Report: Internalising social and environmental externalities
13 July 2026
‘Externalities’ are the wider environmental and social impacts of activities that tend to be unplanned or unforeseen, and are therefore not considered (or are neglected) during decision-making or pricing conversations.
Failing to account for these ‘externalities’ leads to inefficient outcomes and unintended consequences; in the case of economically-driven activities, increased greenhouse gas emissions are a common unintended externality.
Correcting this requires the implementation of a different decision-making process that more accurately represents the full range of costs and benefits: this process is known as ‘internalising externalities’.
Zero Waste Scotland commissioned research to deepen its understanding of how externalities can be more effectively internalised within Scotland’s economy. The research – delivered by Resource Futures experts – focuses on two key sectors: the built environment (including energy infrastructure) and the bioeconomy (with a focus on aquaculture).
Four key questions are addressed during the research:
- What mechanisms exist to internalise externalities?
- How effective and feasible are these mechanisms?
- Which mechanisms can be implemented unilaterally, and what factors influence their adoption?
- How could Zero Waste Scotland contribute to reducing negative externalities and enhancing positive ones?
