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= Environmental externalities of concentrated animal feeding operations = Concentrated animal feeding operations (CAFOs) are industrial sized live-stock operations that are larger than animal feeding operations (AFOs) and house more than 1,000 animal units for over 45 days a year. These sites create externalities, which are positive or negative effects felt by an outside party which may be an individual, business, community, society, or the environment. Externalities are commonly used in economics to refer to the impact economic decisions have on an outside party(s) not involved in the transaction. Externalities are not accounted for in the market because they are not included in the cost of the goods or services provided. Environmental externalities are the specific externalities or uncompensated effects of production and consumption on the environment. CAFOs environmental externalities include air pollution, water pollution, soil pollution, and climate change. To limit the effects of these externalities federal regulations have been put in place in the United States and other nations. The United States Environmental Protection Agency (US EPA) regulates CAFOs though the Clean Water Act under the National Pollution Discharge Elimination System (NPDES) permitting program. Additionally, the US EPA may regulate CAFOs’ air pollution under the Clean Air Act, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), or the Emergency Planning & Community Right to Know Act.

Water pollution
Since CAFOs house a large quantity of animals, these industries also create a large amount of waste. These wastes contain nitrogen and phosphorus and are stored in manure lagoons, which are man-made pits or open ponds. Manure lagoons pose the risk of overflow during heavy precipitation events, which could lead to the pollution of local water sources. Alternatively, CAFO waste may be sprayed onto farm fields, known as spray-fields, where the manure is used as a fertilizer. Manure lagoons and spray-fields may contaminate groundwater through seepage and degrade surface water through surface runoff. Once these wastes enter waters, they can lead to the eutrophication of streams, rivers, and lakes as well as the contamination of local drinking water sources. For example, in the agricultural state of Idaho, a study found private wells had high levels of nitrates and veterinary antibiotics, products commonly used by CAFOs. Groundwater contamination may also impact surface water that is sourced through the lateral movement of groundwater. These impacts on water quality are not accounted for in the price of meat, dairy, or other products produced from these facilities so they exist as externalities. Communities impacted by CAFO water contamination may incur the cost of contamination due to health issues, impacted property values, or destruction of local wildlife habitat.

Soil pollution
The practice of spraying manure on crop fields is beneficial as manure works as a fertilizer, however, this method can contaminate soil if overdone. Overapplication of manure can expose soils to too much nitrogen, phosphorus, and micronutrients. This excess supply of nutrients can overload soil and result in saturated soil as its absorptive properties are declined. Once the soil is incapable of absorbing nutrients, nearby water sources are at higher risk of contamination as the nutrients from waste runoff into surface waters or leach into groundwater. Additionally, practices of CAFOs lead to soil arsenic pollution that is high in comparison to traditional agricultural lands. Arsenic levels are sourced from organoarsenic feed additives that animals do not digest and most of which ends up in their waste. This waste, high in arsenic, is then used as a fertilizer and contaminates soil. This unintended outcome of CAFOs results in negative effects or externalities to nearby landowners and future generations.

Air pollution
CAFOs create air pollution in the form of particulate and gaseous substances. These substances are released when animals move and during the decomposition of animal wastes. The gaseous substances include volatile organic compounds (VOCs), ammonia, hydrogen sulfide, nitrous oxide, and methane. The substances released from CAFOs contribute to acid rain and climate change and pose threats to local residents and farm workers. The leading cause of CAFO air emissions is the decomposition of animal wastes. When waste is sprayed on fields, volatilization of ammonia occurs. The volatilization of ammonia and other nitrogen contents contaminate the air and create dust, ultimately leading to acid rain.. Particulate pollution includes feed, bedding materials, dry manure, animal dander, and poultry feathers and it is created during the movement of animals. Although CAFOs air pollution is regulated under the Clean Air Act, local residents and farm workers are still impacted as they may suffer from health effects including headaches, nausea, weakness, and have higher risks of developing respiratory illnesses. In addition, farm workers and residents directly exposed to large amounts of CAFO air pollutants may face more severe health effects including death. Since air pollution is a side effect of CAFOs not included in the market, individuals impacted by this air pollution are responsible for the costs they may incur, not the CAFO.

Climate change
The air pollutants that CAFOs emit are greenhouse gases and therefore contribute to climate change. Climate change refers to the shift in global weather patterns due to human actions such as the release of greenhouse gases. CAFOs release methane, which is 23 times more potent than carbon dioxide (CO2), and nitrous oxide, which is 300 times more potent than carbon dioxide. These potent greenhouse gases contribute to climate change effects happening today, while carbon dioxide typically results in effects that will occur in the future. Manure sprayed on fields is introduced to oxygen and does not create methane, but this method of waste disposal creates carbon dioxide as it decomposes aerobically. On the other hand, manure lagoons are a source of methane production, since the waste is not exposed to oxygen and breaks down anaerobically. Additionally, methane is produced by the animal's digestive system, particularly their burps. The US EPA has also noted a high amount of carbon dioxide emissions from the CAFOs extensive use of fertilizers. Climate change will impact vast amounts of people, wildlife, and ecosystems. However, CAFOs contribution to climate change is not included in the market, so current and future generations impacted by climate change will incur the cost.