Externalities Research Articles

Consumption of Nitrogen Fertilizers in the EU—External Costs of Their Production by Country of Application

Consumption of Nitrogen Fertilizers in the EU—External Costs of Their Production by Country of Application

Quality Costing: A Key Tool for Enhancing Customer Satisfaction and Efficiency

Quality costing, also known as the Cost of Quality (COQ), is a strategic framework that helps organizations manage and improve the quality of their products and services while minimizing operational inefficiencies. In today's competitive business environment, ensuring high quality is not just an option but a necessity for organizations aiming to build customer loyalty and a strong market reputation. This paper delves into the critical components of quality costing, which include prevention costs, appraisal costs, internal failure costs, and external failure costs, each contributing to a comprehensive approach for managing quality-related expenses. Prevention costs are incurred to avoid defects before they occur, while appraisal costs focus on evaluating and inspecting products to ensure they meet quality standards. Internal failure costs arise from defects found before products reach customers, whereas external failure costs result from defects discovered after the product has been delivered to the customer, potentially damaging the organization’s reputation. Beyond its immediate financial benefits, quality costing facilitates informed decision-making by providing data that helps organizations assess quality risks and prioritize improvements. It plays a crucial role in reducing risks associated with product failures, thus enhancing competitive advantage in a highly dynamic market. Moreover, this paper explores various methods for measuring COQ, emphasizing that accurate measurement is key to realizing the full benefits of this tool. It also offers recommendations on how businesses can leverage quality costing to drive continuous improvement, foster innovation, and promote sustainability in their operations.

Integrating plant growth microorganisms in potato farming reduce soil CO2 emissions and improve crop quality

AbstractCurrent horticultural practices typically require high demands of fertilizers, leading to significant environmental impacts and increased production costs. Alternatives based on microbial inoculants have garnered considerable interest owing to their potential to enhance soil quality whilst reducing external inputs and costs, all without compromising productivity. This study aimed to compare the impact of four fertilizer application strategies, including mineral fertilizers and microbial inoculants, on crop yield, soil fertility and functionality and soil greenhouse gas emissions in potato production in Southern Spain. Four treatments were tested: (i) mineral fertilizers added to meet the crop's nutritional needs (F100); (ii) a 50% reduction of the F100 rate (F50); (iii) a 50% reduction of the F100 rate combined with the application of a formulation containing nutrient‐solubilizing bacteria, nitrogen‐fixing bacteria and non‐mycorrhizal fungi (BAI+FU) and (iv) a 50% reduction of the F100 rate combined with a formulation of N, P and K solubilizing bacteria (BAII). Results showed that crop yield was unaffected by the different fertilizer application treatments. However, the mean tuber weight and firmness were significantly higher under the BAI+FU treatment, indicating improved product quality. CO2 release rates decreased by 25%, 34% and 42% with F50, BAI+FU and BAII treatments, respectively, compared with F100. The N2O and CH4 emissions or soil nutrient contents were not affected by treatments, except for ammonium content, which was highest under the BAI+FU treatment. Additionally, whilst overall soil bacterial and fungal abundance was not significantly affected, the BAI+FU treatment resulted in a higher number of nirK (denitrification) and cbbL (carbon fixation) gene copies. Therefore, combining biofertilizers with reduced chemical fertilizer rates could represent a sustainable strategy for mitigating climate change whilst enhancing crop quality in potato production.

Prospective life cycle assessment of cost-effective pathways for achieving the FuelEU Maritime Regulation targets.

To reduce environmental impacts from the shipping industry, the FuelEU Maritime Regulation has set a binding 80% reduction target for well-to-wake (WTW) greenhouse gas (GHG) emissions by 2050. This article presents a prospective life cycle assessment (LCA) comparing the environmental impacts of e-ammonia, e-methanol, e-Fischer Tropsch (FT) diesel, and e-liquefied natural gas (LNG)-for maritime applications in Europe. In addition to e-fuels, traditional propulsion technologies using very low sulfur fuel oil (VLSFO) and LNG are assessed, both with and without integrating ship-based carbon capture (SBCC) systems. Key factors considered include the impact of different production locations in Europe, electrolysis technology choices, and global climate policies. Beyond analysing the environmental footprints, the study examines the economic and externality costs associated with each fuel option, contextualizing these findings within the GHG mitigation targets set by the FuelEU Maritime regulation. The results indicate that e-ammonia, e-FT diesel, and e-methanol could meet the 2050 FuelEU Maritime target, but e-LNG and SBCCS could not. Although it is the most immature technology, e-ammonia could be the cheapest option with the lowest overall environmental impacts. E-LNG shows higher life cycle climate change impacts due to ship-level methane slip but has lower impacts across other environmental categories because of low NOx emissions. E-methanol has higher toxicity risks over the life cycle and higher costs.

