People around the world are running unhealthy and dangerous activities that are destroying the whole society and economy around them. One of these activities is throwing uneaten food in the bin without considering the consequences of this activity. This activity costs 8 billion a year which is a large amount of money that the economy can use to increase the amount of goods and services for example.
Moreover, the amount of energy that is used up into producing food is about twenty tonnes for every one tonne of food produced. Activities (production and consumption of goods and services) that affect the society positively and negatively, and that are external to the market and are not taken into account by consumers and producers where there is no appropriate cost is paid are known as externalities.Externalities can either be positive externalities (exists when the production and consumption produce external benefits that may go valued improperly by the market this means that the marginal social benefit of production and consumption rise above the marginal private benefit) or can be negative externalities (exists when the production and consumption produce external costs that may go undervalued).
In this article throwing uneaten food by householders in United Kingdom is considered as a negative externality.When families throw away a lot of uneaten food it will keep piling up to form a mountain of rotten food. This rotten food forms methane gas which is 20 times more damaging than CO2. When people throw away the food, they don’t take into consideration the external costs of this activity. Figure 1.1 shows a market with demand and supply which reflects the private benefits, costs and the negative externality. Including the negative externality corrects market failure.
Figure 1.1Unfortunately, negative externalities are ignored in the market place and therefore there is market failure. Market failure is a situation where the market either leads to uneven allocation of resources (under-allocation or over allocation) to a specific economic activity.Economics is concerned about the environmental risks that are growing due to damaging effects of production or consumption. Throwing food wastes is considered as a polluting activity.
Polluting activities are considered a major problem because they impose an external cost. For example, householders getting rid of uneaten food are not paying the cost of the methane gas which is causing global warming when the food piles up and rotten. In addition, there is a distributional problem where the polluters are imposing costs on others.For example, global warming affects the whole world and so the polluters are imposing costs on others by this polluting activity which is causing global warming. Nevertheless, there are other economic concerns about this negative externality. Valuing the amount of damage (external cost) of pollution activities can be extremely difficult.
However, in this article the external cost has been valued as 8 billion pounds a year.This article provided some worthy solutions. The first solution is known as Ludlow trial. This solution is to ask the people to separate their food wastes from the original garbage where the food wastes are collected and turned into a force of environmental good where it can be used as a fertilizer without emitting harmful methane gas. More or less, there is another solution provided which is building incinerators which will cost a large capital.
This solution is not very efficient where we must use the scarce earth resources carefully. In addition, the article provided the best solution which awareness where each family must be aware of the amount of wastes they’re throwing so that they can manage the amount of food they must throw as wastes.In conclusion, I would like to mention other economic solutions that are not mentioned in the article to stop market failure. Controlling market failure and reducing pollution caused by food wastes can be achieved by the interference of the government. The government can extend property rights (internalize the externality).
The consumers who are causing pollutions will meet the costs of damage to other people’s lives. This can be done by giving the people who are concerned about their life a right to report any person who fills the bin with loads of food wastes. Another method is by using the law (legislation). For example if a person gets caught with additional food wastes he gets charged an appropriate amount of money.
Bibliography* MacKean, Liz. “Food waste costs ï¿½8bn a year.” BBC News 14 April 2008. [Online] 20/4/2008. ; http://news.bbc.co.
uk/go/pr/fr/-/2/hi/programmes/newsnight/7335188.stm;.* Glanville, Alan. Economics from a global perspective. United Kingdom: Glanville Books Ltd, 1997.