Final answer:
The unforeseen consequences that are not immediately felt in economic activities are known as externalities. These can include both unintended positive and negative outcomes not originally accounted for. The precautionary principle advises caution when the cause and effect relationships of an action are not fully understood, reflecting the nature of these externalities.
Step-by-step explanation:
The unforeseen consequences that are not immediately felt are known as externalities. In economics, externalities are results of economic activities that affect third parties, which may not be directly involved in the transaction or the activity. This can refer to both positive and negative outcomes that are not reflected in the market price. An example includes the building of a dam; the primary objective is electricity production or flood control, but the construction can lead to diverse environmental impacts that are not initially considered, such as changes in local ecosystems, displacement of communities, or alteration of river systems.
Considering the precautionary principle, it is prudent to assume that certain actions, like releasing a new pesticide into the environment, may have unknown but potentially detrimental effects. It reflects an approach of caution in the face of uncertain cause and effect relationships. This principle is particularly relevant when scientific understanding has not fully established the consequences of an action. Similarly, policies and regulations can have various unseen impacts on society, leading people to bear costs without fully realizing it, such as changes in market prices, shifts in labor demands, or environmental degradation.