Трансграничные эффекты экологической политики Европейского союза: до и после «Зелёной сделки»

EU environmental policy primarily addresses the internal problems of the Union. At the same time, due to the size of the EU economy and the vigorous nature of the policy, numerous transboundary effects can arise, resulting in environmental changes in third countries and, indirectly, worldwide. The article examines the negative and positive transboundary externalities of EU environmental policy and speculates on the future international effects of the European Green Deal. The author describes typical examples of externalities of the European environmental regulation. It is revealed that the international trade is the main channel of their distribution. Their negative impact on third countries usually takes the form of excessive use of national natural resources, as well as the form of “carbon leakage” which stems from the EU emissions trading system. Positive externalities encompass the Brussels effect and demonstration effect and contribute to the development of environmental regulation in partner countries. The energy reform and carbon border adjustment mechanism are identified as the most important provisions of the Green Deal’s international dimension. The potential impact of the Green Deal’s transboundary externalities is described in the form of scenarios for different groups of countries. African hydrocarbon exporters are expected to suffer the greatest damage. At the same time, they have the best prospects for green transformation. Other countries are likely to be forced to speed up the decarbonisation of their economies in the medium term, while the most developed and powerful of them, such as the United States and China, stand to benefit by the expanding demand for environmental technologies

Assessment of Vaccination Impact in PPR-Control Program Implemented in Southern States of India: A System Dynamics Model Approach.

Mass vaccination against peste des petits ruminants (PPR) in two southern states of India, namely Andhra Pradesh and Karnataka, has reduced disease outbreaks significantly. The sporadic outbreaks reported now can be attributed in part to the recurring movement of sheep and goats between these contiguous states. This study assessed the present level of economic burden and impact of vaccination on the local system (one state), considering the exposure from the external system (neighboring state) using a system dynamic (SD) model. The SD model relies on interdependence, interaction, information feedback, and circular causality and captures potential feedback between disease control interventions and their impact on various epidemiological and economic outcomes. The data for parameterization of the model were collected through surveys, expert elicitation, and literature review. The sporadic outbreaks reported in recent years (<10 outbreaks/year during 2022) were due to continuous "mass vaccination" for more than a decade. During 2021-2022, the PPR incidence was less in both the states, with an estimated loss of USD 26.30 and USD 22.86 million in Andhra Pradesh and Karnataka, respectively. The SD model results showed a systemic increase in flock size and offtakes and a decline in the number of infected and death cases under high vaccination coverage (75% and 100% coverage) compared to the low-coverage scenario. Hence, the coordinated inter-state vaccination efforts offer better prospects, as efforts in one state have positive externalities in terms of fewer outbreaks in a neighboring state.

Time-Varying Effects of China’s Agricultural OFDI on the Sustainability of Bilateral Agricultural Trade Within RCEP Countries: Multiple Analyses Based on the Model of Trade Gravity and TVP-VAR

China’s agricultural OFDI has achieved a new promotion of regional opening to the RCEP agricultural field, and the bilateral agricultural trade cooperation has great potential. China’s agricultural OFDI has been steadily increasing in recent years. As significant trade partners for Chinese agricultural products, RCEP countries represent an important region for China’s agricultural OFDI initiatives. However, existing studies have paid little attention to the trade effect and dynamic impact of China’s agricultural OFDI on agricultural products of RCEP countries. Therefore, based on the panel data of agricultural trade between China and RCEP countries from 2004 to 2019, this paper uses the trade gravity model and TVP-VAR model to investigate the time-varying effects of China’s agricultural OFDI on agricultural trade of RCEP countries. The findings are as follows: (1) The impact of China’s agricultural OFDI on bilateral agricultural trade between China and RCEP countries has significant time-varying characteristics, and there are short-, medium-, and long-term positive impacts most of the time. (2) When the bilateral agricultural trade reaches a certain level, the role of China’s agricultural OFDI is limited, but the overall positive and significant impact remains, showing a strong trade effect. (3) The positive impact on China’s agricultural OFDI has a heterogeneous impact on RCEP countries with different income levels and geographical connections, but the overall positive externality effect is significant. The research conclusions expand the research perspective on the trade effect of agricultural OFDI to a certain extent and provide management and policy implications for agricultural enterprises to “move fast” and promote the sustainability of bilateral agricultural trade between China and RCEP countries through government efforts.

