Ch. 6, Version 010315 Chapter 6 THE ENVIRONMENT AND SOCIAL COSTS

Document begins: Ch. 6, Version 010315 Chapter 6 THE ENVIRONMENT AND SOCIAL COSTS As Chapter 2 points out, the 1990s witnessed a shift in the debate over the long-run availability of mineral commodities. Fears that the environmental and other social costs incurred in the extraction, processing, and use of mineral commodities might severely constrain their future availability pushed aside the more traditional concerns over mineral depletion. Even if new technology allows the exploitation of poorer deposits without any significant increase in the real price, the environmental damage inflicted on society and the other social costs that the producer and consumer do not pay, it is argued, may soon preclude the widespread use of mineral commodities. Social costs cover all the costs associated with a particular activity. They include those costs for which the producing firm and in turn the consumer pay, such as the costs of labor, capital, and materials. These are called internalized costs, since the firm or party that uses these resources pays for them. Social costs also include any external costs, or what are often referred to as simply externalities. These are costs that are borne by members of society other than the firm and the consumers ...