Commentary Number 2
Food waste costs £8bn a year
People around the world are running unhealthy and dangerous activities that are destroying the whole society and economy around them. One of these activities is throwing uneaten food in the bin without considering the consequences of this activity. This activity costs 8 billion a year which is a large amount of money that the economy can use to increase the amount of goods and services for example. Moreover, the amount of energy that is used up into producing food is about twenty tonnes for every one tonne of food produced. Activities (production and consumption of goods and services) that affect the society positively and negatively, and that are external to the market and are not taken into account by consumers and producers where there is no appropriate cost is paid are known as externalities.
Externalities can either be positive externalities (exists when the production and consumption produce external benefits that may go valued improperly by the market this means that the marginal social benefit of production and consumption rise above the marginal private benefit) or can be negative externalities (exists when the production and consumption produce external costs that may go undervalued). In this article throwing uneaten food by householders in United Kingdom is considered as a negative externality. When families throw away a lot of uneaten food it will keep piling up to form a mountain of rotten food. This rotten food forms methane gas which is 20 times more damaging than CO2. When people throw away the food, they don't take into consideration the external costs of this activity. Figure 1.1 shows a market with demand and supply which reflects the private benefits, costs and the negative externality. Including the negative externality corrects market failure.
