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exhalations
Thursday, November 15, 2007
 Negative externalities 
In grad school I took a land economics class that dealt with issues related to land use and other impacts on the land. We discussed a concept referred to as “negative externalities”; the negative impacts of economic development that are not accounted for in regular accounting practices (see link above). Basically it means that the negative effects of pollution generated from industrial practices is not factored in to the cost of production. As a naive, idealistic grad student, this seemed absurd to me. Of course there would be pollution if the companies that generated it were not responsible for the costs of cleaning it up. It seemed like a straightforward way to deal with pollution would be to start accounting for these negative effects.

As society becomes more concerned about finding ways to reduce pollution and unnecessary energy consumption, this concept seems to be catching on. An article in today's New York Times, Court Rejects Fuel-Economy Standards, a court in California ruled that the Bush administration must take into account the effect of low fuel efficiency standards on climate change:
A federal appeals court here rejected the Bush administration’s year-old fuel-economy standards for light trucks and sport utility vehicles today. It said the rules were not tough enough because regulators had failed to thoroughly assess the economic impact of tailpipe emissions that contribute to climate change.
Maybe there is hope.

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