Does increased broadband internet penetration improve the quality of investors' information about local firms?

AbstractThis study documents that greater availability of residential high‐speed broadband internet in the area around a firm's headquarters is associated with an improvement in the quality of analysts' information, and the information efficiency of stock prices, for local firms. These results are driven by firms in areas with two and fewer local broadband providers, consistent with these firms benefiting more from additional information dissemination by locals. Increased internet penetration is also positively associated with locals producing more stock tweets about local firms. Our study provides evidence that increased broadband penetration is associated with positive information externalities for local firms.

Business models and strategies for the internalization of externalities in agri-food value chains

Current food systems have significant negative environmental, social, and economic impacts. Externalized costs and benefits create false market incentives favoring less healthy and unsustainable options. Transitioning to sustainable agri-food systems requires that businesses internalize these externalities. Internalization of externalities (IOE) is often addressed through policy measures and regulatory initiatives. However, IOE can also be carried out through business models (BMs) and strategies which involve creating positive externalities, mitigating/preventing negative ones, as well as ensuring fair distribution of risks, costs, and benefits. Accordingly, sustainable and innovative BMs and strategies offer pathways to achieving IOE. This paper identifies existing sustainable and innovative BMs and strategies and explains how they can achieve IOE. Using an integrative literature review methodology, we reconcile both economics and business literature approaches. We subsequently carry out two levels of analysis including abductive coding and interrelationship evaluation. The paper explores the characteristics of BMs and strategies that address IOE, using the well-known concept of value and introduces a conceptual framework for categorizing business models and strategies for the internalization of externalities (BM4IOE). The article initiates a discourse on the role of BMs in the IOE within agri-food value chains and provides insights into how businesses can develop and implement models that effectively internalize externalities, thereby enhancing sustainability and driving innovation in the transition of agri-food systems.

Research on Impact of Equity Costs and Environmental Costs on Supply-Side Classified Water Pricing

The classified water pricing system is an effective measure for promoting the rational utilization of water resources under market mechanisms. Studying the water prices of three different types of water sources, including reservoir water, river water, and wastewater treatment plant effluent, is the basis for promoting the use of reclaimed water. However, there remains a spectrum of viewpoints on how to establish a pricing mechanism for reclaimed water at present. This study primarily focuses on the multi-level quality-separated water supply system in Yiwu City, China. It analyzes the limitations of the current water pricing formation mechanism and the externality of integrating reclaimed water into the unified allocation of multiple water sources. Based on the principles of full-cost water pricing and externality theory, a supply-side classified water pricing permit cost and pricing calculation model, covering the entire process of the social water cycle, is proposed. It focuses on the analysis of the impact of equity costs and environmental costs on supply-side classified water pricing. The Shapley value method is used for the technology of cost allocation among stakeholders to reasonably distribute the calculated water pricing of reclaimed water. The price of reclaimed water varies depending on the user type, with residential users paying 2.93 CNY/t, industrial users 4.00 CNY/t, and government allocations at 8.52 CNY/t. Compared with the classified water prices of various stakeholders on the user side of reservoir water, reclaimed water has a significant price advantage. This research demonstrates that the supply-side classified water pricing model, which includes a permit cost and pricing calculation framework, can encourage the supply of higher-quality water at corresponding higher prices, while also providing the internalization of external costs. Furthermore, the Shapley value method of cost allocation can realize the fair burden of stakeholders on the calculated water price and maintain the competitive advantage of reclaimed water prices.

