How People Begin Internalize Externalities and Its Consequences to Identity
An externality can be both positive or negative and can stem from either the production or consumption of a good or service. The costs and benefits can be both private—to an individual or an organization—or social, meaning it can affect society as a whole.
Economic tools based on monetary equivalences cannot offer a synthesis of the actual costs-benefits trade-off really at stake. The complexity of the social and environmental implications of decisions impacting the environment can thus not be expressed through “synthetic measures”, which usually hide forms of power abuse (apud Luzzati, 2005: 11).
Business needs to review its current practices and look for ways to increase the efficiency with which it uses energy and material. Running a business as if it were a part of a continuous closed cycle creates new opportunities. Looking for projects that reduce energy and material consumption represent significant savings for the firm, that are often less risky than investments in additional production and good for the environment.
Kapp, Karl William (1950). “Political Economy and Psychology: The survival of Hedonism and the Research Tasks of the Future”. Kyklos, 3, 205-29.
Martinez-Alier, Joan (1987), Ecological Economics: Energy, Environment and Society. Oxford, UK: Blackwell.
Luzzati, Tommaso (2005), Leggere Karl William Kapp (1910-1976), “Per una visione unitaria di economia, società e ambiente”, Discussion Papers del Dipartimento di Scienze Economiche–Università di Pisa, 56, 1-30.