Damage costs

External failure costs and lost opportunities are potentially the most damaging costs to a business. Several examples commonly quoted in the literature are given below. 

An indicator result could, for instance, be compared to the total indicator value in an area, or to the average indicator value per inhabitant per year. Other common methods are to compare with national reduction targets and with damage costs from emissions and resource depletion. Sometimes these are weighed across impact categories made by expert panels. However, some studies using this technique would not meet the requirement of transparency for the weighting process set by ISO. 

Mentors cannot be held responsible for any loss, damage, costs, and/or expenses incurred by the mentee as a result of/in connection with the mentoring relationship. 

External costs, damage costs, also often called just externalities, are a monetization of negative external effects being the consequences of, for example, some sort of environmental degradation. These effects and damages are external because the affected does not receive any compensation and the polluter does not need to pay for the damage. In order for physical measures of impacts to be commonly measurable, they must be valued in monetary units. The monetary valuation of different effects is not a straightforward procedure since many of the effects have no market value. The total value is often composed of both use values and non-use values. 

Social costs reflect in this example all costs occurring from the provision and the use of transport infrastructure, such as wear and tear costs of infrastructure, capital costs, congestion costs, accident costs and environmental damage costs. Some of these costs are already indirectly included in the private costs through taxes and charges, while others are not. In the context of environmental economics, private and social aspects are of importance. Mainly since it is often the case that environmental degradation is a social cost caused by private activities. Hence, the distinction between private and social is as presented above another impact of costs not being properly internalized in prices. 

To illustrate the concept of external (or damage) cost, we can first look at the emissions from Waste of Electric and Electronic Equipment (WEEE) to the air. The different points leading to the evaluation of emission s impact are the following [36] ... 

According to Spadaro and Rabl [41], damage costs of IQ decrement is likely the dominant part of the total damage costs of Pb. The dose-response function has been quite well characterized for Pb, for example by Schwartz [48] in a meta-analysis, who found that the IQ decrement is 0.026 IQ points for a 1 pg/L increase of Pb in blood. Spadaro and Rabl identified two possible ways of linking blood levels of lead to exposure. One of the methods connects incremental exposure of Pb in air to... 

If a delay in activation occurs, the fire may be larger and longer, resulting in more property damage (cost)... 

The strict-liability rule assigns fo firms fhe cosfs of residual risks that cannot be cost-effectively eliminated given current information. In turn, firms often have a strong incentive to find, act upon, and disseminate information that lowers their damage costs (or insurance rates), unless they can avoid their liability obligations as described earlier. 

Other costs which were identified but not included in many of the studies, primarily because of the difficulty in quantifying their effect, are costs from increased weed resistance to herbicides replacing the triazines direct labor and management costs of developing and using new weed control practices and increased erosion damage costs, such as siltation of lakes, subsequent water recreation reduction, and lower land productivity. The economic impact due to weeds becoming resistant to the triazines was found to be minor. 

Love Bug Damage costs Rise to 6.7 Billion available at http //www.businesseconomic.com/cei/press.index.html... 

Damage costs for these events have nol been adjusted for population growth. 

The U.S. has sustained 62 weather related disasters ever the Iasi 24 years with overall damages/costs exceeding 1.0 billion for each event. 

Figure 6.15. Damage cost estimates per ton of NOx emission. Best estimates or geometric average of upper and lower bound estimates, inflated to 2001 based on Consumer Price Index.

Weighting Environmental Impacts. As mentioned previously in Section 6.1, societal costs, either alone or in combination with other types of environmental costs, may be used as weighting factors to value different environmental impacts. For illustration, Table 6.12 compares damage cost estimates for different air pollutants from different studies. The monetary figures listed are based on those reported... 

Figure 6.16. Comparison between the original direct estimates of the damage costs per ton of NOx emission with correlation best fit. ln( Cost) = 0.5 4-ln(ozone) + Q.19Q-ln(population) + 5.99 where ozone is the 2nd 1-hour maximum in ppm population expressed in 1000s.

First, the analyses consider the direct costs associated with generation and ignore the social and environmental cost associated with them. The exclusion of these external costs means that fossil fuels appear cheaper than their true cost. Inclusion of damage costs for SO2, NOx, and, importantly, CO2 makes a large difference even if they might be difficult to predict. Estimates of the cost of CO2 vary significantly but 30/tonne—at the lower end—is often used in compar-... 

The third case, Sy, in Fig. 10 illustrates the strong influence of the discount rates on the computed optimal solutions. In contrast to the baseline scenario Sy and the zero-inertia scenario S, in which only the abatement costs were discounted, in scenario Sy both costs were discounted at the same rate of 2%, following standard economic practice. In this case, the optimal emission path leads to a climate catastrophe similar to the BAU case shown in Fig. 9. The explanation is simple since major climate change develops only after several centuries, the associated discount firctor is very small, and the discounted climate damage costs are negligible. Thus, there is only a small cost-penalty incurred in following the BAU path. This also explains why previous cost-benefit analyses (e.g. Nordhaus, 1993), ba.sed on the applicaton of uniform dis-... 

Fankhauser, Sam. 1992. Global Warming Damage Costs Some Monetary Estimates. Working Paper GEC 92-29. London Centre for the Social and Economic Research of the Global Environment. 

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