The soaring global demand for avocados has significant environmental consequences. Cultivating just one kilogram of avocados requires approximately 2,000 litres of water—far higher than most other fruits or vegetables. In major producing regions, native pine forests are being cleared to make way for commercial orchards, disrupting local ecosystems and reducing biodiversity. The intensive use of chemical fertilisers and synthetic pesticides has polluted local water tables. Additionally, transporting avocados thousands of miles to consumers in Europe and North America generates substantial carbon emissions from refrigerated shipping and trucking.
If consumers in major importing nations substituted avocados with locally sourced fruits just one day a week, the reduction in agricultural water demand would save billions of litres of fresh water annually, according to a recent environmental agency report.
Using the concept of external costs, evaluate the possible economic effects of increased avocado cultivation. Use an appropriate diagram in your answer.
54 exam-style questions on Edexcel A A Level Economics 1.3.2 Externalities. Each one has a worked solution and a mark scheme showing where the marks go.