🎒 Base knowledge and understanding

✅ Tasks

🌿 Content

🔑 Key terms

Term	Definition
Market failure	A situation in which the free market fails to allocate goods and services efficiently, resulting in negative environmental impacts.
Externality	A cost or benefit of an economic activity that affects a third party not directly involved in the transaction.
Polluter-pays principle	The principle that the costs of stopping, managing and cleaning up pollution should be covered by the polluter.
Greenwashing	A form of misinformation in which companies spend time and money marketing themselves as environmentally friendly rather than changing their practices to become sustainable.
Tragedy of the commons	The overexploitation of a shared resource that occurs when property rights are not clearly defined and no market price is attached to a common good.
Common good	A resource that is shared by all and owned by none, such as the atmosphere, oceans or international waters.

🎯 Context

Introduction

A textile factory on the banks of a river discharges untreated wastewater containing chemical dyes into the river. The factory's clothes are sold cheaply in international markets. The company's website features images of green forests and the slogan "Fashion in Harmony with Nature". The river is used by local fishing communities and downstream villages for drinking water. Nobody owns the river.

What economic problems can you identify in this scenario?

The factory pollutes at no cost to itself (market failure / negative externality)
Society bears the cost of the pollution (need for polluter-pays principle)
The website misleads consumers about environmental practices (greenwashing)
The river is a shared resource with no ownership or price, leading to overuse and degradation (tragedy of the commons)