Hanley, Shogren, and White (2007) states that "A market failure occurs when the market does not allocate scarce resources to generate the greatest social welfare. A wedge exists between what a private person does given market prices and what society might want him or her to do to protect the environment. Such a wedge implies wastefulness or economic inefficiency; resources can be reallocated to make at least one person better off without making anyone else worse off."
I understand the basic idea that the private and social costs are different, and therefore, there is economic inefficiency. However, the last sentece confuses me, "resources can be reallocated to make at least one person better off without making anyone else worse off". How is this the case? Won't producers be made worse off? And which group is being made better off, and why?