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Outsourced costs, also known as externalities, are negative impacts on people outside of economic transactions, such as pollution. External costs can also include resource depletion, climate change, and health problems. The environment is often the victim of external costs, and many countries have agencies in place to protect it.
Outsourced costs are negative impacts associated with economic transactions involving people outside those transactions, meaning that neither the buyer nor the seller bears the brunt of the costs. A well-known example of this type of cost is factory pollution, which can have a negative influence on the surrounding community. Many activists have raised concerns about such costs, suggesting that some economic systems may need to be reformed to address them, and some consumers have joined the chorus calling for reform of the way people and companies do business.
Anything that impacts someone outside of a transaction is known as an externality. Externalities can be good or bad and are incredibly varied. As a general rule, people use the term “externalized costs” to describe externalities that are negative, while “externalized benefits” are externalities that are good. Often, externalities are both negative and positive at the same time, which can create a rather tangled web of problems.
Examples of external costs beyond pollution include: resource depletion, climate change, and health problems, among other things. Some external costs are a bit difficult to control; resource depletion, for example, can be difficult to combat when a company sees a demand for a product and wants to fill it, and pollution is an unfortunate side effect of most industrialized manufacturing, even in relatively “clean” factories ”. Others may be deliberate by the parent company, as is the case with companies that do not offer benefits to their employees, relying on the company at large to support their employees.
The environment is often the victim of outsourced costs. In the case of external costs such as health problems caused by pollution or the use of various products, individuals or groups may choose to seek justice from the company that sold the product, or the people who bought it, and most Legal systems provide avenues of redress in these situations. However, the environment is a silent entity, which makes it difficult to bring the environment into question.
Many countries have agencies in place to protect the environment, and many of these agencies work to reduce the impact of externalized costs on the environment, in the interest of protecting living individuals and future Earth residents.
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