Externalities and Sustainability Processes
Externalities may be defined as positive or negative side (external) effects of actions of one economic agent that affect the welfare of others who are not involved in these actions. These external effects are outside of the market mechanism. An externality is a cost or benefit imposed on people other than those who sell or buy the product. Negative externalities affect the welfare of current and future generations and inhibit the prospect of sustainability. Neutralization of negative externalities and creation of positive externalities are necessary conditions for achieving weak sustainability, but strong sustainability requires to conserve resources for future generations through the preservation of environmental rights.
The importance of sustainable development has grown out of recognition that current economic activity may have important effects on future generations. Despite...
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