Define the term ‘marginal external costs’ (Extract B).

Extract B: The resurgence of domestic wood-burning stoves

According to environmental reports published in 2023, the installation of domestic wood-burning stoves has experienced significant growth in urban areas across the UK. Since 2018, over 1.5 million households have installed these stoves as an alternative or supplementary heating source. Proponents argue that wood-burning provides a cosy, independent, and carbon-neutral source of heat compared to fossil-gas central heating. However, atmospheric scientists point to rising levels of fine particulate matter ($P{M}_{2.5}$) in residential areas. A public health coalition report estimates that domestic wood burning costs the National Health Service (NHS) approximately £80 million annually in treating respiratory illnesses, alongside £220 million in broader productivity losses. In choosing to burn wood, individual homeowners generally focus on their own marginal private benefits, such as warmth and aesthetic comfort, while ignoring the marginal external costs imposed on their neighbours and the local community.

Several factors explain the rapid adoption of these stoves. Rising gas and electricity tariffs, a desire for energy self-reliance, and aggressive marketing by stove manufacturers have made wood burners highly appealing. Conversely, some local authorities have established smoke control areas, introducing fines of up to £300 for households emitting smoke from chimneys, or banned non-certified stoves altogether to curb localized air pollution.

While wood burning offers a traditional, rustic warmth, it introduces significant negative spillover effects. Smoke particles linger in narrow street canyons, worsening asthma for nearby residents, and the harvesting of wood fuel can lead to localized deforestation if managed unsustainably.