These costs are not part of the prices paid by producers or consumers. And when such externalities are not included in prices, they distort the market. They encourage activities that are costly to society even if the private benefits to farmers are substantial. A heavy lorry that damages a bridge, or pollutes the atmosphere, externalizes some of its costs - and others pay for them. Similarly, a pesticide used to control a pest imposes costs on others if it leaks away from fields to contaminate drinking water.
Water is an interesting case.
25 million kilograms of pesticides are used each year in farming - and some of these get into water. Water companies do not pay this cost - they pass it on to those who pay water bills. This represents a hidden subsidy to those who pollute. Some of the costs are straightforward to measure, others more difficult. We have been very conservative, using lower estimates of costs.