check back now and then…

  2. Alice Suon 13 Jan 2008 at 4:23 pm

    If you take into consideration the definition of "market failure" as one that is represented by the existence of negative externalities, then I guess that the funeral industry does represent a market failure. At the same time, it reflects a sort of ridiculous example of how everything in our lives up to even the boxes that our decaying remains are going to lie in has become commercialized so that producers can make as much profit as possible. Does it REALLY matter what kind of coffin you're put in? It's not like you'll be alive to even know. And so i guess it would make sense to take into consideration how your dead body is affecting the environment after you're gone. At the same time though it still seems silly to spend $3,000 on an imported eco-friendly coffin. Personally, when I die I want all my body parts to be donated for scientific research.

  3. kxc.024on 13 Jan 2008 at 9:23 pm

    I admire Alice. I get the creeps when I think of someone else cutting open my body for research, even if I'm already dead. =

    I don't think we can blame people for wanting to be buried in a nice coffin. I mean, it is the place you'll stay for an extremely long time. But this is the same concept as aging. A lot of people do things to their bodies like Botox so that they can continue looking young when it's normal to get old (ever heard of natural beauty?). Likewise, people like being well preserved, even if they're corpses.

    A hundred and fifty years ago, people never thought that the resources they were using would cause global warming. This might be the same case where we never really thought about how the coffins and things we use to preserve the bodies are ruining the environment. But it's better late than never so I guess the best way is to contemplate on whether using the bad coffins or having a environmentally friendly one shipped from the UK has more benefits. Each has their own costs so either way, we'd be harming the environment if we want to be buried in a non-recycled coffin.

  4. ElaineLungon 14 Jan 2008 at 7:41 pm

    "But it’s better late than never so I guess the best way is to contemplate on whether using the bad coffins or having a environmentally friendly one shipped from the UK has more benefits. Each has their own costs so either way, we’d be harming the environment if we want to be buried in a non-recycled coffin."

    But as the article says, there are eco-friendly alternatives in the U.S., and if all else fails, there is still the cardboard box.

    I've always thought that where you're buried matters more than what you're buried in, if you're going to get all sentimental about death…amirite? I mean, a lavish burial in a place meaningless to you <a>

  5. ElaineLungon 14 Jan 2008 at 7:41 pm

    (oops, cut off)

    is worth less than a simple burial in a place that meant a lot to you.

  6. KatherineYangon 14 Jan 2008 at 8:08 pm

    Personally, the idea of burial at all creeps me out, I don't want to spend eternity six feet under …anyone considered the benefits of cremation? Ash is meant to be beneficial to the environment in a way too; it promotes plant growth. I think, when I die that's how I'd prefer to be laid to rest (although my mom wants me buried and says if I die before she does, she'll bury me anyway =/).

    In the end I guess it is all about costs, and cremation takes a lot of hot fire, so how environmentally friendly it is depends on how you tend the fire, fossil fuels help an oven burn better.

  7. Kristie Chungon 14 Jan 2008 at 10:03 pm

    The funeral industry does represent market failure; it has negative externalities as the coffins' chemicals pollute the natural environment. The eco-friendly coffins seem to take care of this problem, but shipping them from overseas creates pollution problems of its own; either way, the environment is harmed. Both options have its own costs. However, the article does say that there are alternatives for the eco-friendly coffins in the U.S… but, I still prefer cremation.

  8. Jason Welkeron 16 Jan 2008 at 8:57 am

    Wow, I just received the comment above from Cynthia, the owner of the the Natural Burial Company, the makers of the "green coffins" mentioned in the article above. I'd just like to point out to my students the enthusiasm and passion for her market that she exhibits in her insightful comments.

    Also, to Cynthia, I also wanted to point out that I'm personally all for your cause. The "market failure" alluded to in my article referred to the traditional funeral industry, towards which too many resources have been allocated over the last several decades, evidenced by the environmental hazards associated with burying our loved ones in sealed metal lined chemical filled cases then preserving their burial site with chemicals for eternity. As you may have determined from reading other posts on this blog, I myself am an avid environmentalist and only wanted to critique the traditional funeral industry in this piece, and share the perspective your company advocates, which I agree with.

