What is a negative externalite?

1 Answer
May 12, 2015

Externalities are events or effects that affect an activity without relating to it - directly or not.


For example, we can say that 2015 April's tornadoes in Southern Brazil were negative externalities for, let's say, agriculture. There, many crops and fields were damaged. How could the farmers there predict or get prepared for a tornado? Ok, there might be prevention policies and so, but do people keep waiting for such event day and night, everyday? I don't think so.

Another example: pollution and waste on rivers/seas for fishermen. Their core acticity - fishing - is not at all related to the causes of pollution and environmental waste. But there they are: facing a decrease in number (and, why not, in quality) of 'production' (fishes) due to an unrelated (to fishing) event!