Externalities
An externality is the (possitive or negative) effect of a given activity caused on a third party that did not participate directly in such activity. Common negative externalities include air pollution on a community produced by a manufacturing company and noise from construction work that affects the nearby residents. An example of a positive externality is the nice smell that the neighbors of a flower shop can enjoy.
In the fashion industry, known negative externalities are water pollution with fabric dyes and massive water consumption in different steps of the process (including by customers, at home). By choosing to buy more and more clothes, we are definitely affecting everyone else that needs water to survive (that is, everybody).
In Bangladesh, the costs of garment factories pollution are high:
The odor rises off the polluted canal — behind the schoolhouse — where nearby factories dump their wastewater. Most of the factories are garment operations, textile mills and dyeing plants in the supply chain that exports clothing to Europe and the United States.
Source: The New York Times.
The country suffers the severe effects of pollution from this and other industries, damaging its natural resources and making it more vulnerable to climate change. While retailers (WalMart, JcPenney, H&M, Gap) save a lot of money by operating in countries with poor environmental regulations and paying low wages, the people living in them and nature pay the real high price.
The following video offers a great perspective on the water and energy consumed in the production of a t-shirt:
What other externalities can you think of in the fashion industry?