Question

A bee-keeper in an orchard enables pollination and fertilization of the orchard’s shrubs and trees. This is an example of ____________.

• A. Negative production externalities
• B. Negative consumption externalities
• C. Positive production externalities
• D. Positive consumption externalities

Answer 1

The Correct Option is C

In environmental studies, an externality refers to a cost or benefit incurred or received by a third party who did not agree to it. Externalities are categorized into production and consumption, as well as positive and negative. Here, we examine this categorization:  

• Negative Production Externalities: Negative outcomes in production impacting other parties negatively, like pollution from a factory affecting nearby residents.
• Negative Consumption Externalities: Negative outcomes from consumption affecting others, such as smoking affecting nearby people’s health.
• Positive Production Externalities: Positive outcomes from production benefiting others. In this example, a beekeeper’s activity enhances orchard pollination and fertilization, aiding productivity beyond the immediate benefit of honey production.
• Positive Consumption Externalities: Benefits arising from consumption improving others' welfare, such as vaccination reducing disease spread.

Given that the beekeeper’s activities unexpectedly benefit the orchard’s productivity, it exemplifies positive production externalities.

Answer 2

The bee-keeper enabling pollination is an example of positive production externalities.

Additional Context:

• Externality Types:
  • Positive Production (3): Benefits from a producer's activity without payment (bee pollination)
  • Negative Production (1): Harmful spillover effects (e.g., factory pollution)
  • Consumption Externalities (2,4): Arise from consumer activities
• Economic Significance:
  • Market undervalues such beneficial services
  • Justifies subsidies for beekeeping industries
• Real-world Impact:
  • 35% global crop production depends on pollinators
  • Honeybees contribute $15 billion annually to US agriculture

Correct Answer: (3) positive production externalities.