Externalities are the positive or negative impacts of an asset that are not reflected in its financial costs.

Why A (Impact on the environment) is correct:

Infrastructure assets (e.g., roads, dams, power plants) create environmental and social externalities, such as:

Air pollution from transportation projects.

Habitat destruction from hydroelectric dams.

Noise pollution from airports.

Why not B or C?

B is incorrect—technical issues (e.g., equipment failure) are not classified as externalities.

C is incorrect—externalities originate from the asset itself, not external factors.