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Externalities in agriculture
Externalities in agriculture can be positive or negative. Positive externalities occur when agricultural production or consumption benefits third parties, such as honey producers aiding pollination or beautiful gardens providing enjoyment. Negative externalities happen when agriculture harms third parties, like pollution from steel plants or carbon emissions from vehicles contributing to global warming. Governments can address externalities by taxing negative externalities, subsidizing positive ones, regulating pollution, and providing incentives for environmentally friendly choices.
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Externalities in agriculture
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- 2. Hello! I am SUMITACHARYA My roll no is 180804130073 2
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- 4. • It refersto the consequence of an industrial or commercial activity which affects other parties. This concept is given by Arthur C.Pigou. • Externalities occur when producing or consuming a good cause an impact on third parties not directly related to the transaction. 4
- 5. “ ➜ Externalities caneither be positive or negative. They can also occur from production or consumption. ➜ In other words, they are unforeseen consequences to economic activities. 5
- 6. Thus, externality meansthe economic effect which arises from the production or consumption which having positive or a negative impact on a third party. Examples are pollution, pollination, soil loss, biodiversity loss, damage to health etc.
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- 8. 1. Positive externalitiesin agriculture When the production or consumption of a good/service proves beneficial to a third party, then it is a positive externality. For example, a farmer that cultivates oranges is a positive externality because he provides society with healthy products. 8
- 9. positive externalities can bedivided in to two types as below: 1.Positive Production Externality 2.Positive Consumption Externality 9
- 10. Positive Production Externality Whena firm’s production increases the well-being of others but the firm is not compensated by those others. Example: Honey producers have a positive impact on pollination and agricultural output. 10
- 11. Positive Consumption Externality When anindividual’s consumption increases the well being of others but the individual is not compensated by those others. Example: Beautiful private garden that passers-by enjoy seeing and increased the value of nearby properties of other individuals. 11
- 12. ➜ Flood defenceprojects benefit the whole community. ➜ Projects to reduce deforestation ➜ Apps that promote the "sharing" of scarce resources ➜ Research and development - spillovers for other businesses ➜ Bee-keeping and pollination. ➜ Healthcare / Childcare / flu and other vaccines made available to the population. ➜ Education / Learning / Community Work. ➜ Pest control/gardening. ➜ Usage of mass transport services instead of private motoring ➜ Youth clubs and apprenticeships 12 Positive production externalities Positive consumption externalities
- 13. 2. Negative externalitiesin agriculture ➜ When the production or consumption of a good or a service is detrimental to a third party, then it is a negative externality. ➜ For example, someone who is smoking in a closed area is a negative externality because he may cause cancer to other people. 13
- 14. Negative externalities can bedivided in to two types as below: 1.Negative Production Externality 2. Negative Consumption Externality 14
- 15. Negative production externality When afirm’s production reduces the well-being of others who are not compensated by the firm. Example: Steel plant pollutes a river 15
- 16. Negative consumption externality When anindividual’s consumption reduces the well-being of others who are not compensated by the individual. Example: Using a car and emitting carbon contributing to global warming 16
- 17. 17 OVERCOMING EXTERNALITIES ➜ Organicagriculture and environmental construction practices should be adopted. ➜ FriendlyTo reduce consumption of negative externalities, we can place a tax on goods with negative externalities ➜ To increase consumption of positive externalities, we can place a subsidy on these goods. ➜ The government may place regulations which limit the amount of pollution. ➜ The government could place incentives and make it easier to choose less costly environmental choices.
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