FUNDAMENTALS OF ENVIRONMENTAL ECONOMICS

Two economic concepts that are integral parts of environmental economics are cost-benefit analysis, or CBA, and externalities. CBA refers to the economic appraisal of policies and projects that have the intentionally aim to improve the provision of environmental services or actions that might affect (sometimes adversely) the environment as an indirect consequence. An externality is an economic term referring to a cost or benefit incurred or received by a third party. Even if the third party has no control over the creation of that cost or benefit. An externality can be both positive or negative .Pollution emitted by a factory that muddies the surrounding environment and affects the health of nearby residents is a negative externality.

Click the picture below to explore the pages below to understand the fundamentals of cost benefit analysis and externalities. As you explore the pages explain the externalities associated with agricultural practices.