High‐Speed Rail Opening and Corporate Environmental Responsibility Performance: Analysis of Talent Aggregation and Supervisory Pressure

ABSTRACTThe existing literature has explored the impact of high‐speed rail (HSR) opening on macrolevel environmental performance. However, few studies have validated its effects on microlevel corporate environmental responsibility performance. Therefore, on the basis of data from Chinese A‐share listed companies from 2011 to 2020, we examine the relationship between HSR opening and corporate environmental responsibility performance, along with the underlying reasons for this relationship. Our research reveals that HSR opening can significantly improve the corporate environmental responsibility performance. Talent aggregation and supervisory pressure constitute the two main channels that explain the positive relationship. Furthermore, the results of heterogeneity tests indicate that this positive effect is more significant in cities with larger populations and administrative centers, as well as in nonpolluting industries and companies certified through ISO14001 environmental management systems. This paper confirms that HSR opening contributes to generating positive externalities for firms and provides valuable insights into improving and understanding corporate environmental responsibility performance.

The Impact of Equity Financing Moderation on Global Supply Chain Management and Corporate Performance Relationship

The main urban environmental problems are poor air quality, the urban heat island effect, water quality deterioration and flooding, environmental biodiversity needs, increased waste flows, and excessive carbon emissions levels. Many of these issues, especially the urban heat island effect and stormwater runoff, have a greater impact and stronger influence on post-industrial cities more emphatically influence post-industrial cities, because of their specific development patterns. Cities face many environmental challenges, including air and water quality problems, the need for adequate green space, excessive heat gain, contaminated stormwater runoff and lack of biodiversity ecosystem. Urban agriculture offers a unique opportunity to utilize vacant or idle land and rooftops throughout cities for the production of oxygen and healthy pesticide-free food. Adding residential green space to a neighborhood, including community gardens and urban farms, is known to provide a number of social, health, economic, and environmental benefits. Despite the challenging global trends, some citizens believe that Indonesia presents the resilience trend as displayed across the region, and we are ready to keep moving forward together for the years. In 2021 President of the Republic of Indonesia, Bpk Joko Widodo, officially established National Food Agency in Indonesia. This agency is ministered under the Ministry of Agriculture Food Security Agency, led by Bpk Arief Prasetyo Adi, and the Ministry of Economy, led by Bpk Airlangga Hartarto. The need for food and the market is very large and will continue to grow. However, the development of the food sector requires innovative methods based on modern technology, which will be able to increase the efficiency of the production process and the quality of food that is affordable and able to improve the carrying capacity of the environment, as well as the welfare of farmers and their supporting sectors. The purpose of this research is to provide information for executives to contribute to the development of the supply chain management talent, including the primary drivers, benefits, barriers, and bridges. The challenging macroeconomic and political environment is also putting pressure on the global business sector. Large companies have reported shrinking profit margins due to rising costs. Among small businesses, bankruptcy rates have begun to rise as borrowing costs rise and financial support dwindles. Emerging markets face many risks related to a strong US dollar, high external borrowing costs, persistently high inflation, volatility in commodity markets, increased uncertainty on the outlook for economic conditions in global economies, and pressure from tightening policies in advanced economies.

An Empirical Study on the Impact of Local Financial Capacity on the Supply Efficiency of Ecological Public Goods

Improving the quality and level of ecological public goods supply is crucial for enhancing the public happiness index and ensuring ecological welfare. A high-quality ecological environment generates significant positive externalities, making the provision of such goods a key focus of government expenditure. The ability of local governments to adequately fund the supply of ecological public goods depends on the strength of their financial capacity. Based on the panel data of 30 provincial-level regions in China from 2007 to 2019, this paper uses the super-efficiency Slack-Based Measure (SBM) model and the dynamic Malmquist index to measure the supply efficiency of provincial-level regional ecological public goods including undesirable outputs. Furthermore, the panel Tobit model and the system Generalized Method of Moments (GMM) model are used to empirically test the impact of local fiscal capacity on the supply efficiency of ecological public goods. The results show that fiscal absorption capacity can significantly improve the supply efficiency of ecological public goods, and the economic growth preference of fiscal allocation capacity can also significantly improve the supply efficiency of ecological public goods, indicating that under the influence of the current economic structure transformation and ecological civilization construction, the distortion of local governments in the supply of public goods has been improved, while the administrative consumption preference of fiscal allocation capacity hinders the improvement of the supply efficiency of ecological public goods, and the fiscal self-sufficiency has a lag in improving the supply efficiency of ecological public goods. Fiscal transfer payments have significantly improved the efficiency of the supply of ecological public goods.

