Negative externalities can diminish a property's value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate "internalizing" these externalities by implementing:

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Impact fees are charges imposed on developers to offset the negative externalities their development may have on the community, such as increased traffic or strain on public services. By internalizing these costs, the property's true value is reflected and the community is compensated for the negative impacts. Performance standards, growth moratoriums, and planned unit developments can also help to mitigate negative externalities, but impact fees directly address the issue of property devaluation.

Negative Externalities Can Diminish a Property's Value by Imposing Costs