External and Social Cost of Detergent Powder Production (Case Study: Tolypers Inc. - the Largest Iranian Manufacturer in Detergent Powder Industry)

This paper aims to measure the external cost in the production of detergents by Tolypers Company during 2011. The used methods included sequenced consequence approach to quantify the external cost of air pollution resulting from the combustion in production process of detergents, fuel analysis techniques to obtain the weighted value of each pollutant per unit of fuel, and unit cost estimation to estimate the total external cost for detergents produced in the factory during one year. The results show that external cost of 1kg detergent powder produced by Tolypers Inc. in 2011was 116.2IRs according to prices of the current year. Calculations indicate that the private, external and social cost of hand-washing detergent powder was 8157.1, 116.2 and 8273.3 IRs, respectively, and 13752.1, 116.2 and 13868.3 116.2 IRs for machine detergent powder. These results indicate that the contribution of external cost has been lower than the social cost, compared to the contribution of private cost than social cost. In other words, these ratios were 1.40% and 0.83% for hand and machine-washing detergents which are lower than the same ratios in electric production industry with 20% and 40% as mentioned in empirical studies. Nevertheless, the relative amount of cost is still of great importance to provide practical solutions in order to improve processes to reduce the external costs of producing detergents, considering the massive amount of powder detergent produced in Iran, and the fact that the current study merely calculated the external costs resulting from fuel combustion (rather than the external costs caused by polluting sources). Accordingly, the focus on manufacturing methods that are less polluting, internalizing the external cost of detergent powder in its market price by tax and providing the necessary infrastructures for development of investment in the manufacturing sector to provide cleaner production technologies can effectively reduce the external cost of these products.