Externalities Assignment

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AC 340-01
Externalities Assignment
April 2, 2012

The Externality costs of Environment

As we all start our day in the morning, the first thing we do is step outside and watch the sky or the colored sun. However, we tend to forget that we don’t actually get to see the natural colors of the sun through all the layers of pollution within the air. We are not just deprived of seeing this beautiful sight but also there is an increase in diseases, infections and death that is caused by pollution. One such pollution is air pollution, which is the presence in the atmosphere of harmful gases, liquids, or solids. Today we live and work in a world driven by a fossil fueled economy. The cars and other forms of transport that we run on are primarily on gasoline derived from oil. Our homes and work places stay heated and cooled using electricity generated by utilities heavily dependent on coal. Many air pollution issues such as climate change, acid rain and smog are directly related to our energy choices. Solutions to air quality issues range from calls for greater energy efficiency to increased reliance on renewable energy sources to more stringent pollution control regulations. According to the article in greennature.com, “The most publicized issue of externalities today is probably the issue of second hand smoke. Smokers, so the logic goes, harm not only themselves, but also others who breathe their smoke second hand, when they smoke inside poorly ventilated buildings. This would be considered a negative externality.” Even though smokers gain the pleasure from smoking, others have to pay for this gain of pleasure as a cost. When one calculates the cost of negative externalities, it often starts by organizing the costs along three broad areas which are security, environment, and health. According to the article in greennature.com, “Dependence on fossil fuels also creates a variety of negative environmental externalities. For example, fossil fuel energy production is...
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