Assigning Environmental Costs
Both products and processes are sources of environmental costs. Processes that produce products can create solid, liquid, and gaseous residues that are subsequently introduced into the environment. These residues have the potential of degrading the environment. Residues, than, are the causes of both internal and external environmental failure costs (e.g. investing in equipment to prevent the introduction of the residues into the environment and cleaning up residues after they are allowed into the environment). Production processes are not the only source of environmental costs. Packaging is also a source of environmental costs. For example, in the United States, 30 percent of all municipal solid waste is packaging material.
Products themselves can be the source of environmental costs. After a product is sold, its use and disposal by the customer can produce environmental degradation. These are examples of environmental postpurchase costs. Most of the time , environmental postpurchase costs are borne by society and not by the company and , thus, are converted into realized external costs.