    Again, I would still hope that a truly "natural" burial would not require the transport over thousands of miles of "green" coffins. Perhaps what the industry needs is a grassroots network of burial grounds that make use of entirely locally available materials… but then again, no money to be made there! Anyway, keep up the good work Cynthia, and thanks a ton for your comments! – Jason Welker

  9. Cassy Changon 16 Jan 2008 at 7:21 pm

    I didn't know rigor mortis lasts 24 hours.

    Having elaborate coffins and funerals is a way living people console themselves about death. And I think it is necessary gesture (for the living people). The thing is, many people feel that letting the body become part of the earth in a picturesquely unpleasant way takes away from the respect in an almost morally unacceptable way. I think it's one of those faulty human feelings…because the common undegradable kind of burial is even more unpleasant if you think about it.

    Personally if I were deciding my own burial, I would probably not think in specific terms of positive/negative externalities, but I would object to the idea of making me part of a eco disaster in the future (since I prefer to be remembered kindly).

  10. Rebecca Sungon 17 Jan 2008 at 6:43 pm

    I agree with Elaine; it's more about WHERE you're buried than WHAT you're buried in. I think it'd be better if you were buried in a carboard box in a place that you love. When your body degrades, you'd become a part of the place you love. So, you not only can possibly become a tree, but become part of your favorite place.

  11. TimChuon 19 Jan 2008 at 5:39 pm

    What about cremating? wouldn't burials without any coffins at all be good? and your ashes may even add to the richness of the soil in the area. However, cremating may cause some greenhouse gases… Personally, i want to be cremated. the thought of bugs and bacteria eating at my dead body is a bit strange…even if you're dead.

  12. Nicole Wongon 20 Jan 2008 at 6:21 pm

    I have to say that it definitely seems like these coffins are polluting the environment in order to stop polluting it in another way. It seems to me that the reason for many of these issues we have to deal with every day (e.g. global warming, wars, health issues) are problems we have caused for ourselves, the unnatural things that we do. If we came into this world naturally, it only makes sense to leave it naturally. The most ideal way to go is to simply be buried in the soil, but the idea of cremation also appeals to me.. though it results in a cost to the environment. What can I say? Tim's right. Bugs are gross.

  13. Trevor Sunon 21 Jan 2008 at 6:49 pm

    The idea of eco-friendly coffins is a great idea for the environment. Before this article I had no idea that the traditional coffins where having an impact on the environment. I hope that the use of traditional coffins will cease but at the same time it just wouldn't seem right. Buying a biodegradable coffin would seem like being buried in a cardboard box, so why spend the money for the coffin unless the coffin was cheaper than the cardboard box.

  14. […] this post has nothing to do with Economics. A couple weeks back, I did write an econ related post about the funeral industry and the emergence of a new market for “green burials” in […]

  15. Cynthia Bealon 05 Mar 2008 at 1:35 pm

    I'm back, but with fewer words:

    1) Cremation uses energy and the by-product, scorched sterilized bone, is not edible by soil microbes who are responsible for a large amount of the growth activity (including carbon absorption) in the soil. When you bury yourself naturally you are food for the soil. You've built yourself from food. Give it back. Without burning it first.

    2) The coffin is not only a utilitarian product. It is an item that can carry a lot of meaning for people. Something handmade means more to some folks than stamped upholstered steel (80+% of US coffins are this type, increasingly made in china). When a favorite relative dies and you're able to be involved in painting their coffin (for example) you'll experience profound and startling emotions that no product, no television show, no conversation at a bar, can ever give you. Meaningful things create feelings. Those feelings help teach us what it means to be human.

    Economists and business people who don't understand what it means to be human, and what it takes to evolve into a full human being, will kill the rest of us before we have a chance to fully live.

    Do good business, folks! Become humans!

  16. Hanna Feekon 10 Mar 2011 at 5:10 am

    The sales pitch associated with Natural Burial is a "greenwash". Besides coffins, dead bodies are filled with contanimation from diease, drugs, mercury, metals from pacemakers, heart monitors which are all harmful to our natural environment. Toxic waste should be contained & not be allow to enter groundwater. What are these people thinking. I am horrified with this irresponsible concept.

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