Why are negative externalities bad?

1 Answer
Jan 7, 2016

Negative externalities affect those who had no part in a decision.


A negative externality is where those who had no part in a decision feel negative affects from the decision. For instance, if a mining company decides to drill in a location, they are negatively impacted people who live nearby, even though those people had no part in the drilling decision.

This is a problem because its not easily controllable and negative. The people in the example can't really do much about the decision, but they do feel negative affects. Therefore, its not manageable and it hurts those who don't take part in the decision.