Referencing Styles : Not Selected Case study The negative externalities in the production are that the residents are continually affected by these fires and haze during the burning and clearing the land for production in Indonesia (Wadley, 1997). The smoke inhalation has led to serious breathing problem among the people since most of the locals are unable to purchase face masks in the attempt of controlling the smoke. At some incidences, villages and homes are burnt especially when the fire burn uncontrollably. These devastating fire damages are because of the poor means of transporting the water for putting off the fire making it hard to stop the flames. For example, the fire that broke out on June 9th, 2013 in the land that was intended for the construction of palm oil industry in the Bengkalis Regency led to serious health problems for some of the people (Wadley, 1997). Another negative externality is the challenges faced by the subsistence farmers in that they are believed to be the main course of the haze and the blazes (Kiki & Akpor, 2012). For instance, in reaction to that, the Indonesia police usually arrest the farmers while keeping others in the custody. This trend has demoralized most of the farmers as they fear to clear more land for farming. However, it is evidenced that they are not the only cause of the fires in the country since some companies are responsible for such fires in the country. The farmers are always charged with the fire breakout allegations due to their illegal slash-and –burn method of clearing land in the province. POSITIVE EXTERNALITIES The Indonesia environmentalists have continually blamed the government of failure to quickly enough respond and enforce local laws to stop farmers from practicing the method of slashing and burning activities (Palte, 1989). The president of Indonesia has always issued apologies to Malaysia and Singapore over the issue of haze. Fire prevention strategies have been put in place to help in the reduction of the effects of such activities in the Indonesia and other surrounding areas. The activity of slash and burn activity is majorly carried out by the weak and the poor segments of society for their survival. The positive impact of these activities is that they are able to earn their living. This process usually persists in the search of the most profitable land for the best yields. Forests need to be well managed by the government to ensure that a proper climate is managed to avoid issues such as global warming. The political, economic and social costs are involved in the war against deforestation. Adverse selection of the products is one of the main unfavorable externality about the products of the subsistence farmers in Indonesia since they produce mostly for the domestic use. This problem also intensifies especially when the products happen to be of poor quality. The inferior product can cause the product’s market to collapse hence leading to poor performance in the production. In addition to these conditions the clearing of the forest and the haze can have long-term effects on the farmers and the surrounding areas. The above externality can be well illustrated in the diagram below. Supposing the point of haze pollution affecting the Indonesia and other surrounding areas (Wadley, 1997). Suppose this marginal externality costs caused by the pollution be indicated by line OBD as shown in the figure below. Then line ABC represents the marginal benefits of the farmers. In case of absence of proper regulation the pollution will be x2 of the blaze and haze over a given period of time. For a better management and the control of burning, the level of pollution will move from x2 to x1 which is considered as a private and social optimal equilibrium.