Externalities

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Externality: an unintended consequence of something. Can be positive or negative

Pollution Sink:

Many technologies produce externalities that are not accounted for e.g. CO2 from burning fossil fuels

The atmosphere is treated as a pollution sink as it was assumed it was large enough to cope

Issues of the hole in the ozone layer and reducing 'Living Planet Index' suggests it can

Polluter Pays Principle:

Those that cause the pollution should bear the economic cost of the damage they are doing to the environment

Command and control - new technologies are introduced to limit pollution e.g. catalytic converters

Market based - governments introduced pollution taxes, carbon trading permits and produce labeling

The Car Industry:

Many governments have imposed penalties on polluters e.g. car drivers have to pay VED bands based on the amount of CO2 a vehicle emits

This is expected to increase from £110 to £115 for an Audi A3 next year

Indian Car Sales Boom:

Tato Nano sells for £1250 and is the cheapest car in the world.

Externalities:

In 2004 India released 266 million tonnes of carbon - 4th largest CO2 emitting country

Tato Nano does does not meet European emission standards and will increase the CO2 emissions into the atmosphere