Investigating optimal green port investment strategies considering location-based externalities

ABSTRACT Green port development benefits the port communities but might make shippers in the hinterland face positive or negative externalities. Those externalities to shippers might be amplified or reduced by congestion, which more likely happens when ports have a farther hinterland location. Therefore, the location-based externalities should be considered when decide green effort in competing ports. In this paper, we establish a competition-based green effort decision-making model in different scenarios, focusing on the impact of location-based externalities. By comparing the green effort and welfare under different investment modes and different market power structure, we discuss the impacts of location-based externalities and the motivation for joint-investment in green port development. We find that (1) The positive location-based externalities decrease the port profit due to the non-exclusivity of green port services. Public port governance mode and the dominant market position can alleviate port’s losses. (2) The negative location-based externalities make smaller port contribute more green effort than the larger port. (3) As the positive location-based externality increase gradually, the joint-investment between ports with similar size achieves lower total welfare than the separate-investment. Our findings suggest the necessity for flexible adjustment of green port plans to mitigate conflicting interests between ports and hinterlands.

Evaluating Justice in Accessibility to Urban Opportunities: Introducing Justice Analysis Frameworks Based on Theoretical Perspectives and Transportation Costs

Accessibility analysis plays a crucial role in urban and transportation planning. However, the modeling and interpretation of accessibility can vary significantly across theoretical frameworks, which offer diverse considerations and measurement approaches. These distinctions profoundly influence planning evaluations and policy- and decision-making activities. Therefore, this article explores the impact of intellectual theories—specifically Bentham, Marx, Rawls, and Al-Sadr's perspectives—on justice assessments regarding accessibility to urban opportunities via public and private transportation. To achieve this, a gravity-based accessibility model that incorporates both internal and external costs is developed. Subsequently, quantifiable frameworks for justice assessment are introduced. Next, five scenarios are evaluated, and accessibility values are calculated for a selected study area. Finally, the results are ranked and analyzed within the context of the theoretical frameworks. The findings reveal that theoretical justice evaluation frameworks significantly influence the prioritization of scenarios. Additionally, incorporating internal and external transportation costs into the accessibility computation process not only affects accessibility values but also enhances the reflection of theoretical perspectives on justice. The results further demonstrate that the proposed accessibility model and justice evaluation frameworks can enable planners to embed justice-oriented approaches more comprehensively in the planning processes.

Analisis Eksternalitas Industri Pariwisata Pantai Batu Pinagut Terhadap Pelaku Ekonomi dan Masyarakat

The progress of the management of the tourism sector, especially Batu Pinagut Beach, will have a direct impact on the community through aspects such as Economic, Social and environmental. Externalities can be in the form of positive/negative impacts on the surrounding community, the impact of externalities can cause various changes in the welfare of the surrounding community. The research using a descriptive-comparative method was carried out to compare a condition before and after the existence of the Batu Pinagut Beach tourist attraction located in East Boroko Village, Kaidipang District, North Bolaang Mongondow Regency, North Sulawesi Province. Data collection techniques with questionnaires and direct interviews with the community around Batu Pinagut Beach. The externality data analysis method used uses a different test from the Wilcoxon Signed Rank Test. The results showed that there were differences between before and after the tourist attraction was managed, there were positive externalities in the economic and social aspects, while negative externalities in the environmental aspects in the Batu Pinagut beach tourist attraction.

