Research over the last 30 years confirms that air pollution causes adverse effects on community health and the environment and imposes a real cost on the community. Economic theory shows that for resources to be used and distributed efficiently, all costs and benefits of an activity need to be adequately considered. However, in many cases, the costs of air emissions are ‘external’ to the production and consumption decision- making processes, as they are imposed on the wider community rather than the polluter. The presence of external costs, or negative ‘externalities’, is a sign of ‘market failure’, and means that the.
