Externalities of Shipping

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Shipping is one of the best examples of generators of externalities. There is a range of externalities involved in shipping such as water, noise, air, congestion, death and injury. The economics of maritime safety and environment specialises in studying the relationship between the economic system and the maritime safety and environment system and the way the two systems interact. Such a study aims at achieving a balance between the objectives of the two systmems. In order to face these externalities and reduce them to the minimum, so as they do not affect the environment, is important to produce such proposals for economic policies for the maritime sector. It is essential especially for a chairman or a chairwoman of Global Commission on Maritime Safety and the Environmental Reform. This is a fictitious Commission which will be used in the report as an example. To begin with, the definition of externalities is going to be addressed so as to be able to understand what it is and how they can be confronted. Externalities are the "benefits or costs, generated as byproduct of an economic activity. Environmental externalities are benefits or costs that manifest themselves through changes in the physical or biological environment" (McCracken M, 2009). Using the definiton above interpretation leads to state that economics will focused on making the externalities recognised to craft them into the market internalsing making the market more effective. Since the definition of externalities is stated, the individual focusing on each one of them which are involved in shipping is going to be examined further down. Firstly, when a large vessel, such as container ship or an oil tanker carry ballast water in their cargo tanks that they then discharge to reload cargo, the water they discharge inevitably contains a certain amount of crude oil, which pollutes the sea. The carriage of sea water aims to help stabilize and balance the ship. Ships are also responsible for the...
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