Predicting medication adherence among children with epilepsy: Application of the protection motivation theory

PurposeBased on the protection motivation theory (PMT), which is an extension of the health belief model that takes the “reward” brought by behavior in the long-term process as a consideration factor and considering the influence of environmental and social factors on behavior patterns, this cross-sectional study evaluated medication adherence among children with epilepsy using structural equation modeling. MethodsChildren with epilepsy from pediatric neurology clinics were consecutively sampled at West China Second Hospital of Sichuan University from July 2021 to January 2024. According to PMT, we designed the 23-item questionnaire, which included seven factors, namely severity, susceptibility, external return, internal returns, self-efficacy, reaction efficiency, and reaction cost. Medication adherence was assessed using the Morisky Medication Adherence Scale. The reliability and validity of the scale were tested by confirmatory factor analysis, and path analysis was used to conduct hypothesis testing and calculate standardized path coefficients. ResultsWe enrolled 1357 children with epilepsy (mean age, 8.36 ± 4.04 years). Younger age, being an only child, caregivers’ unemployment, and comorbidities were associated with high medication adherence scores. The designed scale of PMT displayed good reliability and validity. Through path analysis of the structural equation model, self-efficacy, susceptibility, and severity exerted significant positive effects on adherence, and external return, internal returns, and reaction cost had significant negative effects on adherence. ConclusionsMedication adherence in children with epilepsy is relatively poor. PMT can explain and predict the medication adherence behavior and behavior intention of patients with epilepsy. It is recommended to increase the health education, personalize medication guidance, and provide telephone interventions to caregivers of children with epilepsy to enhance medication adherence and further improve therapeutic efficacy.

True Cost Accounting Using Life Cycle Assessment Methods and Data: A Case Study Comparing Palm, Rapeseed, and Coconut Oils for Sustainability and Nutrition

True Cost Accounting (TCA) aims to assess positive and negative externalities in agri-food value chains by focusing on four capitals: produced, natural, human, and social. While produced capital is easily measured through market values, obtaining relevant data for measuring natural, human, and social capitals can be challenging. To address this challenge, this paper presents a case study around the production in Asia of three globally important edible plant oils: palm, rapeseed, and coconut. Results show that readily available methods and data from different types of Life Cycle Assessments (LCAs) can be integrated into the framework of TCA to quantify and monetize positive and negative externalities associated with the production and consumption of these oils and to analyze the tradeoffs involved in choosing among them. However, the use of LCA methods and data also entails significant assumptions and limitations that must be considered when evaluating their use in TCA. Specific results show that the environmental impacts of production are small in comparison to the potential nutritional health benefits of consuming one oil over another. This study provides a roadmap for conducting similar analyses, allowing for a greater understanding of often overlooked sustainability and nutritional issues of food items.

Monetizing Positive Externalities to Mitigate the Infrastructure Underinvestment Problem

Many cities struggle with financing their infrastructure projects. When decision makers cannot fully capture the benefits of their investments, there is a risk of underinvestment. Hong Kong’s transit operator created a model where it not only collects fare revenues but also engages in property management, leveraging the positive effects of public transport on nearby property values. In the article titled “Monetizing Positive Externalities to Mitigate the Infrastructure Underinvestment Problem,” the authors present a stochastic Stackelberg game of timing to examine the reasoning behind this approach. The issue is complex because the operator faces a two-dimensional optimal stopping problem that cannot be simplified by changing the numéraire. The authors determine the operator’s optimal investment strategy through the use of a “penalized problem” and provide comparative statics. They also identify the conditions in which capitalizing on positive externalities can encourage infrastructure investment. Other management challenges share similar structures.

Nationalist enclaves: Industrialising the critical mineral boom in Indonesia

Nickel's new status as a critical transition mineral has altered developmental agendas in the world's largest producer—Indonesia. The country's resource nationalist ambitions for a higher-value downstream mining industry dovetail with global demand for nickel, a key ingredient in low-carbon technologies like electric vehicles. Indonesia banned raw nickel exports and forced importers, primarily from China, to invest in downstream processing facilities. As a result, Indonesia's nickel industry expanded at breathtaking speed, export revenues soared, and economic growth along the country's nickel belt grew to over three times the national average. Indonesia's leaders cast the downstream sector as both an economic success story and a point of nationalist pride. This paper reflects critically on nickel-led growth in Indonesia, arguing the industry is generating new nationalist enclaves. I advance this concept to capture the paradox that new nickel-based industrial parks meet resource nationalist demands for a value-added extractive sector; yet the parks emerge as reconstituted extractive economic enclaves. Nickel-led growth relies on narrow networks of foreign and politically-connected domestic capital, and the industry's benefits are unevenly distributed. These political economy arrangements generate positive pecuniary externalities for a narrow set of state and private actors, and familiar negative externalities for the environment and communities at sites of extraction.