These external costs, commonly called externalities, are being born by society when in fact they should be internalized by the polluting firm. The result of reduced output is a reduction in emissions. Since the firm does not choose this socially optimal level of output on its own, government must intervene through policy action. The strongest reason for clean air policy is its role as an important resource. Making production decisions involves making a choice on the use of capital.
Natural capital is the same.
The most widely used example of natural capital theory is logging. This is because the scale of pollution exceed the earth s assimilative capacity, or the ability of the earth to process pollution through the ecosystem and turn it into something useful. In addition there is no cheaply and widely available substitute for breathable air. Furthermore, it costs nothing to use the air, because of this the quantity of air used is much higher than it should be. This means that clean air is being depleted far too quickly, and we have nothing to replace it and its services with.