noun ( pl. -ties)
[Economics] a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey.
(Oxford American Dictionary, 2012)
Externalities are not a rare occurrence in the world, though some human activities generate more dramatic cases. In addition to positive externalities – such as the example of honey bees pollinating nearby crops – there are also negative externalities. Imagine that the same bees are also responsible for stinging 100 people; the pain and medical costs that these people must deal with would not likely be reflected in the price that consumer’s pay the beekeeper for her honey.
While certain livestock activities can produce positive externalities, such as cheap fertilizer for nearby farmers in the form of manure, today’s livestock production creates a plethora of negative externalities. Examples include; water and air pollution, chronic health-related diseases, the production of super viruses such as H1N1, the suffering of billions of animals in intensive confinement, and a loss of biodiversity and increase in global warming from clearing vast tracks of forested land for feed and rangeland. It is not negative for humans to enjoy the taste and hunger-satiating effects of eating meat, eggs, and dairy, to connect with other humans over the cultural practices related to eating animal-based foods, or to earn a livelihood from raising livestock , though the negative externalities associated with producing and consuming such products far outweigh these positive points. This basic cost-benefit analysis should be the basis for a critical rethinking of our food system and our personal diets; the detriments of modern livestock practices far outweigh the benefits.
One response to the many negative externalities arising from livestock is to ‘internalize’ some of them monetarily. For example, if farmers really had to pay for their pollution or carbon emissions, their production costs would go up significantly, prompting them to increase their prices and change how they produce. But the idea of internalizing externalities is problematic because it assumes that one could objectively put a monetary value on non-pecuniary things; for example, what is the true dollar worth of a square mile of the Amazon, a healthy river system, or better yet, the well-being of an single chicken? While those who produce animal products ought to compensate those they negatively impact (or better yet, not negatively impact them at all), many of the damage caused by livestock cannot be satisfactorily resolved with money.
Many governments not only fail to curb the negative externalities of livestock, but actually encourage them by pumping subsidies into certain sectors of the economy – e.g. by funding large CAFOs or by providing livestock operators with cheap corn and soy feed. It seems that the US Farm Bill currently under debate will improve upon former versions in this respect by cutting direct payments to farmers. This might make it marginally more expensive to produce meat, eggs, and dairy in the U.S., though will hardly go far enough in reducing consumption of such products. But if the negative externalities involved in producing meat, eggs, and dairy were somehow reflected in the final price of those products it would likely lead to a substantial reduction in consumption. An example of the inverse relationship between price and consumption is the drop in the number of smokers in New York City that has corresponded with the dramatic price increase of cigarettes (packs can run about $13.00 here). This is an example of the government intervening to internalize some of the negative public health externalities resulting from smoking.
Even though there is no way to objectively internalize externalities into the cost of meat, eggs, and dairy, an honest attempt on the part of the government would certainly go a long way in moving away from the current food system that delivers copious amounts of cheap, high-fat, high-cholesterol food to consumers while harming people, animals, and the planet.