Nunavut (NU) | Ontario (ON) | Prince Edward Island (PEI) | Quebec (QC) | Saskatchewan (SK) | Yukon (YK) |
The existence of external benefit and external cost leads to misallocation of resources. External cost For example, when drivers are not liable for the health damage of car exhaust, drivers will equate only marginal private cost with marginal benefit. But if drivers are forced to pay for the health damage of car exhaust, their marginal cost will go up by the amount of the external cost.
Another private solution to externalities are charities many of which are established to deal with externalities. For example the Sierra Club, whose goals are to protect the environment, is a nonprofit organization funded with private donations.